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Presented by INSCX exchange Board of Governors members, Professor Graham Rogerson, Head of School of Computing and Mathematics, Keele University, United Kingdom and Professor Yuli Kaplonov, Brunel University, Honorary Professor, Saratov State University, Russian Federation.
We are pleased to have been invited to address the audience today and our thanks are extended to the organisers. We are intent on discussing a central issue in the commercial debate concerning nanotechnology and that is the application of an effective market mechanism as a support to the ongoing efforts at delivering sustainable, but yet compliant commercialisation. INSCX exchange should be understood as a project centred on delivering what we regard as a vital missing link, demonstrated time and time again as being vital to commercialise any sector of commercial activity.
Some of you may not appreciate what we are talking about or indeed understand the very concept. This position is not uncommon in many instances of commercial endeavour and not exclusive by any means to nanotechnology. Before continuing we stress two issues, the first being that we at INSCX exchange believe in nanotechnology and aim to support its effort at compliant commercialization to the best of our collective ability. The second is that we reflect the cold realities of the business world, where proof of result equates to everything. The potential inherent in nanotechnology opens for all of us an opportunity, but yet a shared, collective responsibility.
Potential alone does not and in our mind cannot ensure sustained commercialisation. In this we should be clear. Success in any business sector is dependant on the principals of hard work, thrift and the deliverance of clarity. We make no apologies for stating our view that the effort to commercialise nanotechnology has thus far failed to deliver. Nanotechnology has not changed the world, rather has spent a great deal of money over the last decade discussing how it will, as if change will somehow automatically occur as a birthright. Meanwhile nanotechnology today we find presented at the commercial front end as a something that delivers trinket applications into the consumer marketplace which detract from its obvious potential.
This exchange recently attended a discussion in London focused on aspects of commercialisation pertaining to the matter of insurance where nanotechnology was presented as something delivering a better tennis racket or a self cleaning shirt, where a contribution from a toxicology perspective maintained that "you could never plan for an accident" despite the whole purpose of insurance being related to pricing in the risk of an accident.
Not a mention was made of nanotechnology beyond the contribution cited by this exchange for what nanotechnology is; a multidisciplinary method to deliver advances in engineering, science, medicine, computing or the environment, or any focus directed to what nanotechnology had to do for itself to become insurable in the first place. Rather nanotechnology was simply presented as unique, wonderful if not just a complicated extension of chemistry delivering a better tennis racket and a few new technologies into the proverbial bargain.
The industrial revolution promised by nanotechnology we hope very much will extend beyond simply enabling a generation of faster tennis players, self-cleaning shirts and other trinkets and be presented with a mettle to present nanotechnology for what it is can truly deliver to benefit society. Each of us here today should regard these examples at presenting a commercial face for nanotechnology based on novel trinkets as derogatory. That is not to slight the game of tennis or regard a self-cleaning garment as being of no use, but rather to point up the fact nanotechnology should busy itself with organising itself effectively to deliver its true potential. In this undertaking we all share a collective responsibility to balance the exploitation of opportunity with societal and environmental interest. We should realise the issue of safety is also a commercial interest and not a matter solely a concern for the consumer and official regulation agencies.
Long-tail risk as witnessed by the consequence of asbestos cannot and should not be permitted a risk we as an industry can take for the commercial world today is littered with examples where attempts to cut corners have resulted in the engagement of protracted litigation. Nanotechnology does not need to cut corners, nor worry that good regulation will restrict commercial opportunity nor the mind of the inventor. Rather we should embrace the concept of self-regulation supported by official regulation. We appeal to official regulation agencies to work with us as a stand-alone industry to carve out the regulation necessary to enable nanotechnology to help as opposed to hinder society. In that we underline there is no one brand of nanotechnology, it is not just an exclusive chemistry, or something that can be placed in a convenient economic or sector pigeon hole.
