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INSCX exchange outline a series of initiatives to implement supply/downstream adherence to nanomaterials (SHE) standard, traceability and contingency "Shut-down" procedures for effect on a global basis ahead of the exchange's live launch of its formal trading platform later this year. Policy outlined will be binding on all members and users of the live market to be operated in Asian, European and North American time zones. Based on the long-established commercial concept of self-regulation, which by definition is proven more effective than official "top-down" regulation acting in isolation, as self-regulation acts to support official legislations by enlisting a greater industry support essential to make any regulation effective, the series of initiatives are disposed to compliment ongoing efforts on the part of various agencies to devise a formal framework for nanomaterials.
The initiative forms part of INSCX exchange proposals to enlist the support of global insurance syndicates to extend indemnification to include nanomaterials, the lack of insurance coverage being recognised as a key deficiency restricting greater commercial uptake for the diverse suite of emerging materials. The policy initiative is to be highlighted in an address to be given by the exchange to a gathering of vested EHS and industry interest organised by the Lighthill Risk Network scheduled to be held later October 2010 at the Lloyds of London exchange buildings in the City of London.
The specifics of the initiative outlined in the release form an integral part of a formal exchange offering to the global insurance industry. The objective remains to deliver a practical, cost-effective methodology which provides a means to secure the support of nanobusiness while enabling the participation of the insurance industry as a willing commercial driver based on greater adherence to (SHE) and Downstream Audit Sequencing of nanomaterials throughout the supply-chain supported by a working method to implement for global effect Contingency "Shut-Down" measures in the event of proven societal risk.
The Integrated Nano-Science & Commodity Exchange (INSCX exchange) announce a series of initiatives to be implemented on formal live launch of the exchange later this year structured to increase the ability of suppliers and downstream users of nanomaterials to adhere to benchmark Health & Safety standards, while implementing downstream traceability of (SHE) accredited engineered nanomaterials from source throughout the supply chain to end product supported by procedures to execute a contingency "Shut-down" in the event evidence arises in the future where societal interest warrants restriction in the manufacture, supply and/or use of a particular nanomaterial. The series of initiatives are announced as a response to recent commentary from several quarters expressing concern for greater regulation of the nanomaterials industry.
While many industry participants worry official regulators may now move to "over-regulate" the nanomaterials industry through enacting a framework which poses a detriment of its commercial standing, official regulation agencies are clearly motivated by a requirement and obligation to devise regulation which safeguards societal interest. The series of proposals put forward by INSCX exchange are structured to accommodate both areas of concern. Practical solutions are put forward to address issues surrounding the traceability, (SHE) accreditation and contingency approach to be employed in the context of nanomaterials in a manner which balances commercial interest with societal requirements for transparency and accountability.
These self-regulatory procedures are placed in support of official "Top-Down" efforts to regulate the emerging sector as a reference template on which to evaluate as official agencies deem fit an appropriate legislative response. It is hoped the practical nature of self-regulation if adhered to by suppliers and users of nanomaterials proposed by the exchange initiative will act to enable regulators to formulate a legislative framework which further enables pursuit of compliant commercialisation. The proposals are based on marrying the concept of self-regulation as a means to strengthen compliance with official regulatory measures. The concept of self-regulation acting in support of official regulation is a longstanding feature of many aspects of the global economy which through INSCX exchange can now pass to the benefit of nanomaterials.
Nanomaterials (SHE) Accreditation Scheme
The nanomaterials (SHE) Accreditation Scheme is provided to INSCX exchange members by AssuredNano™, the premier Safety, Health and Environment (SHE) accreditation scheme for organisations producing nanomaterials, nano-enabled products and users of nanotechnology in general.
The scheme is the only accrediation scheme underpinned by the world renowned Institute of Occupational Medicine and endorsed as the benchmark EHS standard by INSCX exchange.
The scheme promotes the responsible and proactive application of nanomaterial (SHE) good current practice within the nanomaterials and nanotechnology community by:
Accrediting organisations to its annually audited, comprehensive nanomaterial (SHE) methodology
Disseminating developments in the rapidly evolving field of nanomaterial (SHE)
Promoting debate within nanomaterial (SHE)
INSCX exchange registered suppliers and downstream users of nanomaterials qualify to use the exchange process to fund the financial cost of accreditation. This represents an important development in support of greater industry adherence to a benchmark EHS standard in nanomaterials. The Credits System removes cost of on-site (SHE) audit inspection as a financial burden to suppliers and users while effectively removing ability to pursue Health & Safety in nanomaterials as a business.
