PowerPoint Presentation

Key Legislative Reforms - new property and organizational forms cont.

•Commodities Exchanges: Background events

–Systematic reduction of 3 long-term Soviet institutions:

•Gosplan (State Planning Committee)

•Goskomtsen (State Price Committee)

•Gossnab ( State Committee for Material Supply)

–May 1990 first Commodity Exchange - Moscow Commodities Exchange

–By Oct. 1991 more than 400 commodity exchanges operating

–By Oct. 1992 ~1,000 commodity exchanges

–Wholesale auction houses / markets even “flea market’ like

–Function of Commodity exchanges

•1) connecting commodity buyers and sellers

•2) price discovery

–Sources of commodity exchange revenue streams

•1) capitalize exchanges by selling shares for hard currency

•2) sell brokerage seats or rights to transect business deals

•3) sales commissions from 0.5 to 5.0% on transactions, brokers get ~40% of commissions

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