Nanotechnology is a stand alone industry, multi-disciplinary and the regulatory approach should be guided by a continuous appreciation of this multi-disciplinary character where interaction between the various disciplines and official regulators will prove an ongoing affair. As an industry we are not in the business of dominance, and existing business has nothing to fear from enlightening itself to its opportunity to integrate. As a community we in nanotechnology should stand ready to engage. The fact we are commercially small is of no consequence nor is this a disadvantage as solutions and resources are available to us provided we open our minds to collective engagement. The consumer is welcome to engage with us for our commercial success depends on the consumer ultimately in the short, medium to long run.
We move now to focus on certain commercial realities.
The following comment was attributed to the CEO of Ford Motor Company in response to questions as to why Ford had yet to make use of advanced materials including engineered nanomaterials to any great extent throughout their business model. In response, CEO Alan Mulally maintained; "We cannot make a business case for composites in the auto industry," Citing the work left to be done on producing better steel and alloys for use in a practical commercial context, Mulally went on to suggest; "Getting enough composites to meet a volume maker's needs and the sheer cost of production nixes the prospect for now."
This response from one of the worlds leading automobile manufacturers was in reference to commercial limitations faced by business seeking to make a practical use of many advanced materials including engineered nanomaterials and rests at the heart of the dilemma concerning the commercialisation of nanomaterials. The observation can in many instances be assumed to reflect a view that in many cases, a practical commercial use of these materials cannot be effectively priced into the supply-chain to deliver an end product for resale within margin limitations faced by the general as opposed to high end auto industry. While business noted the potential benefits to associate with these materials, and can be assumed to retain interest in exploiting their use, concerns as to their availability, lack of independent quality inspection, limited trade transparency and flexibility, and in many cases, doubts with regard to safety, appear to restrict the development of a wider commercial uptake.
The Commercial Case
The following suggestions were cited recently from a report compiled by Nina Horne, titled Facing New Challenges: EU-U.S. Nanotechnology Cooperation and Harmonization to Solve Global Energy and Environmental Problems. Nina is an invited Expert to the OECD Working Party for Manufactured Nanomaterials (WPNM.)
Her observations suggested as being needed to further commercialization the following;
1. A rudimentary 1st-order economic analysis points to a very clear set of policy shifts that can be easily implemented within the existing regulatory structures to improve efficiencies and reduce consumer, worker, and environmental risks today.
2. Bolstering the weakening U.S. insurance market for nanotechnology is a critical first step in ensuring the continued growth of the emerging market while providing a safe and responsible development of novel materials. The creation of a separate global risk market can provide an added incentive for continued innovation.
She concluded; "Both of these options provide significant benefits at essentially no costs."
Nanotechnology in a commercial context has yet to deliver for itself either of these recommendations. While much work has been completed with regard to assessing safety and regulation, likely as is the case in any field to be an ongoing affair, nanotechnology has done little to establish for itself an effective market to structure the allocation of its raw materials base effectively. To sustain any endeavor the raw materials base underpinning any commercial activity needs to operate allocations efficiently whilst engaging mechanisms to sustain the organic, and more importantly autonomous, independent growth of its participants. The genius in nanotechnology is not the well financed multi-national of late entering the fray, but rather the small, often isolated inventors and small cash strapped concerns who are struggling to gain commercial traction. Unless we move to support and enable these participants to grow, nanotechnology will stand still.
This structuring of the raw nanomaterials base, and the enabling of supports to the inventors in nanotechnology rests at the very heart of the INSCX exchange project. INSCX itself should be understood for what it is. INSCX is a commodity marketplace dedicated to nanomaterials, as the Chicago Mercantile Exchange is dedicated to metals, oils, energy, agriculture, foodstuffs, capacities and so forth, where all regardless of financial resource can engage on equal terms. The market is an open forum with agreed rules. It does not dominate, nor need to dominate. It is not controlled by one sector but by the application of supply versus demand. The open market enables interaction, in many cases drives it.
