Exchange safety: risks and how to close them
Trade safety on the GCX exchange rests on three things: both sides pay a deposit, the parties stay anonymous before and after matching, and the deadlines for confirmation and documents are set by the rules.
At the same time, the exchange is not an escrow, does not check the counterparty and does not read your documents. Below is what exactly the platform closes, what you close yourself and which documents confirm it, including the metal batch passport.
What the exchange guarantees
The exchange matches binding orders for a physical commodity and records the trade. Everything to do with settlement and delivery goes on between the parties, off the platform: the exchange is not a party to the sales contract. Its guarantees therefore concern the procedure, not the metal itself.
There are four procedural guarantees.
- Both sides pay a deposit at matching. The deposit is held, not spent, and is returned in full to both sides once the document round is accepted.
- The trade parameters are fixed at the moment of matching: commodity, volume, currency, Incoterms basis, mode of transport, shipment week. There is no re-trading after matching.
- The deadlines are set in advance: 24 hours to confirm the trade, 5 days to exchange and accept documents. The first countdown starts from the moment of matching, not from confirmation.
- Both sides are anonymous. Before and after the trade the parties see each other as "buyer" and "seller". Bank details are not stored on the platform.
The point of anonymity is not secrecy for its own sake. It removes the pressure in negotiations over a specific lot: the parties cannot bypass the platform, and there is no reason to bargain over the counterparty's name instead of the commodity.
Deposit: the main protection mechanism
A deposit is neither an advance payment nor a fee. It is held and returned if the trade follows the rules. This works symmetrically.
| Situation | What happens to the deposit |
|---|---|
| Trade confirmed, documents accepted | Both sides get their deposit back in full |
| A party missed its deadline | Loses its deposit; the other side gets its own back in full |
| Cancellation by agreement before both sides confirm | Deposits are returned to both |
| Withdrawal from the trade while the deposit is held | Your own deposit is lost; the counterparty's deposit is returned to them |
You can withdraw from a trade at any moment while the deposit is held. It is a deliberate choice: you pay for the refusal, but you are not left bound by the obligation. Cancellation by agreement is possible only before both sides have confirmed the trade.
Anonymity and separation of roles
Anonymity does not cancel the fact that the counterparty exists and that the obligations are real. An order is binding; matching records a trade, not an expression of interest. Hence the practical consequence: you should place an order only for the commodity you are ready to ship or pay for in the stated week.
The exchange does not match an order with itself or with an order from a colleague at the same company. This protects against an accidental trade within one organisation and against accidentally closing your own position.
An order lives in one market: one commodity, one currency, one unit of quantity. Delivery points must overlap. The basis and the mode of transport are set in the order before matching and are carried into the trade unchanged. The more precisely the order is filled in, the fewer grounds for dispute after matching.
What the exchange does not do
The division of responsibility is the most common point of misunderstanding. The exchange does not hold money for the commodity, does not provide escrow, does not check the counterparty, does not read or assess documents, and does not handle delivery or insurance.
| Risk | Who closes it |
|---|---|
| Non-payment or non-shipment | The parties under the contract, off the platform |
| Metal quality — grade, geometry, surface | The buyer on acceptance, a laboratory, expert examination |
| Transportation, breakage, loss of cargo | The contract with the carrier and cargo insurance |
| Taxes, duties, currency control | The parties to the trade |
| Execution of the procedure and deadlines | The exchange through the rules and the deposit |
The exchange gives no guarantees on the commodity, so checking quality and the reliability of the counterparty remains your task. The platform provides even rules and enforces them, not a guarantee for the supplier.
How to check a counterparty
Checking starts before you place an order and continues at acceptance.
- Check the legal entity against the public sources available to you and request the documents your contract requires.
- Agree before shipment on what confirms the batch: quality certificate, metal batch passport, origin documents.
- Compare the marking and the actual geometry with what the documents state.
- If the requirements are strict, identify an independent laboratory and the sampling procedure in advance.
- Provide in the contract for the procedure in case of discrepancy: who pays for the expert examination, within what period, what counts as a defect.
Anonymity on the platform does not hinder this: the parties disclose their details and the contract to each other directly, outside the exchange.
Metal batch passport and documents against a dispute
A dispute almost always grows out of a mismatch of expectations, not out of malice. The best remedy is a written record.
| Document | What it confirms |
|---|---|
| Order on the exchange | Commodity, volume, currency, basis, shipment week |
| Quality certificate | The steel grade and compliance with the standard |
| Metal batch passport | That specific metal belongs to the batch and to the document |
| UPD and transport documents | Transfer of the commodity and transfer of responsibility |
| Acceptance report | The actual condition of the batch at the moment of receipt |
The document round is given 5 days. If you realise you will not manage, it is better to withdraw from the trade within the rules than to drag out the deadline: a missed move means losing your deposit.
Frequently asked questions
What is a metal batch passport
This is a document that links a specific batch of rolled steel to its characteristics and certificate. It allows the grade, the heat and the dimensions to be checked at acceptance against what was declared. The exchange does not read or check such documents — that is the parties' job.
Is 304 stainless steel safe for food
304 is a common grade for food equipment and cookware. The decision on suitability is taken on the requirements of the specific production facility, the condition of the surface and the supplier's documents. Only the supplier, not the exchange, can guarantee anything about a batch of metal.
What does safe stainless steel for cookware mean
Usually it means a grade with sufficient corrosion resistance and a quality surface without defects, plus documentary confirmation of the grade. Arguing about this on the platform is pointless: the criteria are set by the buyer in the contract.
Can delivery of stainless steel by a transport company be arranged
Yes, but the exchange does not handle delivery. You choose the Incoterms basis and the mode of transport in the order in advance; they are carried into the trade without re-trading, and the carrier is hired by the party responsible for the leg under the basis.
How to check a counterparty if it is anonymous
On the platform you see only the role — buyer or seller. The parties disclose their details and the contract to each other directly when the trade is performed. Check the legal entity and the signatory's authority at this stage.
What happens if the counterparty does not ship the metal
The exchange is not responsible for delivery: settlement and delivery go on between the parties. Within the platform the deposit works — the party whose move it was and who missed the deadline loses its deposit. The rest is settled under the contract between the parties.
Does the exchange hold money for the commodity
No. The exchange does not hold money for the commodity and does not provide escrow. Only the trade deposit and the fee, which is charged in USD, pass through the platform.
What to do next
- How the exchange works — the rules, the deadlines and the roles of the parties.
- Trade deposit — when it is returned and when it is lost.
- How a trade works on the GCX exchange — the steps from order to documents.
- Exchange fee — how it is calculated and what it does not include.
- Open an account — registration is free.