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In this issue: Mercaris Protocols: Safeguarding data confidentiality and integrity

Mercaris Protocols: Safeguarding both data confidentiality and integrity

Our Cash Market Data Survey kicked off earlier this month and now that it’s underway, we’ve heard two important and related questions:
  1. If I’m a participant in the survey, how does Mercaris protect my information?
  2. How do you ensure that reported trades are accurate?
The issues these questions raise are timely ones. Market data and price reporting are important and valuable functions in many industries, and lately a great deal of scrutiny has been directed at the information produced by these efforts as well as the organizations behind the reporting. Whether in agriculture, energy, or materials, there are best practices that should be followed to help ensure that the information being reported is fair, accurate, and truly reflective of the market.  

The data behind the Mercaris Cash Market Data Survey come from selected first purchasers of unprocessed commodity crops.  For our grain prices, we report weighted average prices on cash market trades that these organizations complete by week, by region, and by crop.

To assure the integrity of our market data, we are following several protocols that have been recognized as ‘best practices’ by groups like the International Organization of Securities Commissions.  Several of these serve a dual purpose of both protecting the survey participants’ information and identity, and strengthening the robustness of the data. Among the most important:

Mercaris reports averages of actual transactions. Some Price Reporting Agency’s (PRAs) report data that is based on what participants believe they could have received in the marketplace as opposed to actual trades. This can lead to inaccuracies in reporting, whether intentional or accidental. Mercaris differentiates itself by reporting actual transactions that have occurred in the marketplace, rather than just bids or asks.

Mercaris watches for ‘atypical’ transactions. Through our software we can flag trades that fall outside of predetermined limits, follow up with the organizations reporting such trades, and discard those trades if we believe they are outliers that should not be part of the data set.

Mercaris relies on a large numbers of reporting entities and transactions. We have carefully included survey participants who are geographically dispersed and who conduct small, medium, and large volumes of trades. Not only does this more accurately reflect the cash market, it also reduces the likelihood of any single reported trade skewing the data. We also have protocols that control for the effect that a single, large volume transaction could have on our reported prices.

Mercaris can confirm the opposite sides of trades for certain commodities. In some cases, our software enables us to follow up with the counterparty of a trade and independently confirm prices, volumes, or delivery dates.

Mercaris Protects Data Confidentiality. Confidentiality is of critical importance for Mercaris and our data survey participants. For that reason Mercaris does not publish individual trades or transactions, but only an average price. We also have a required minimum number of transactions and we don't allow any single trade to make up more than a certain percentage of the weighted average. This is not only important to ensure good data, but also to protect the identity of market participants in thinly traded markets. Mercaris signs non-disclosure agreements with all of its data survey participants, providing an additional layer of protection. Finally, each of the actual survey participants have a secure web-based portal through which to record and access their own data.

As a third party, independent provider of market information, our highest priority is the confidentiality of your data and the integrity of the information we report.  We continue to add participants to our grain and our coffee survey groups; over the next several weeks we’ll be analyzing data to assure its robustness and its accurate reflection of the cash market. Please stay tuned for updates ahead of expected publication later this year.

Cartoon credit: Mike Twohy

Upcoming Events

IFOAM Organic World Congress
This event is held every three years. The next World Congress is in Istanbul, Turkey in 2014, but the call for papers & presenters is open now! Visit www.ifoam.org for more information. 
Missed us at the 2013 Croplife America National Policy Conference?

CEO Kellee James spoke on the panel “Dollar & Sense: Real World Ramifications of Disjointed Policy.”  

You can view the session here.

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