Its relevance to nanomaterials rests in the history of the original industrial revolution as the commodity exchange mechanic which acted then as a driver for growth in the worlds ability to structure the allocation of the essential metals, resources and foodstuffs society required in addition to enabling the engagement of buy interest, capital support flows in investment, insurance and logistics that acted to power the first industrial revolution. Just as we today need to allocate the use of nanomaterials, or to enable supply capacity growth, provide a venue to interact with buy side interest, the wheat farmer, metals producer, livestock merchant, garment manufacturer, and so forth faced exactly the same questions as they struggled to gain commercial traction. Furthermore, just as the past faced the difficulty of regulation against the backdrop of an explosion in innovation, of chronic supply bottlenecks and displacement, we in the context of nanomaterials face similar, albeit unique challenges.
What are we trying to sell, what resources do we require to make it, who do we want to use it, how can we enable them to be in a position to use what we provide, and how do we regulate the entire process balancing societal and commercial interest?
Nanotechnology is attempting to find answers without employing the medium of the open market to help. We say on the one hand that we can replace steel, but yet refuse to employ the methodology where steel is allocated between the competing interests of a buyer, seller or capital investor. We say we want regulators to regulate, but yet we cannot prove to regulators what is agreed in the trade to be presented as a basis upon which to enact regulation by industry consent. We maintain we want buyers for nanomaterials, but yet cannot provide assurance on price stability, openness, transparency, supply guarantee, independent quality assurance, pricing insurance, commercial insurance or contingency insurance to account for a possible future accident. We appeal for private investment but to date every single public listing of stock relating to a nanotechnology investment has failed to deliver an appreciative return for its subscribers. Are none of us asking why? Why in an industry holding so much potential are we failing to deliver? Are we expecting national governments to provide the answers bearing in mind national governments tend to encourage as oppose to direct the business world.
Meanwhile small nanomaterials suppliers are facing cash shortages and being told they can expect to be regulated by agencies which admit on their own account they are unsure as to what needs regulating. How will these small producers fund access to the business of Health & Safety? How will nanomaterials prove a factual value to enable interaction with the global investment and insurance industries? How can use of nanomaterials be priced in?
What we at INSCX are saying is; Are we blind to the obvious? Are we so focused on futurism that we cannot see what will be necessary to get first generation nanotechnology out the door? We can state categorically that investors, insurers, regulators and consumer groups want to engage with us as an industry. People are not blind to the benefits of nanotechnology, it is we ourselves that are blind to what we need as an industry to put in place before these essential elements can engage. When we take stock of the opportunity presented to all of us, to the hard work that has been put in dealing with the many complexities, we owe it to ourselves, to society to business to enable nanotechnology to deliver.
Ask ourselves how the first industrial revolution happened, before we lay claim to creating a second. What drove the first industrial revolution? National governments, official regulation agencies or the small farmers, merchants, foundaries that organised themselves on their own account employing the simply mechanic of agreeing what was required, to what standard and to what price. The availability of invention, commonsense, opportunity and the application of logic drove the commercialisation witnessed in the developed world two centuries ago, not the civil servants, regulation agencies or those elements we in nanotechnology now look to as a "big-brother" for guidance and support. The first revolution was driven through application of the market process, as an enabler for interaction. That market process is the something we have yet to put in place for nanotechnology.
What we should appreciate is one very simple fact. Just as past commercial endeavor organised, so can we. Instead of meeting on the banks of a river in Missouri as the wheat farmers and merchants did, or in a coffee shop as the insurers, commodity merchants and ship brokers did in a world where the concept of a telephone had not even been invented, we in nanotechnology have the advantage of instant communication and the internet. Organisation will commence when we effectively open our commercial minds, firmly believing the impossible to be possible. When we in future seek answers, ask ourselves for collectively there exists the intellect to answer.
