The role of banking institutions in enhancing commodities trade

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The role of banking institutions in enhancing commodities trade

Post  Reilly Beck on Wed Oct 06, 2010 8:48 am

The monetary settlement of a trade between two entities is most often conducted through a prominent banking network. This requires the integration of the banking system with the internet trading system. All the newly started and the existing private sector banks and even the foreign banks whose operations are fully computerized now follow the standards set by the international financial regulatory authority to offer the best to those involved in online trade. commodities trading company managements have now made it mandatory for its members to have an account with a prominent bank.

Banks like the Centurion Bank, Global Trust Bank, ANZ Grindlays Bank, ABN-AMRO Bank and the Hong Kong Bank, to name a few offer enough options for a trader to open and operate accounts either as an individual or as a group. In addition, the 24/7 services on offer from these banks helps a trader to settle the accounts during any trading day without waiting for the next working day.

However, the situation is not the same with some of the other not so prominent banks. It is not possible for these major banks to be fully integrated in to the system in the near future. Investors will therefore, have to depend on the existing banking system for the settlement of transactions. One aspect that the smaller banks or the newly started banks will have to do is to step up their operations and make it convincing to the common people.

If the transactions of a trader and his relationship with the bank are proper, then the prominent bank managements may not mind giving loans of phenomenal amounts at short notice and without much paper work. All the prominent traders normally enjoy a special relationship with all the financing institutions. Commodity trade is highly volatile, but if the various portfolios are properly managed, then the risks involved can be greatly minimized. To minimize risk, a trader needs to have access to enormous amount of data to arrive at the right conclusion.

Reilly Beck

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