Et

hiopi
aCommodi
tyExchange
Whati
sanExchange?
A neutr
alt
radi
ngsyst
em thatrel
iablyandeffi
cientl
yconnect
sbuyer
sandseller
s.A
meansofsetti
ngandenforci
ngallactorscanpar t
ici
pat
efair
lyandt
ranspar
entl
y.A
serv
icetot
hemarket:a3rdpartythattakesont heri
skfr
om bothsi
desofthetr
ade.

Whati
stheEt
hiopi
anCommodi
tyExchange(
ECX)
?

TheEthiopi
anCommodi tyExchange( ECX)i samar ketplaceestabl
ishedin2008to
provi
deat r
anspar
ent,efficient
,andreli
ableplatf
or mf ortr
adingagricul
tur
al
commodi ti
esinEt
hiopia.It'
sapubl i
c-pr
ivatepartnership,wit
hthegov ernmentof
Ethi
opia,pr
ivat
esectoract ors,
andotherst akeholdersinvolv
edinitsmanagementand
operat
ion.TheECXist hef i
rstorgani
zedexchangeofi tskindinEthiopi
aandapioneer
i
nEastAf ri
ca.

Hi
stor
yoft
heEt
hiopi
aCommodi
tyExchange
ECXwasest abli
shedi n2008,whichmakesi toneoft henewestglobalcommodity
exchanges.I
twasor ganizedasapr ivatecompany ,buttheownershi
pconsist
sof
marketactor
s, exchThepr ocl
amationt hatestabli
shedtheECX( No.550/2007)
mandatestheECXt osetoutit
sownr ulesforself
-gover
nanceofitsvar
iousoperat
ions.
Atthesamet ime, proclamati
onNo.551/2007est abli
shedanout si
deregul
ator
ybody
fortheECX–t heEt hiopiaCommodi tyExchangeAut hori
ty(ECEA)Thedriv
ingfor
ce
behindthecr
eat i
onofECXwasi t
sf ormerCEO, Et
hiopi
aneconomi st

DrEl
eni
ZaudeGabr
e-Madhi
n

WhyEt
hiopi
aCommodi
tyExchange?
BecauseTher
eisapr
obl
em……

Hi
ghcont
ractDef
aul
t

Unr
eli
abl
eSuppl
y:

Vol
ati
l
ePr
ice;
-
pri
cedr
amat
ical
l
yFl
uct
uat
ing;

PoorQual
i
ty:
Ther
ewasnotgr
adi
ngsy
stem

Unr
eli
abl
eTr
adi
ngPar
tner
s:-Unt
rust
edwor
thy
PoorI
nfor
mat
ion'
s;

Unr
egul
atedAct
ors:

Uncoor
dinat
edMar
ket
s;

Hi
ghcost
sand

Hi
ghRi
sks;-Suppl
i
ers/f
armer
sgi
vest
hei
rcommodi
ti
esf
orunknownr
ecei
ver
,pay
ment
mayaf
termonthslat
er

HowDoTr
ader
sCommuni
cat
e?
Tr ader
sontheECXusehandsi gnalstoconveyt heirint
enti
ons.Atraderf
ir
stannounces
thecommodi tyandthenthequant i
ty.I
fthetraderwi shestobuythecommodi t
y,t
he
tradertur
nsthepalm ofhis/
herhandt owardhis/ herface.
Ifthetr
aderwishestosell
the
commodi ty,
thetradertur
nshis/herpalm awayfr om theface.Thecombinati
onofhand
signalsandvocal
izati
oncreatesasy st
em forcommuni cati
ngbetweent r
aders.

Bef
oreECXEst
abl
i
shedagr
icul
tur
almar
ketst
ruct
urei
nEt
hiopi
a
St
ruct
urewi
thExchange(
Aft
erECXest
abl
i
shed

TheEthiopiaCommodi tyExchange,orECX, i
samar ket
place,wherebuy ersandsel l
ers
comet ogethertotr
ade,assuredofquality
,deli
veryandpay ment.ECXt radingwi l
lcover
si
xt ar
getcommodi ti
es,selectedint
ermsoft heirimport
ancet oeit
her: coffee,sesame,
peabean, t
eff,wheat,
andmai ze.Together,t
heyr epr
esentroughl
yat otalvalueofUS$1
bi
ll
ionofphy si
caltr
ade.Thef i
rstofi
tskindinEthiopi
a,ECXi sanationalmul ti
-
commodi tyexchangethat