Nanotechnology can and will deliver, and none of us present here today should permit frustration and despondency with the perceived lack of commercial progress thus far to cloud our opinion on that matter. All we need to do is organise in a manner where a neutral venue exists to enable each to their own to compete and interact. That venue in the context of nanomaterials is the commodity market, and the commodity market for nanomaterials is INSCX exchange.
National governments nor regulators did not create INSCX, that they will need it and use it to achieve their own objectives is beyond doubt. Rather INSCX owes its origins to the work of individuals who collectively understand what nanotechnology and business realities are, who have spent the last 4 years toiling without support to achieve for nanomaterials what the meeting in 1848 on the banks of the Missouri river in the United States did for the wheat and flour industry; namely the meeting of minds between buyer and seller.
What does INSCX need to prosper to support nanotechnology, to act as the commercial face of nanomaterials? The answer is not expensive advertising nor massive injection of state funding supports for all INSCX and nanotechnology needs to succeed is collective participation, namely the participation of the competing interests of buyer and seller of nanomaterials and the input of the inventor going forward. That ladies and gentlemen costs nothing but your willingness to engage.
When we arrive to address the issue of safety it is not suggested by us here at INSCX exchange as absolute that many advanced materials and nanomaterials in particular are unsafe or that producers are in some way irresponsible. These points need to be made perfectly clear given the continuing safety debate in the context of nanomaterials, and take account of the fact there are many loaded arguments presenting for a variety of reasons opposing the evolution of nanotechnology. We are here today to make observations simply to highlight key commercial limitations preventing wider uptake, effectively barriers to sustained commercialisation, as opposed to joining in a chorus of disapproval. It remains our opinion that nanotechnology will progress and deserves to progress given its undoubted potential in benefit to both commerce and society. Furthermore, this exchange will with the cooperation of the nanotechnology community act as the impartial driver.
What are the barriers to progress beyond the safety debate we refer to and are they unique to nanomaterials? The barriers are not unique and we must all accept this in light of factual evidence of the experience of other sectors for the same is true of many non-uniform raw materials such as in the case of the Polymer industry. The similarities between commercial difficulties faced by the Polymer industry and those facing nanomaterials today are striking and relate to the lack of a defined commercial framework to enable competing interests to interact and reflect on the existing commercial evolution of nanomaterials. For the polymers industry as is the case with nanomaterials, the commercial difficulty relates to another form of "insurance", what could be described as pricing insurance or Hedging.
The management of financial risk, in many ways, is not new to the plastics industry. Property insurance, for example, is a form of risk management as companies are covered from losses through plant fires and other liabilities through their insurance. Hedging is a different risk management tool but it also offers a similar level of certainty; enabling organisations to lock-in future prices and therefore more confidently focus investment on research, development and other capital expenditure. The intense price volatility that the (polymer) industry has suffered in recent years is starting to become unmanageable for many parts of the supply chain. 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.
Whilst the plastics industry supply chain grapples with these issues, the emergence of new world economies, such as China, and their demand for industrial raw materials is fundamentally changing the global balance of supply and demand. With these new market conditions, and with no indication of when they will end, the plastics industry desperately needs a long-term solution to the problem of price volatility. Can anyone appreciate the fact polymers in this commercial deficiency context could so easily be described as nanomaterials? We all should appreciate that it is not potential alone that ensures sustained commercial uptake, or the enabling of an effective supply-chain. Rather it is the commercial usefulness of potential that enables participation or interest to grow and the creation of an effective source to end product supply chain sequence that enables participation to become a reality. This can be assumed the import to conclude from assessment of the comments attributed to the US automobile supplier, Ford. Let us interpret in abstract the essential message along these lines as many companies responding in the context of advanced materials in this manner so to speak.
Can we use the potential, at the moment no? Are we interested in using these materials, Yes, but until we can actually make a commercial case we cannot do so.
