Research On The Profit Modes Of Agent Company In Spot Electronic Transaction Of Bulk Commodities

In September 2009,the first spot commodity exchange in China,Bohai Commodity Exchange,was established with the approval of local government.Hereafter,with the rapid development of electronic trading of spot commodity,hundreds of electronic trading platforms for spot commodities,including agricultural products,energy and precious metals,were established and had quickly attracted various speculators,which brought the whole industry into a stage of savage growth.In particular,since CCTV reported lots of scandals in spot electronic trading markets on 15 March,2014,the whole industry has entered into a cold winter.In retrospect,besides of industry characteristics and regulatory environment,most scandals are intrinsically related to innovative or alienated profit modes adopted by the platforms.The agency problem between settlement members and agency companies and the potential risk are the fundamental for the healthy development of electronic trading platforms.On the basis of the summary of research background and literature review about principal-agent theory and information asymmetry theory,this dissertation takes H Corp.,an agent company in spot electronic trading,as the case object to investigate its profit modes by deeply tracking the development history of the firm.Specifically,this dissertation focuses on the comparison between betting mode and commission mode adopted by H Corp.and then analyzes the potential risk for each mode from the perspectives on legal risk,business risk and transaction risk.Finally,we give insightful suggestions for risk management of H Corp.By the comprehensive case analysis on H Corp.,two profit modes,betting mode and commission mode,are summarized.In the betting mode,as the counterparty of investors,settlement members have natural information advantage,and thus agency company can help settlement members to enlarge their information advantage by inducing investors' position and levered trading volume.In the commission mode,the main role played by agency company is to help settlement members to earn more commission fees by inducing investors to make big dollar value transactions as frequently as possible.Furthermore,the dissertation points out the potential risks of two modes,respectively.For the agency company adopting betting mode,potential risk includes the legal risk stemming from the infringement of citizen information and illegal transactions,the possibility of loss its business credibility because of the business risk transferred from the upstream settlement company,and the trading risk because of the attack by professional investors.For the commission mode,the agency company needs to bear the risk of illegal operation as investment advisor,the business risk of being lack of commercial competitiveness due to high transaction cost,and the trading risk due to its unprofessional investment and transaction.