•provi
desmarketi
ntegr
it
y,byguarant
eei
ngtheproductgradeandquant
it
yand
operat
ingasy
stem ofdail
yclear
ingandset
tl
ingofcontr
acts

•enhancesmarketef
fi
ciencybyoper
ati
ngatr
adi
ngsyst
em wherebuyer
sandsel
l
ers
cancoordi
nat
einaseaml esswayonthebasi
sofst
andar
dizedcont
ract
s•

.
enabl
esmar
kett
ranspar
encybydi
ssemi
nat
ingmar
keti
nfor
mat
ioni
nreal
timet
oal
l
mar
ketpl
ayer
s,andal
l
owsr
iskmanagementbyof
fer
ingcont
ract
sforf
utur
edel
i
ver
y,
pr
ovi
dingsel
l
ersandbuy
ersawayt
ohedgeagai
nstpr
icer
isk.

Howi
twor
k
ECXai
mst opr
ovi
deal ow-
cost
,securemarket
placet
obenefi
tall
par
ti
cipant
s.Fi
rstand
for
emost
,ECXguarant
eesthei
ntegri
tyoft
heproduct
.Tr
adingisont
hebasisof

warehouserecei
ptsissuedbyECXoperat
edwar ehousesthroughoutthecount
ry,wher
e
commodi t
iesaregraded,wei
ghed,
andcerti
fi
ed.ECXguar anteesthegradi
ngofthe
commodi t
iesandmai ntai
nsacent
ral
regi
stryofwarehouser ecei
pts.

ECXpr
ovidesstandardi
zedECXcommodi t
ybasedcontract
s,whichspeci
fygrade,
del
i
ver
ylocati
on,lotsi
ze,andot
hercont
ractt
erms.Thecontr
actswil
lbeeitherfor
i
mmediatedel
iveryoratapre-
speci
fi
eddatei
nthefutur
e.

TheECXt r
adingsy st
em combinesaphy si
cal t
radingf l
oorlocatedinAddisAbaba,
wher ebuyersandsellersmayparti
cipat
ein“ openout cry”biddi
ngforcommodi ties,
wit
h
electr
onicremot eaccesstothetr
adingsystem.Mar ketpricesareconstant
lychanging
throughoutTradinghoursandaretransmit
tedi nreal t
imet oproducersandconsumer s
direct
lyusi
ngel ect
ronicpr
iceti
ckersinrur
al areas,aswel laswebsiteandmedi a.

ECXguaranteespay mentagainstdeli
verythroughani nt
ernalsystem f
orcl
earingand
sett
lementofcontracts,i
ncoll
aborati
onwi thpartnerbanks.Everytr
adingday,ECX
cl
earsthenetobli
gat i
onsofallofthemar ketpartici
pant
sandt ransmit
sordersto
part
nerbanksandwar ehousestosettl
etransactionsthr
ought r
ansferr
ingfundsinone
dir
ecti
onandwar ehouser ecei
ptsi
nt heotherdirecti
on.

ECXpr ovidesaddi
ti
onal l
ayersofsecur
it
ythroughoperat
inganAr bi
tr
ati
onTribunalwit
h
l
icensedar bi
tr
ator
stoassur ethespeedyandprofessi
onalresol
uti
onofanycommer ci
al
disputesthatmayarise.Addit
ional
ly
,ECXmai nt
ainsasystem ofmarketsur
veil
lance
wher eexpert
smoni t
orthebehav i
orofmarketactor
stoprotectthemarketf
rom

mani
pul
ati
on,
excessi
vespecul
ati
on,
fraud,
orot
hermal
pract
ice.

I
mpor
tanceofEt
hiopi
aCommodi
tyExchange
ECXbr
ingor
dert
hrough

anor
gani
zedt
radi
ngpl
atf
orm

f
ormal
rul
esandpr
ocedur
es
st
andar
dizedcont
ract
sandst
andar
dizedpr
oduct
s

asy
stem ofMember
shi
pbasedpar
ti
cipat
ion

moni
tor
ingandenf
orcementofcompl
i
ancet
other
ules

managi
ngr
iskst
othemar
ket