Trading at the Integrated Nano-Science and Commodity Exchange (INSCX)

INSCX Exchange

The Integrated Nano-Science & Commodity Exchange (INSCX) is a self-regulated commodity exchange devoted to trading a wide range of nanomaterials and nano-enabled commodities as well as some other commodities.

The opening of INSCX is a significant event in the evolution of commodities markets. Nanomaterials are the crucial building blocks of many important technologies in diverse areas such as drug delivery, regenerative medicine, diagnostics, electronics, cosmetics, textiles, information technology and environmental protection. For the first time, buyers and sellers can trade nanomaterials in the same manner as more traditional commodities such as agricultural products, energy and metals.

The goal of INSCX is to be the focal point of the emerging world trade in nanomaterials, a trade which will be crucial to continuing world prosperity in the 21st century.

What Are Nanotechnology and Nanomaterials?

Nanotechnology is the term for the design and construction of items whose use depends on construction at the nanoscale. This is generally defined as being 100 nanometers (100 millionths of a millimeter or 100 billionths of a meter) or less.

Nanotechnology encompasses devices or systems made by manipulating individual atoms or molecules, as well as items which contain very small structures.

What's the Big Deal About Nanotechnology?

What’s the Big Deal About Nanotechnology? – Image via NSWC Crane Public Affairs

Examples of nanomaterials include basic raw materials such as carbons and metal oxides and high-end, processed goods such as photonics and programmable matter.

Why is INSCX an Important Exchange?

The founding of INSCX and the commoditization of nanomaterials is a significant achievement for at least three reasons:

Transparency and Liquidity

Both buyers and sellers in the marketplace benefit from an organized marketplace for transacting business.

Security

Commoditization offers buyers assurances that the nanomaterials they are purchasing conform to pre-determined standards and sellers assurances that they will be paid for providing these materials.

Scalability

An organized commodity market means buyers can easily procure nanomaterials in much larger quantities than they could without an organized market. The availability of large amounts of inexpensive raw materials could facilitate research, development and mass production of a new generation of nanotechnology products that could improve the lives of many people. Essentially, the opening of INSCX could usher in an age of affordable and ubiquitous nanotechnology.

INSCX

Background of INSCX

INSCX is based in the United Kingdom. The exchange operates live trading markets during UK and North American hours of business.

Over the past two decades, the emerging importance of engineered nanomaterials in industry led to a collaboration between experts in nanoscience and the securities industry. The need to procure these materials in large quantities and in a reliable manner made the creation of an exchange a logical endeavor, and in 2009, INSCX was founded.

In 2010, INSCX joined the NanoCentral® Alliance of Specialist Providers in nanoscience. In 2010 and 2011, the exchange was featured at several nanomaterials conferences.

INSCX has played a key role in engaging industry leaders and governmental agencies interested in nanotechnology. Since 2009, the exchange has remained active in forums determining standards for engineered nanomaterials (ENMs). INSCX was an original member of the UK Department for Environment, Food and Rural Affairs (DEFRA) Nanomaterials Stakeholder Forum. In 2010, Lloyds of London commissioned INSCX to produce a report on the insurability of nanomaterials.

How Does INSCX Partner with Its Stakeholders?

INSCX forms working partnerships with organizations that are concerned with the reliable delivery of accredited and compliant nanomaterials. The ecosystem of interested parties includes ENM buyer, sellers, regulation agencies and experts that help ensure the integrity of the products being traded.

The exchange believes that its successful operation relies on:

[a] spirit of collaboration between interlocking and competing interests.

INSCX strives to create a cohesive working relationship with both producers and downstream consumers of nanotechnologies. The exchange offers purchasers a structured and organized way to fabricate items using ENMs and sellers a way to supply these commodities.

Because nanomaterials have different physical and delivery characteristics than traditional commodities, INSCX employs experts in fields such as materials characterization, EHS toxicology and nanomaterials track/trace.

INSCX Toxicology

How Does INSCX Work With Regulators?

INSCX employs a unique track/trace mechanism for keeping records of trades in ENMs. The mechanism, which is called Downstream Audit Sequencing (DAS), records each ENM trade executed and/or reported through the exchange. This enables INSCX to sequence each batch of materials from its source through to the end of the supply chain.