The commercial case relates to supply assurance, safety, price and flexibility. While the insurance market has a vital role to play in terms of providing insurance against a safety risk, another mechanism has a role to play to enable the other form of pricing insurance, vital to drive increased commercial uptake.
The combination of enabling both "insurances" stands to dramatically alter the commercial sustainability and growth prospects for engineered nanomaterials.
Changing the Game
The final section of our report provides an insight into a particular commercial development holding a potential to alter the position favourably for competing interest in engineered nanomaterials, providing a focal point for interaction between trade buyer and seller, insurer and regulator to capital investor and interest group.
David Hwang of Lux Research in a webinar dated July, 2010 provided and assessment of four specific markets that are leading the commercialisation of one key nanomaterial MWCNTs (Multi-Walled Carbon nanotubes) comparing 2009 usage figures against projected 2020 material usage estimates.
His conclusions are cited below:
Sporting goods: 4 tons (2009) versus 270 tons (2020)
Aerospace/defense: less than 1 ton (2009) versus 67 tons (2020)
Wind turbines: 130 kg (2009) versus 253 tons (2020)
Automobile industry: 56 tons (2009) versus 2351 tons (2020)
Batteries: 67 tons (2009) versus 763 tons (2020)
The question must be asked: Are nanomaterials to be assumed commodities capable of being exchanged in observance of trade standards observed by other commodities such as metals, grains or products, or are nanomaterials wholly incapable of being traded in a standardised manner? More to the point, when we assess the projected growth in use, what mechanism have we in place to deliver this growth?
While at base level such as in the case of some 20 leading nanomaterials, certainly these can only be regarded as commodities used to further a secondary process of manufacture toward end application of product. The following circular recently released by the exchange is referred to in abstract summary explaining the relevance of the project.
An observation cited by one of the authors to a report issued by the think-tank Demos titled "Governing at the Nanoscale: People, policies and emerging technologies" cast some insight in justification for application of a market process;
"It is the public working in many economic sectors that will be affected by nanotechnology, all the way from direct science-based industries to all the areas in which the products of nanotechnology might be put to use, who will, by embracing or failing to embrace nano-enabled products and in their working practices, determine their economic impact. In any case I'd prefer to put the issue in a positive way; in our system, societal needs and desires are delivered through market mechanisms, so achieving consensus on what society wants from nanotechnology will as a by-product lead to the desired economic gains."
INSCX exchange came about in recognition of a deficiency inherent in the overall nanotechnology commercial end-point; the lack of a defined market mechanism structure to coordinate the interaction of competing interests (Upstream Supplier, Downstream User, capital investor, insurer, regulator and consumer) in the allocation of resource pertaining to raw nanomaterials, the base used to deliver nano-enabled products and applications. INSCX™ exchange (Integrated Nano-Science & Commodity Exchange) is a commodity exchange established to trade to defined commercial standards of a wide range of nanomaterials, source materials and other commodities.
Launching in Europe and the United States by 2010, the exchange will permit physical trade in accredited, compliant and validated nanomaterials, ranging from basic raw materials such as carbons and metal oxides, advanced and source materials, nano-enabled and traditional commodities (grains, metals, minerals and products) 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 endorsed by companies, organisations from government, academia, the world of commodity trading and various fields of nanotechnology, is to be the focal point of the emerging world trade in nanomaterials, a trade that will be crucial to continuing world prosperity in the 21st century. The opening of INSCX means that, for the first time, nanomaterials will be traded in the same way as basic commodities where purchasers will be assured of quality and competitive prices while suppliers will be provided with the financial tools and trade flexibilities needed to upscale to meet rising demand.
The rationale of INSCX is to empower nanomaterials on a par with existing established materials and commodities through provision of cost-effective tools to enable organic as opposed to leveraged growth. One key difficulty facing the nanomaterials industry has proven the distinct lack of access to impartial sources of capital to finance upscaling, concern as to transparency and regulation, the absence of uniformity in the specification of base reference materials in addition to there being limited efficiency at the point of trade in nanomaterials generally.
