Electronic Trading and the Globalization of Grain Markets Prepared by: Charles Whitman

Founder and CEO, Infinium Capital Management

February 24, 2011

USDA’s 2011 Agricultural Outlook Forum Today’s Strategies & Tomorrow’s Opportunities

Intro

“The revolutionary idea that defines the

boundary between modern times and the

past is the mastery of risk: the notion

that the future is more than a whim of the

gods and that men and women are not

passive before nature…. By showing the

world how to understand risk, measure it,

and weight its consequences, they

converted risk-taking into one of the

prime catalysts that drives modern

Western society”

Risk Management

Risk Management Understanding = Major Business Edge

Hedge Away Risks

Focus On Core Competency

Benefits of Electronic Trading

Transparency

Access- 24 Hour Markets

Increased Volume & Liquidity

Tighter Bid/Ask Spreads

Faster Product Adoption

Instant Reporting & Risk Management

2007 2008 2009 2010

0%

20%

40%

60%

80%

100%65%

83% 88% 88%

Corn FuturesElec % of ADV

2007 2008 2009 2010

0%2%4%6%8%

10%12%14%

<1% 2%5%

13%

Corn OptionsElec % of ADV

2007 2008 2009 2010

0%

20%

40%

60%

80%

100%

61%82% 86% 88%

Soybean FuturesElec % of ADV

2007 2008 2009 2010

0%2%4%6%8%

10%12%14%

<1% 2%4%

11%

Soybean OptionsElec % of ADV

Accessibility Due to Electronification

20072008

20092010

0

5

10

15

20

25

30

9

19 22

30

CME Ag Contracts With More Than 50% Electronic Volume

Global Ag Exchanges

Africa South African Futures Exchange

Asia Agricultural Fut Ex of Thailand Bursa Malaysia Central Japan Commodity Ex. Kansai Commodity Exchange Korea Exchange Singapore Exchange (was SIMEX) Tokyo Grain Exchange

Australia Australian Stock Exchange

Canada ICE Futures Canada

China Dalian Commodity Exchange Zhengzhou Commodity Exchange

North America Chicago Board of Trade Chicago Mercantile Exchange ICE Futures US Softs Kansas City Board of Trade Minneapolis Grain Exchange New York Mercantile Exchange

India Multi Commodity Ex. of India National Cmdty & Derivs Exch.

Latin America Bolsa de Mercadorias e Futuros Mercado a Termino Buenos Aires Rosario Futures Exchange

Europe NYSE LIFFE - London NYSE LIFFE - Paris Russian Trading System Turkish Derivatives Exchange MFAO Olive Oil Exchange

Accessibility Due to Electronification

Accessibility Due to Electronification

20072008

20092010

0

10

20

30

40

50

60

70

37 45 5163

Number of Ag Contracts Listed on CME

Challenges

Technology (Safe, Stable & Fair) Error Prevention Scalability & Bandwidth Equal Direct Access

Fair Access to All Market Participants Dark Pools

Willingness to Change Hesitant to push the button Some parties have a vested interest in holding on to the “old” way

of trading

Risk Hedging

Grain prices

Energy prices

Interest rates

Margin Hedging

Benefiting From Electronic Ag Markets

Benefiting From Electronic Ag Markets

Strategy Examples Futures Futures Spread Cash/Future Swap – EFP (Exchange for Physical) Options

• RFQ (Request For Quote)• Outright Options• CSO (Calendar Spread Options)

Inter-Commodity Spreads (and Spread Options)

Thank You

600 W. Chicago AveSuite 300NChicago, IL  60654

Business Development 312-770-1912

www.inifiniumcm.com