ECX move into regions, set to launch 7 more e-trading centers
- Trades 10 billion birr worth of commodities in six months
The Ethiopia Commodity Exchange (ECX) that introduced electronic trading platform last year said it had been commissioning three more e-trading centers in the regions which were set to be operational in three months’ time. Four e-trading centers are set to follow gradually.
Ermias Eshetu, CEO of ECX, told reporters on Friday that the central exchange had been deploying an effective electronic trading platform that had substituted some 89 percent of the open outcry trading method.
Mainstreamed since last fiscal year, the e-trading platform has enabled the ECX to trade 246,752 metric tons of commodities, mainly coffee and white beans. In addition to that, sesame, maize, wheat, mung bean and red bean have contributed to achieving the targets set during the first half of the current fiscal year. According to Ermias, the volume the exchange traded in the stated period had a value of 10.108 billion birr.
Ermias and his strategic officer Haile Michael Hailu noted that the volume of traded commodities had shown a six percent decline from the same period last fiscal year. The exchange, however, was able to achieve 96 percent of the targets set for the volumes traded. On the other end, the value of trade has shown an increase of 19 million birr with a 94 percent of achievement set for the half year target.
Ermias recalled that last year had set a record high performance both in volume and value. From 632,000 metric tons of traded commodities, the ECX was able to transact some 23 billion birr. This year due to the late harvest season, commodities joined the exchange late and more fair outcomes were expected at the end of the fiscal year, Ermias claims.
Launching an e-trading center at the Addis Ababa platform that still is in the process of switching from the open outcry trading method, the new centers the ECX is set to introduce to the commodity exchange business are located in Hawassa, Nekempt and Humera towns. The remaining four centers are expected to be launched in Jimma, Adama, Gondar and Kombolcha towns of the Oromia and Amhara regional states.
The introduction of e-trading centers, on which the ECX is spending some 30 to 40 million birr each, is hoped to limit price fixing activities, reduce misconducts and misbehaviors of actors and traders. Moreover, the electronic system has been lauded for reducing settlement, clearance errors and compliance issues. For that reason, the ECX has trained some 760 traders to familiarize them with the new mechanism.
During the presser, Ermias and Behailu Nigussie, chief operations officer, indicated that a price range mechanism, focused on the price range of coffee between the local and international markets, was on the table to be reinstated. The price range which served to narrow the market price gaps was halted since 2012.
An increasing trend of contraband, quality compromise through bribing cuppers while grading commodities are some of the severe criticisms the ECX chief had to address during his presser. Despite the claims, Ermias argues that each day a 200 million birr transaction was conducted without any significant hurdle. In addition to that, he said, the exchange had been able to maintain zero-default rates.