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Sections Blog Commodity Exchange on the move | Commodity Exchange on the move |
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| Saturday, 21 June 2008 | |
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Trading on ECX is done exclusively by members or their authorized representatives who purchase a permanent and freely transferable trading right known as a membership seat. At the moment ECX has sold seats to 70 approved members drawn from the private sector such as exporters, domestic traders, processors, and cooperative unions engaged in the commodity business. Another 53 market actors are in the process of completing their application for membership. At the moment there are 25 active members trading in the ECX. "We started small. It was a soft launch,” says Dr. Eleni Z. Gabre-Madhin, CEO of ECX. However, Eleni said that in the past one month and a half they had proved that the ECX system was working. Both buyers and sellers are required to open a especial bank account at the Commercial Bank of Ethiopia (CBE) or the Dashen Bank, partners of ECX. Buyers should deposit a certain amount of money before the trading day and sellers are required to deploy commodities at the ECX store. The grain should meet the quality standards of ECX. ECX has set standards for the bags. The Ethiopian government provided 194 million birr to the ECX. The requirements for purchasing a membership seat include a valid trading or commercial license in the commodity business, financial net worth, training and certification examination, a refundable security deposit, and a membership seat price of 50,000 birr. Currently, ECX membership is made up of 3 cooperative unions, representing a total of 126,000 farmers, ten processing firms, including flour and food processing factories, four commercial farmers, one public enterprise and 42 private exporters and domestic companies, mainly Plcs. ECX offers two classes of membership: trading members who trade for themselves and intermediary members who also trade on behalf of clients. Anyone can access the ECX market as a client trading through an ECX member. ECX started operations with a warehouse located in Kality and just two weeks ago it opened another store in Adama (Nazareth), 98 km east of Addis Ababa. It plans to roll out more warehouses in Shashemene, and Nekemt. Each house is equipped with a grading laboratory and quality control specialists. The system checks the transaction within less than ten seconds and it will be displayed. “If the transaction has a problem it will be rejected within ten seconds. “ If the buyer does not have enough money or if there is a problem with the ID, simple errors will be corrected but if the case is serious it will be rejected,” Eleni said. ECX service include grading and storage of commodities, a system of electronic warehouse receipts, standardized contracts for trade on its “trading floor”, an internal clearing house for settlement of payment and transfer of warehouse receipts and broad dissemination of market prices. ECX has one electronic price display board in Ehil Berenda (grain market) in Addis Ababa. And they would soon put more in Adama, Shashemene and Awassa. Dr. Eleni told The Reporter that in addition to the electronic price display board ECX would use SMS to disseminate the prices of commodities. “We have already developed a software and a prototype. After a couple of months, members of ECX and clients would get the prices of commodities via SMS,” Eleni said. ECX market data dissemination system includes transmission of market prices on radio, television and electronic display board which will be rolled out in major market towns. ECX has developed a prototype of price dissemination through Inter-active Voice recognition (IVR) technology which is under testing. ECX plans to reach further into rural areas with electronic display boards transmitting market information to 200 woreda centers in the next 12 months. The ECX has been operating for one month and a half and it is moving on. “It was a very interesting period. We have demonstrated our system is efficient and reliable. We are providing the service we promised. The public has developed trust and we are getting more members and clients. We are pleased with the response of the trading community,” Eleni said. “We started with maize, wheat and white beans. But we want to scale up the system by adding more commodities such as coffee, teff, sorghum and oilseeds and opening new stores in major commercial towns” she said. The number of memebers is increasing. Ehil Berenda Grain Traders Association which has 400 members has decided to join the ECX. The Ehil Berenda and Mesalemia will converge. “We are excited by their decision to join us,” Eleni said. The WFP recently made its first grain purchase through the ECX. The WFP bought about 500 quintals of white beans from a cooperatives union in Mojdo town. The WFP would use the grain for food aid. The Addis Ababa Grain Millers Association which has 3000 members has applied for membership. "We have finished the paper work and they will soon join us,” Eleni said. However, everything was not as rosy as it looks. The ECX has faced several challenges. “One of the problems we faced is shortage in the supply of grains and the high price hike. And the policy measures taken to control the inflation has also an impact. Traders have fears to transport the grains to our warehouse,” Eleni said. The shortage in supply has an impact on the activity of ECX. However, Eleni said the shortage in supply had helped them handle the soft launch properly. She concluded by saying that, despite the challenges, ECX was growing. |
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