According to an exchange spokesperson: "While there are costs involved in the provision of Health & Safety audit to nanomaterials suppliers and downstream users and certainly it remains only fair providers of services should be entitled to financial incentive, quite clearly, Health & Safety (H&S) in the traditional business world of late remains driven by commercial as opposed to societal interest, a point acknowledged recently by the UK Prime Minister. These "profit" tendencies are also evident in the context of nanomaterials. In our opinion to further a "H&S business ethos" in the context of nanotechnology, where many industry participants remain of SME status, would be to self-defeating in an EHS context and impractical as many SME's would not be able to pay. Indeed to hold the issue of H&S standards subject to a "profit" motive will simply surrender effort to increase adhence to bechmark EHS standards in nanomaterials to reflect commercial interest as opposed to societal concern. The policy enacted by INSCX exchange is structured to focus emphasis on societal interest and permits any supplier or user of nanomaterials to qualify for (SHE) standard regardless of financial resource."
The system will work as follows: A series of "credits" are to be awarded a supplier or buyer on the occasion of executing a trade through the exchange process by way of each transaction being subjected to an Accreditation Levy based on 0.5% of the financial consideration of the trade. The procedure will come into effect when the exchange launches for trade later this year. The credit will be awarded equally to both counterparties to the trade, supplier and buyer who are permitted Interim Accreditation Status (IAS) permitting either to supply or source to the EU REACH registration ceiling of 1 metric tonne. Any excess supplied or sourced at or above this ceiling would however warrant exclusion from the Credits System triggering compulsory (SHE) accreditation from a position where a suppier and/or buyer could reasonably be expected to have the financial resourse courtesy of increased trade flow to afford to pay up-front. Using the credits system by simply trading using the exchange process any supplier or buyer of nanomaterials regardless of financial resource can save to afford the cost of (SHE) accrediation. On the occasion where a supplier or buyer has accumulated enough credits to meet the cost of accrediation, INSCX exchange will instruct AssuredNano™ to conduct the accrediation audit and reimburse AssuredNano™.
Commenting, an exchange spokesperson added; "Most responsible interest in engineered nanomaterials, whether official regulation agencies, academics and nanobusiness itself remain conscious of the need for base EHS standards. What matters in a commercial context, is how do we deliver a practical means where supply and sourcing interest in nanomaterials, especially in light of the commercial infancy of our industry in general, can afford to pay the cost of implementing good practice. The (SHE) Credits System (SCS) is one method whereby the industry can up benchmark adherence to a standard without the requirement to increase standards posing a financial burden. All nanobusiness have to do is simply use the INSCX process of exchange to effect trade in nanomaterials, a commodity exchange system proven to meet the requirements of buy-side interest in any major raw material required for use to deliver end-applications and products."
Nanomaterials (SHE) covers the following areas:
Manufactured nanomaterial types and characteristics, Nanoparticle exposure and risk, Approaches to managing risks from nanoparticles, Life cycle analysis, Principles of risk assessment, Risk evaluation, Control of exposure, Measurement of exposure, Process considerations, Fire and explosion risk, Spillages and accidental releases, Environmental release, Disposal procedures, Packaging, labelling and transportation, Emergency response, Communications and training, Competency, Internal auditing, Record keeping and systems.
Response to Product Labelling - "Brand-nano"
INSCX exchange propose to implement a stsyem of Downstream Audit Sequencing enabling nanomaterials to be traced from source supply and procurement through the entire supply-chain to end product and/or application in a manner which strengthens the ability of official regulators to discharge their obligation in societal interest while not undermining the ability of nanobusiness to commercialise. The system will provide on a global basis the tools to track and reference the implementation of a global recall of any product and winding-down of source raw nanomaterial used in its composition in the event use or appliaction of a particular nanomaterial poses a societal risk. The initiative is put forward by INSCX exchange as an alternative to moves to label individual products containing nanomaterials as a "Brand-nano" delivering traceability by industry consent. The initiative follows as a response to repeated calls for Product Labelling, the latest in a series cited from Nanotechwire.
"Ahead of a regulatory review next year, the Belgian EU Presidency is proposing to create a specific register for nanomaterials under the bloc's REACH chemicals regulation and wants to make it mandatory to label their presence in consumer products. "Nanomaterials are increasingly present in consumer products and everyday items we use, and yet we don't know a lot about them," said Paul Magnette, the Belgian minister in charge of consumer protection and environment. (Source: NanotechWire)
While sharing concerns expressed in the abstract, proposals to insist all nano-enabled consumer and/or industrial devices and products are labeled, ipso-facto promoted as "Brand nano", would in our opinion not serve to fully safeguard society or consumers as they would not enlist a willing industry support as "Brand-nano" would serve only to place the entire nanotechnologies industry at a commercial disadvantage to rival non nano-enabled products. The product label proposals quite understandably motivated by regulators inspired to safeguard consumer and societal interests would as suggested not in our opinion achieve the desired effect for anyone, not society, consumers or indeed business engaged in supply of such product.