INSCX informs regulators in the UK and US of these procedures and believes they provide a way to provide real-time trade reporting of ENMs on a national and regional scale.

INSCX also incorporates a system called NANOGUARd to supplement the DAS track/trace system. NANOGUARd was developed at Ireland’s University of Limerick Business School. It functions as a comprehensive software tool for informing regulators and insurers about the risk profile of specific ENMs. NANOGUARd uses the statistical modeling technique of Bayesian networks to quantify the risks associated with the commercial uptake of ENMs. Ultimately, this tool could aid with risk mitigation and provide both regulators and insurance companies with more transparency about the risks of nanotechnology transactions.

INSCX works with standards institutes such as the UK British Standards Institute (BSI), International Standards Organization (ISO), official regulation agencies and other participants in the ENM supply chain. The goal of the exchange is to develop industry standards for supplying, tracking and regulating the purchase and sale of nanomaterials.

What Products Does INSCX Trade?

INSCX lists the following products for trading on its exchange. All products are traded for physical delivery:

CategoryProductsTerms for QuotationMarket Facts
Nanomaterials
Particle icon
  • Engineered Nanomaterials (ENMs)
  • Nano-enabled commodities, objects and devices
  • Quoted on a single and/or multiple producer basis.Products are:
    1. Validated and compliant with industry standards
    2. Tracked by the DAS system
    3. Compliant with environment, health and safety standards
    Polymers

    Polymer Icon
    Physical polymers for EU delivery.Quoted the following ways:
    1. Real-time aggregate spot
    2. Contract
    3. Fixed-term
    These products are quoted by chemical family in polypropylene (PP) and polyethylene (PE) types.
    EMEA Base Oils
    Oil Icon
    EMEA Group I, Group II and Group III Base Oils.Spot and contractQuoted on a Baltic, Black-sea, Med and Turkish port basis.
    Titanium Dioxide
    Chemical Icon
    Primary Chinese producer rutile and anatase grades.Spot and fixed-term
  • CN port basis
  • EU and US door-to-door delivery pricing available on request
  • How Does the INSCX Conduct Trading?

    INSCX conducts trading electronically on its physical dealing platform. Traders interested in gaining access to this platform should contact the exchange for details:

    What Types of Memberships Does INSCX Offer?

    INSCX categorizes its members into four different groups:

    Type of MembershipDescriptionAnnual Cost 2018
    Commercial Members
  • Producers of or approved end-users of listed materials
  • Required to formally register with the Exchange and be approved
  • £10,000
    Commercial Users
  • Commercial users instruct trade via a non-commercial Merchant member of the Exchange
  • Pay exchange/merchant fees on completed trades
  • £2,500
    Merchants
  • Non-commercial users authorized (once approved by the Exchange) to act as execution agent on behalf of Commercial and Associate Trade members Speculative trade by merchants is prohibited
  • Permitted to charge fees based on a % of the transaction value of the trade executed
  • Merchants accepting commercial member instructions place instructions on the trade platform through the Specialist Merchant, which is a wholly owned subsidiary of INSCX that manages the live trade platform
  • £20,000 per Merchant
    Associate Trade Members
  • Associate Trade Members are producer sales/trading arms
  • These members trade through the Exchange similar to a Commercial member
  • Members wishing to instruct trade do so through a Merchant member of the Exchange
  • £10,000
    Access Only MembersAccess Only members are users who are permitted to view the Exchange trade platform for price discovery, research or data purposes£2,500

    Admission to the exchange involves these steps:

    1. Applicants decide for which category of trader they wish to register.
    2. Complete the online registration form.
    3. Once approved, traders receive logon details for the TORS® trade platform.
    4. Applicants then receive instructions for the remaining steps before beginning physical trading.

    Physical Trading

    Before beginning physical trading, all members must first open a Commercial trade account with the Specialist Merchant member of the Exchange.

    Once the account is opened, the member can choose to trade through any of the approved merchant members for trade execution. Members convey trade to merchants who then notify specialists. Specialists anonymously convey trades to the trading floor.