Other materials and commodity sectors we now regard as commonplace at some point in their commercial evolution all faced similar difficulties. For this reason the nanomaterials community should feel confident that solutions do exist which are practical and not self-serving. Traditional materials (Grains, metals, Oils etc.) have for example overcome many difficulties now faced by the nanomaterials industry using the commodity exchange process to address capital limitations, provide a self-regulatory observance to more universal material and financial trade standards while securing efficiency at the point of trade to deliver physical product to standards accepted by the buy-side.
It is the very absence of these commercial essentials in the context of nanomaterials that appears to inhibit their growth potential.
INSCX simply follows the historical support legacy of commodity exchanges established in the 19th century for metals, grains and oils by providing the nanomaterials industry with the tools necessary to increase the commercial usefulness of this broad suite of innovative materials. The origins of commodity exchanges are commercial not financial, first formed by metals foundries and grain farmers several centuries ago needing more efficient trade process capable of meeting increased societal demand for foodstuffs and base metals.
These commercial as opposed to financial origins guiding a commodity exchange remain with us today and underline the distinct difference between a commodity exchange and a financial market exchange.
INSCX will provide supplier access to trade finance, enable proprietary IP pertaining to any process of engineering a nanomaterial to be safeguarded while using the market process to develop commercial uptake, while also enabling accreditation to Nanomaterials (SHE) standard to be obtained by any supplier/downstream user of nanomaterials without accreditation posing a financial burden. Contracts will also incorporate standard ICC commercial terms and hopefully procedures to introduce a traceability mechanism supported by the levy of a Contingency "Shut-Down" premium on all exchange contracts can entice the insurance industry to consider extending coverage to account for a situation where nanomaterials can be indemnified on the basis that not all, if any will face the prospect of being banned.
These are all compliments toward the common objective, that being to enable both commerce and society to benefit from the emergence and sustainability of compliant nanomaterials, proving to potential users the observance of benchmark standards in supply/use quality, material quality and trade integrity.
Assurances to Buyers
From a buyer's perspective, buyers of nanomaterials will be assured as to material quality, price transparency and flexibility and guaranteed supply for any material traded via the INSCX exchange process. Industrial buyers of any raw material operate a tunnel vision mentality. They do not for example opt to ditch use of reliable raw materials in favour of mere potential. INSCX exchange is about transforming commercial potential to commercial fact satisfying the needs of industrial buyers. The standards introduced by INSCX are basic commercial standards demanded by the industrial scale buyer of any classification of raw materials. More buying of nanomaterials translates to sales revenue for nanomaterials suppliers. It is a simple but practical logic and our minds need to be collectively focused on that end. Without sales, revenue and a means to reinvest profit accrued for growth the entire SME nanomaterials sector faces commercial extinction and most certainly will surrender its autonomy. This we cannot permit to be the outcome of the wealth of innovative talent. Those nanomaterials suppliers who now rally around the INSCX exchange project will find in us a strategic partner interested in their growth as ours will depend on theirs and visa-versa.
Nanomaterials are relatively a new feature in a commercial context and much debate has centred on the issue of regulation. While various official organisations grapple with the issue of regulation, pertaining to reference materials, toxicology, registration and societal issues, nanobusiness seems content to play a "waiting-game" in essence hoping official "top-down" regulators get it right.
INSCX exchange is about developing a self-regulatory structure in the trade of nanomaterials continuing the route taken by now established traditional commodity markets, where participants (trade buyers and sellers) of various commodities came together to agree trade standards to be observed.
Self-regulation by definition has proven more effective that official "top-down" regulation as it enlists the willing consent of parties to commercial interest in a given material or commodity.
