News 
Market Data 
Discover
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
|
Followers
|
13
|
Posters
|
|
|
Posts (Today)
|
0
|
Posts (Total)
|
335
|
|
Created
|
07/25/08
|
Type
|
Free
|
| Moderators | |||
Since the first overseas long distance call more than a hundred years ago, the industry has relied on bilateral agreements between network operators and international carriers in order to set prices for each terminating minute of international long distance traded between Network Operators, In-Country PTT's and Service Providers. The result is different prices for different call qualities between different buyers and sellers providing hundreds if not thousands of different prices for call termination to the same unique destination.
The root of these price discrepancies is found in bi-lateral agreements between Network Operators and International Carriers that have been the standard for setting prices in the market. This has in turn spawned an entire industry of by-pass routes and gateway operators to provide alternatives to non-carriers for in-country call termination.
This has resulted in extreme market inefficiencies, increasing prices due to hundreds of intermediaries in the demand and supply of an international call- each intermediary introduces a price increase, financing risk, technical risk due to multiple intermediary delivery points reducing call quality while increasing its price.
NYTEX is the new standard to which all destinations will have their price for call termination based on market supply and demand. NYTEX permits the monitoring of price fluctuations based on market forces providing one single reference price, at a reference quality, for each destination.
It is no surprise that commodities such as oil, gold and wheat trade globally on internationally recognized commodity exchanges that permit buyers and sellers to exchange them with accurate knowledge of price and market fluctuations within a neutral, financially secure and stable exchange such as the New York Mercantile Exchange (NYMEX)TM.
A minute of call termination is as much a nation's commodity as its wealth of precious minerals and oil- its demand and supply can be predicted due to such factors as population growth and phone penetration rates amongst the population. As demand for termination of call minutes increases due to increasing numbers of phone subscribers, supply will follow as Network Operators will expand their networks to accommodate this growth. New Network Operators will purchase licenses from countries in order to operate their services within the country- these elements will all contribute to increasing demand to reach people within the country, and their respective demands to reach people outside of their country.
Supply issues, much like with that of oil, also exist- as the country permits additional Carriers and gateway operators to operate in their country, supply of termination in that country will increase- just as major network outages will cause sudden decreases in supply- markets react and prices rise and fall.
The population of a country owns their call termination resource and entrust their governments to maximize the value of this resource and manage it as best as possible to the benefit of the population. International call termination becomes a predictable resource that governments can in turn utilize to finance their budgets through adequate taxation to carriers terminating in their country. NYTEX provides a neutral place for them to reference the real value of their resource and to sell those resources on the exchange within a safe, secure and internationally recognized framework.
To date, trading of telecommunications minutes has occurred when a buyer and a seller collectively agree on a price and quality specification between them and when both conditions of price and quality are met, the minutes flow through each trading partner. A change in price from the seller, for example, occurs through communication of rate amendments to the buyer, in which case, if approved, the price will change as per the new amendment. However, during this process the quality of the seller's route may decrease to a point unacceptable to the buyer, traffic is routed away or worse, traffic is blocked due to a technical problem at the seller resulting in dropped and poor quality calls.
NYTEX, through its advanced routing systems, monitors call quality and immediately updates and modifies call routings between buyers and sellers in order to maintain target qualities- should call reference quality cease to be delivered from a seller, for example, NYTEX will route the buyer's calls on a blending of additional routes such that the buyer maintains the reference quality. The blending of routes creates a change to the trading price, and if this price is above that of the buyer's BID, then the traffic is shut off, and the buyer is notified that they must increase their BID in order for traffic to continue to flow.
The same concept works on the Seller's side- if other sellers enter the market and are offering adequate quality at a lower price, the seller will see their traffic reduce and will be asked to update their ASK price should they wish to continue to transit traffic on their route.
Buyers and Sellers can trade on either the Spot market, or may conduct block (fixed price) trades.
As in the examples provided above, the market price fluctuates and as long as the market price is below that of a buyer's BID, or above that of a Seller's ASK, then traffic will flow. NYTEX clearing calculates a settlement based on minutes bought and sold at the market price and either debits or credits the buyers and sellers accounts with both minutes delivered / purchased and funds collected / spent. This is known as the NYTEX Spot Market and represents the flow of minutes at changing prices.
Note that on the Spot Market, buyers and sellers transact minutes and funds at the market price, and hence, if there is a decrease in the market price and call traffic still flows between buyer and seller due to adequate BID and ASK floors and ceilings, their respective accounts are debited at the market price and not at their respective BID and ASK price. This, known sometimes as a "Price Improvement", is always to the benefit of the trading partners and not the exchange.
NYTEX introduces the concept of the Block trade, that is, a fixed volume of minutes (always at the reference quality) at a fixed price. Once a block trade is consummated between a buyer and a seller, all minutes in the block are delivered at the Block trade settlement price irrespective of the market price.
NYTEX utilizes best of breed software, hardware, routing technologies and algorithms in order to ensure that minutes purchased and delivered occur at the reference quality for each destination market. Buyers and Sellers can feel confident in the capacity, redundancies and robustness of the NYTEX platform to deliver their trades on a timely basis. (Technology Partnerships- Quintum, Cisco, etc…)
Corporate Partner: Cambridge Mercantile Group
Cambridge Mercantile Group provides foreign currency exchange services in over 130 global markets including purchase, sales forward contracts , foreign currency drafts and electronic and wire transfers. For over 10 years, with offices located in Canada, the United States and the United Kingdom.