In essence labeling would equate to a "Brand nano" with anything nano-enabled perceived as somehow "bad" or risky in comparison to other products. In addition to generating adverse PR for nanobusiness, labeling would also not provide society with any real means to instigate a global product recall in the event evidence surfaced to prove a societal risk. Certain aspects of labeling nano-enabled devices and products such as transistors in computers would be unworkable as highlighted recently by the Nanotechnology Industry Association (NIA). Clearly another solution must be found as an alternative to labeling proposals and one where society can be safeguarded in the event there is a proven risk, balanced with nanobusiness being permitted to compete equally with other materials sectors in order to pursue compliant commercialisation.
Downstream Audit Sequencing
The proposal put forward by INSCX outlines as an alternative to product labeling a means to sequence the passage of any nanomaterial traded using the exchange process through the supply-chain from source to end product enabling a forward and reverse-audit capability should situation arise for official regulators to act to safeguard societal interests. The procedure to be offered on launch of the exchange is one where the initial procurement order "bargain" to purchase a nanomaterial via the exchange process will on trade automatically generate a unique transaction reference or ID number. This forms standard commodity exchange procedure used for record keeping and trade settlement across many exchanges while also a means to retain a record in the event a formal request for full disclosure of the trade counterparty to a trade is ordered from the exchange in law. Such a disclosure can be ordered in the event an illegal activity is suspected or for other justifiable reasons. Across traditional commodity exchanges requests from the courts for disclosure are a common feature and a systematic approach is long-developed by exchanges to respond effectively and without prejudice to customer right to confidentiality in response to such orders. INSCX will follow standard commodity exchange procedure safeguarding customer right to confidentiality on the part of nanomaterials suppliers and end users superseded only in the event societal risk is proven.
The ID number could be used to effectively label a product containing nanomaterials as opposed to a "Brand-nano". The ID number or bargain reference could simply be carried through the entire sequence of processes to deliver an application or product containing a particular nanomaterial where it was sourced via the INSCX exchange process. Instead of "Brand-nano" each product would carry a number, perhaps even embedded into the end product or device using RFID or a QD. The benefits and practicalities of such an approach would indicate on the one hand nanobusiness would be more inclined to embrace a methodology of traceability which was not perceived as generating adverse PR for nano-enabled products and devices, while official regulators would be provided with a central reference point to trace not only a nanomaterial at source but also all parties engaged in the process of using a particular nanomaterial to deliver and end product or device. The ability to reference all interest in a nanomaterial conducting reverse side audit traceability to source would enable an effective regulatory response or "Shut-Down".
"Shut-Down" Contingency Measures
It is commonly accepted by responsible opinion in nanoscience that occasion may arise in the future where evidence surfaces to force official regulators to either ban or restrict trade in a particular nanomaterial. This realisation warrant there being in place a practical methodology or measures to implement a global contingency to close down supply of any nanomaterial where societal interest warrants such in a manner which provides a safety-net to commercial interest while also enabling a defined reference point of departure to recall or structure disposal of all products containing the nanomaterial in question.
The manner in which a Contingency "Shut-down" Measure of source nanomaterial, either raw primary or secondary functionalized, coupled with a method to ensure forward and reverse traceability throughout the supply-chain to end product or device can be achieved or implemented on a global scale with speed, clarity of focus, and industry cooperation is addressed by INSCX exchange as follows;
1. Industry Cooperation
Any move by official regulators to ban or restrict trade in a nanomaterial for whatever reason will hold negative financial consequences of any party engaged in the commercial supply and/or use of this particular material. This fact automatically places commercial interest in direct conflict with the obligation of official regulation agencies to safeguard society as a ban or restriction would pose a financial threat to commercial interests. At best these parties would seek compensation for loss, or at worst resist attempts to reign in a particular activity. Either disposition would constitute a difficulty for official regulators compounded by the global orientation of nanomaterials insofar as regional or national approaches may differ to a given "societal concern" issue arising from the supply and use of a particular nanomaterial.
There remains a clear risk official regulators may also encounter attempts to influence them to act, or not act as the case may be, in observance of economic as opposed to purely environmental concerns or that commercial interests in a nanomaterial will seek recourse to law in order to thwart or delay any "shut-down" order. To square the issue to ensure there existed self-interest on the part or commercial interest in a given nanomaterial to cooperate fully on a global scale, INSCX exchange propose the inclusion of a "Shut-Down" premium to be levied on all trade pertaining to nanomaterials through the exchange process, operating in a similar manner to the nanomaterials (SHE) levy as outlined.