What is often "agreed in the trade" has traditionally formed the basis for a working official regulatory framework. By and large in the context of global trade, self-regulation has usually pre-empted and helps define a basis for working legislative regulation. With nanomaterials this tradition seems to be reversed with an over-reliance on official "top-down" efforts to enact regulation where there exists a skills-gap outside of organisations such as the OECD, European Union, US and other Nanoscale networks within many regulatory agencies.
Commercial Health & Safety
Health & Safety with nanomaterials has inherited many of the business culture aspects evident in the context of H&S provisions in the traditional world of late leading to a situation where almost every measure or certification programme is provided on a profit-basis beyond the financial resource ability of the target audience; namely SME nanomaterials suppliers.
Downstream users of nanomaterials, often large conglomerates are in a position to fund expensive Health & Safety programmes, but with noteable exception are not established manufacturers or engineers of nanomaterials, but users. While both upstream (SME nanomaterials manufacturers, toll processors, compounders etc) and Downstream users require audit inspection to an industry standard, SME nanomaterials suppliers cannot afford to bear the cost. Schemes that are introduced beyond their financial resource, however well intentioned are practically pointless.
INSCX exchange fully appreciates the SME status of nanomaterial suppliers and other Upstream inputs, and has devised a means where the cost of enrolling participants to accept as mandatory a graduation to involve undergoing (SHE) inspection audit does not pose a burden simply as a result of lack of financial resource. The system is referred to as the (SHE) Credits System.
(SHE) Credits System
INSCX exchange have negotiated a means whereby SME nanomaterials suppliers and users can qualify to use the trade process to fund achievement of nanomaterials (SHE) accreditation status provided by AssuredNano™. The scheme is endorsed by the world renowned Institute of Occupational Medicine and adopted as a benchmark ENS standard by INSCX exchange.
Full details of the SHE can be obtained accessing the link www.assurednano.eu
Using a process of applying a small transaction levy on the occasion of trade suppliers and users of nanomaterials can accumulate funds to cover the cost of (SHE) accreditation effectively removing financial cost as an obstacle to increasing industry adherence to a benchmark standard.
In addition to the (SHE) credits system, which in itself is a practical solution to SME nanobusiness acquiring a base EHS standard, INSCX will introduce a number of other measures designed to overcome "roadblocks" and other obvious obstacles to pursuit of compliant commercialisation. These are outlined subsequent.
In a response to repeated calls for the labeling of consumer products containing nanomaterials, which many observers in the commercial world regard as placing nano-enabled products at a perceived disadvantage to rival products, an effective "Brand-nano" as it were, INSCX will introduce a variety of measures to address the matter in addition to addressing the traceability issue.
As opposed to branding the sequencing of the initial trade ID number procuring raw nanomaterials via the exchange will introduce as mandatory on all users of the exchange the instruction to carry forward the Trade ID number through all the stages of the supply-chain. In the case of any device or a transistor for example, the end-product containing the item can simply incorporate this number perhaps on an end-product bar code or embed using RFID technology. The use of a number as opposed to "Brand-nano" option could find more acceptance with industry particiapants who fear labeling may perhaps somehow portray all "nano" as somehow "bad" or suspect.
A key concern expressed by authorities relates to a manner to effectively trace nanomaterials thoroughout the supply chain, a concern also held by commercial interests such as the insurance industry. While official regulation agencies continue to work toward introducing formal procedures to effect a traceability INSCX exchange have introduced the following Downstream Audit Sequencing and Shut-Down Contingency measure as standard. Use of the initial trade ID number generated at the point of raw nanomaterial supply via a trade executed on INSCX can be used as a reference for Downstream Audit Sequencing through the supply-chain process. An exchange rule will compel any supplier and/or downstream user procuring the raw material to carry forward or sequence this reference number providing a basis for reverse audit.
