How The Exchange Works

Flett Exchange prides itself in the creation of a marketplace which is a hybrid of technology and the market structure of traditional commodities exchanges (New York Mercantile Exchange and Chicago Mercantile Exchange).

The hybrid exchange allows for the ability to achieve efficient markets in commodities that were previously fragmented.

The Business Model

Flett Exchange creates marketplaces in specific commodities. Due to the smaller size of these commodities it was previously not efficient to create a centralized marketplace for them. The only commodities which were successful marketplaces were large ones traded on the traditional commodities exchanges such as the Chicago Mercantile Exchange or the New York Mercantile Exchange. These exchanges were never able to introduce smaller commodities due to the lack of technology and the rigidness of the contracts defining them. Flett Exchange created the technology and the ability for its traders to self tailor the terms of the contracts to their needs.

The core of the business lies in an open, competitive marketplace. We believe this will attract the majority of interested parties in the particular commodities. The result will be market transparency with many players creating a single place for price discovery.

Flett Exchange charges a commission for each trade executed on its system.

Flett exchange writes rules protecting buyer and seller from contract creation to delivery of the commodity and payment. A margin system is in place to further ensure contract performance on some contracts.

Flett exchange combines its responsibility of an exchange along with that of a broker. We disseminate market specific information to our users to help them make decisions.

Energy specific markets: Flett Exchange offers its platform to Over the Counter (OTC) Energy brokers. These brokers place orders on the platform for their customers or permission the customers to place orders themselves. As a neutral party Flett Exchange allows OTC brokers to maintain the relationships with their customers. Flett Exchange charges a nominal fee for this service. Trades are either done bilaterally or cleared through NYMEX Clearport or through ICE.

The Contracts

Flett Exchange creates contracts on commodities to be traded on its system. Only these commodities can be traded and only within the parameters set fourth in the contracts themselves. However, we employ "gray area details"™. These are specific details defined by the traders themselves. (For example, a specific delivery date or a specific grade of commodity). In the OTC energy market the contracts mimic those traded by OTC brokers.

The Market Rules

Flett Exchange employs some of the rules of traditional commodities exchanges such as the New York Mercantile Exchange (NYMEX) and the Chicago Mercantile Exchange (CME) with some changes. These rules have worked for over a hundred years and have the protection of the traders at the center. They are designed to ensure contract performance and define steps taken in case of non-performance. All traders agree to the market rules before they are allowed to enter orders on the system. In the case of OTC energy markets deal completion is all subject to counterparty approval in the case of a bilateral transaction and clearing house and/or exchange approval in the case of a cleared transaction.

Read market Rules