2. "Shut-Down" Premium
There proposals to be implemented by INSCX provide two options for consideration by industry and official regulators.
a) On the one hand the financial contributions amassed by INSCX exchange by way of the "Shut-Down" levy charged on every transaction in a nanomaterial executed through the exchange process could be used as a basis to encourage global insurance syndicates to in-effect indemnify against the risk official regulators are forced in the future to close down supply and/or restrict use of a particular nanomaterial. This insurance coverage could act to compensate commercial interest in a particular nanomaterial should any genuine reason arise to ban or restrict trade.
b) INSCX exchange are presenting this option to a leading insurance syndicate marketplace as a means to enable underwriters to provide a means to compensate on the basis of probability thus providing an essential safety-net to any commercial interest in a given nanomaterial against unforeseen risk. Knowing they stand to be compensated in the event of a ban or restriction would make commercial interest in nanomaterials more inclined to cooperate fully with official regulators in the event any ban or restriction had to be introduced. As we can also appreciate, the chances of every nanomaterial being banned are remote given the longstanding use over many decades of several; this in turn provides an incentive to the insurance industry to consider indemnification.
c) The "Shut-Down" premium collected against every transaction executed via the exchange process could if required be forwarded by INSCX exchange to official regulatory agencies for dispersal themselves or divided proportionately between official regulatory agencies and the insurance industry for dispersion at their discretion, dependent on the estimated extend of liability arising from any "societal interest" incident.
INSCX exchange can only suggest the proposal as a means to address an issue which may or may not arise permitting the wider industry and regulatory interest an option to decide whichever is most suitable. There are several advantages open to marry what appear two opposites; the interests of business and profit, with the interests and obligation of official regulation agencies to safeguard society. It is recommended the initiative be given merit bearing in mind its ability to effectively balance the common but yet competing interests of regulation agencies and commercial interest in nanomaterials, the cost-effective nature of global implementation and practical aspects in addition to the following features of its orientation. .
INSCX exchange will operate to provide live market trading facilities in the centres of Asia, Europe and North America permitting supply and purchasing interest regardless of national domicile to participate in the region most suited their business and market location. Initially on launch the exchange will be operational in Europe and North American time zones. This scope of global operation effectively means standards in trade across nanomaterials can be observed by all exchange participants which abide by exchange rules in addition to any formal, official legislation. The global reach of the exchange process can act as a support to official regulators needing to implement policy effectively by driving a global industry cooperation with trade standard requirements necessary to commercialise nanomaterials effectively while acting to assuage national and/or regional difficulties in the context of implementation. Features associated with the self-regulatory approach to effecting a greater uptake of nanomaterials (SHE), Downstream Audit Sequencing and Contingency "Shut-Down" as commercial requirements effectively dovetail a balance in favour of safeguarding societal as opposed to purely commercial interests.
In the event official regulators moved to ban or restrict trade in any nanomaterial listed by the exchange an effective "Shut-down" procedure is already to be implemented on launch of the exchange to de-list (suspend) and unwind trade in the specific material. The de-listing or suspension of trade in a listed instrument or commodity is among defined procedures long-standing in the world of commodity and financial trading where formal wind-down practices are observed. The "Shut-down" premium to be levied on all transactions would as it stands act to provide trade interest with an incentive to cooperate and the levy itself could be dispersed directly by the exchange to compensate commercial interest, although it is recommended global insurers and official regulators act to disperse these funds and/or compensation payouts given their expertise in this area.
While all suppliers and downstream users of exchange listed nanomaterials will be permitted to trade using the exchange process anonymously where trade is reported in broker nominee listing particulars of price, commodity, volume and time of trade etc., provision to enable full disclosure of the identity of any counterparty to a trade will be made available if required in law. These are standard commodity exchange practices and features used across all the worlds major raw materials markets where anonymous nominee trade reporting is a compulsory feature to enable true price discovery and the safeguarding of customer confidences. INSCX will adopt these procedures as standard. By this is referred the fact that all trades executed on INSCX exchange will adopt formal commodity exchange reporting procedures while Downstream Audit Sequencing will be made compulsory on any supplier and/or downstream user of nanomaterials sourced from the exchange. The former trade reporting rule meets commercial "pricing and transparency" requirements, while the latter Downstream Audit Sequencing stipulation will provide options to official regulators as they attempt to square the dilemma concerning regulation.