It is accepted occasion may in future arise where a societal concern compels regulators to order a ban or restriction on trade in a given nanomaterial. Given that any move to ban or restrict a material poses an financial risk to commercial parties engaged in its supply or use, and the very global nature of nanomaterials, INSCX propose the incorporation of a Shut-Down premium into all exchange contracts as a means to encourage global insurers to contemplate extending coverage to nanomaterials against such a contingency. Quite clearly without some safety-net incentive in place commercial interest faced with a move to ban in societal interest will be tempted to act to delay implementation of any ban or trade restriction. Equally, the implementation of such a measure by official regulators would face difficulty arising from the global nature of the industry. The "Shut-Down" approach offers two possibilities or options to both industry and international regulation agencies strengthened by the global reach of INSCX which will provide a live market access across Asian, European and North American time zones.
Use of "Shut-Down" premium levied on all trade through the exchange as a basis to build a contingency reserve to be dispersed at the discretion of official regulation agencies to help deal with a societal risk and/or to compensate commercial interest. The option of using the "Shut-Down" premium could also be used as a means to encourage insurance underwriters to write a contingency risk clause for nanomaterials. Added to the application of the Downstream Audit Sequencing compulsory on all members and customers of the exchange, the collective offering provides a basis to achieve several common objectives:
a) The extension of a safety-net to commercial interest in nanomaterials and the deployment of structured exchange practices to suspend trade in a specific nanomaterial.
b) The providing of financial incentive based on the law of probability as not all nanomaterials will face a ban or restriction to the insurance industry to act as a driver toward compliant commercialisation extending contingency coverage to include interest in nanomaterials.
c) The providing to official regulators of a reference basis on which to target an effective recall from end-product/device to source material on a global basis. Should societal risk be proven exchange records of all trade in the relevant nanomaterial will be made available for inspection.
This self-regulatory approach offers a basis to balance commercial and societal interest equally and can be used to make official "top-down" regulations more universally welcomed, effective and practical driving in essence a regulation by consent.
1. Trade Standards - INSCX offers the ability to provide potential buyers of nanomaterials the very same standards they demand of existing materials, namely price transparency, quality/supply assurance, commercial insurance and trade flexibility, the latter the ability to procure materials on a cash and forward basis. These benefits alone will prove central to increasing the commercial/industrial uptake of nanomaterials benefiting suppliers providing organic revenue growth supported using the exchange process to acquire trade finance to sustain upscaling in supply capacity.
2. Health & Safety Standards - INSCX exchange offers nanomaterials suppliers and downstream users of nanomaterials the ability to use the exchange process to become Nanomaterials (SHE) accredited without accreditation to this benchmark standard endorsed by the Institute of Occupational Medicine being a cost burden. Through definitive contractual agreements with the scheme's global provider, AssuredNano™ www.assurednano.eu, participation with INSCX exchange enables any supplier and downstream user to graduate toward full (SHE) accreditation without having to commit initial capital.
3. Regulation - INSCX exchange is a process to engender self-regulation within nanomaterials devised by commercial interests in the field enabling the wider industry to provide official regulatory bodies with a working template on which to base formal, legislative regulation. Participation means in effect the embodiment of a single but yet material specific industry voice to official bodies via an exchange mechanic. The rationale of INSCX is not concerned with profiting at the expense of members in helping coordinate material specific trade associations. Rather, the exchange will profit from increased trade activity in raw nanomaterials where the primary benefactor will be nanomaterials companies themselves. Rather INSCX is determined to provide practical, no-nonsense solutions. Nanoindustry needs to be able to deal with official regulators from a collective position of strength, INSCX provides the mechanic to do so with a clarity above and beyond a need for a tax along the way.
4. INSCX will provide a true assessment of the economic value of nanomaterials enabling the global investment community to value nanomaterials on a specific case by case basis using factual evidence of trade flows.
This abstract summarises the rationale for INSCX exchange; it is your market. Our suggestion is to the audience attending today that each and every one of you accept you are each welcome to exploit it.
Many thanks for listening.
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