    All trading on the Exchange is principal to principal, best execution, fully funded.

    What Fees and Charges Do INSCX Assess?

    INSCX charges both annual membership fees and exchange/clearing fees on trades.

    What Services Does INSCX Make Available to Members?

    INSCX makes a number of direct and ancillary services available to exchange members:

    • Dealing: Execution and reporting trades using the exchange
    • Logistics: Access to sea, inland freight and customs clearing services
    • Insurance: Access to conventional cargo insurance and EHS insurance for nanomaterials
    • Trade Financing: Access to liquidity and financing for producers
    • Price Discovery: Users can subscribe to access real-time price and trade data
    • Advanced Materials Refining: Access to customized advanced and nanomaterial refining services that could enable users to develop new products
    • Analysis: Access to inspection and toxicology services
    • Research: Coordinate research with other market participants to integrate nanomaterials into existing supply chains

    Who Are the Approved Suppliers on INSCX?

    Nanomaterial producers are members who are engaged in the fabrication of ENMs, nano-enabled commodities, objects and devices. Current paid members include:

    CompanyYear Membership Commenced
    Nanoshel PVT., Ltd2010
    Primet Precision Materials Inc.2011
    Sodout Ahrar Shargo Co.2011
    Xanofi Inc2011
    Haydale plc2013
    OCSiAL2013
    Talga Resources Ltd2014
    United Nanotech Innovations PVT., Ltd2014
    Henge Precision Materials Limited2014
    NanoEclat Inc2015

    The following nanoproducers are admitted to the Approved Supplier list, although they are not full members of the Exchange:

    CompanyCountry
    Advanced Materials/InframatUSA
    AMCOL/NanocorUSA
    American Elements Inc.USA
    Angstrom Materials Inc.USA
    Lake ChemicalsUK
    LavoisaItaly
    Liquids Research LtdUK
    Nanoamor Inc.USA
    NanocylBelgium
    NanogapSpain
    Promethian Particles LtdUK
    QSI NanoUSA
    Thomas Swann LtdUK
    XG Sciences Inc.USA
    Zyvex Inc.USA

    The following producers are approved to post bids and offers for Base Oil Groups I and II:

    1. CESPA
    2. Chevron
    3. ENI
    4. EXXON Mobil
    5. LOTUS
    6. MOH
    7. Q8
    8. Petrogal
    9. Petronas
    10. TOTAL
    11. REPSOL
    12. Shell
    13. BP/Castrol

    The following trading firms have permission to post anonymous bids and offers on the INSCX trade platform:

    1. FEEDCO
    2. DP OIL Oy
    3. Gulfpetrochem
    4. HIMBALT
    5. Sopetra/Chemlube
    6. PUMACROWN
    7. Troychem
    8. VITOL

    How Can You Get Started Trading?

    Trading nanomaterials is a new and very specialized form of commodity trading and clearly not appropriate for the vast majority of traders. The bulk of trading is this category is conducted by suppliers and industries using these materials. At the moment, all of the trading is conducted with a requirement of physical delivery.

    However, traders looking to invest in commodities have many other options available to them in more traditional markets such as metals, agriculture and energy.

    Many regulated brokerage firms offer contracts for difference (CFDs) based on traditional commodities..

    CFDs are a derivative instrument that offers retail traders a different way to invest in financial markets. CFDs allow traders to use leverage to bet on the price of financial assets. The value of a CFD is the difference between the price of a financial instrument at the time of its purchase and its current price.

    Some regulated brokers worldwide offer CFDs on shares, commodities, indices, forex and other financial assets. Customers deposit funds with the broker, which serve as margin. The advantage of CFDs is that trader can have exposure to financial assets without having to purchase shares, ETFs, futures or options.

    Traders can open an account at one of these regulated brokerage firms and begin trading CFDs based on commodities.

    Lawrence Pines is a Princeton University graduate with more than 25 years of experience as an equity and foreign exchange options trader for multinational banks and proprietary trading groups. Mr. Pines has traded on the NYSE, CBOE and Pacific Stock Exchange. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives. Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts.
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