Exchange records of all trade, both any initial procurement trade to source the respective raw nanomaterial in the first instance, and a means to trace downstream use through the supply-chain in any process or series of processes toward end application, product or device, can be made available to official regulators and insurance underwriting teams where necessary and ordered in law so as to facilitate a global suspension of supply and a recall of any product, application or device containing the nanomaterial in question. With industry cooperation on the part of nanomaterials suppliers and downstream users who elect to use the INSCX exchange process to allocate interest in a nanomaterial, (numbering or embedding all stages of the supply-chain to end product and/or device with the ID reference of the initial raw material trade, as opposed to labeling or "Brand-nano") this procedure of traceability can provide official regulators with an effective tool to reference a "Shut-down", with a focused clarity and global reach confident of securing essential industry cooperation.
The option to use the INSCX exchange process to enable greater adherence to nanomaterials (SHE) good industry practice while overcoming difficulties associated with industry cooperation in favour of product labeling or "Brand-nano" in addition to providing a practical methodology to trace where necessary to safeguard societal interests the dispersion of nanomaterials from source to end product, device or application, are initiatives taken by INSCX exchange as a means to balance commercial and societal interest equally.
The success or failure of any of the initiatives proposed depend on the nanomaterials industry recognising INSCX exchange as firstly a mechanic long used by now established materials and commodity markets to set in motion a structured path to sustained commercialisation, a mechanic now openly offered to the benefit of the nanomaterials industry, and secondly a means whereby pursuit of compliant commercial effort in nanomaterials can act to compliment the societal obligation of official regulators.
Equally the exchange process holds merit for official regulators opening up a clear route to achieving better regulation in the context of nanomaterials on a global scale by industry-wide consent whereby a self-regulatory process enacted by INSCX exchange and made compulsory on all market participants, effectively unites to strengthen ongoing efforts to structure official regulation. It remains therefore for both the nanomaterials industry and official regulators a choice whether to continue the drive to exploit commercial opportunity in nanomaterials furthering what has become a stand-off between either camp or to embrace the concept of a commodity exchange which historically has enabled industry to concentrate of commerce confident a mechanic exists to enable the fullest cooperation with the obligation of official regulators.
About INSCX exchange
INSCX is a formal patent-pending commodity exchange trading platform devoted to the trading of a wide range of nanomaterials to be launched in Europe and the United States during 2010 will global rollout to include Asia earmarked by early 2011. The Integrated Nano-Science and Commodity Exchange (INSCX exchange) will structure trade in accredited, compliant and validated nanomaterials, ranging from basic raw materials such as carbons and metal oxides, advanced materials/composites to high-end, processed goods such as photonics and programmable matter. INSCX is based in the United Kingdom and will have satellite operations in the United States and Asia. The aim of the exchange, which is supported by various companies, organisations from government in the United Kingdom, academia, the world of commodity trading and various fields of nanotechnology, is to be the focal point of the emerging world trade in nanomaterials providing tools to structure the organic growth of supply capacity in nanomaterials while affording buy-side interest in the diverse suite of materials assurance on quality, transparency and pricing in addition to enabling use of hedging, a risk management tool offering certainty, enabling organisations to lock-in future price exposure in nanomaterials and therefore more confidently focus investment on research, development and other capital expenditure.
Hedging is a means to overcome price volatility where excessive volatility proves unmanageable for many parts of the supply chain. The problem posed by excessive price volatility causes problems in emerging materials markets where no effective hedging technique exists. Across many sectors such as the Polymers industry, producers attempting to pass on rising prices are meeting resistance as the converters themselves are typically under pressure from consumers to maintain previously agreed prices. This means that converters are increasingly ‘squeezed’ in the middle, and supply chains, rather than the suppliers, are competing.
The opening of INSCX means that, for the first time, nanomaterials will be traded in the same way as basic commodities, where use of hedging techniques, price discovery, supplier trade financing, quality assurance and adherence to official regulations are practices of long standing. INSCX exchange means nanomaterials can now harness these commercial essentials with purchasers assured of quality and competitive prices, while suppliers will be provided a direct route to market, essential trade supports and flexibilities designed to engender organic growth from within. In equal measure official regulation agencies can be confident a formalised adherence to trade standards in the manufacture, use, application and exchange of nanomaterials exists by way of the INSCX exchange process to support effort to safeguard societal interest.
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Mr John Tolley
+ 44 (0) 161 408 7068 (Direct)
NanoCapital Markets (Stekram Markets)
INSCX Specialist Members
+ 44 (0) 203 137 5187
NanoTech Partnership (NTP)
Member, INSCX exchange
+ 44 (0) 1782 454 144
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