Ethiopia Commodity Exchange to launch online trading
October 27th, 2009 | by addis portal |The system, which will include futures trading, will come into operation in the second half of 2010 when 20 remote online trading centres are set up all over the country.
“Traders can buy or sell from their area using online trading center,” Solomon Edossa, chief technology officer at the ECX told Capital. According to Solomon, while the trading centres are called remote trading centre, they will be fully equipped with the technology and trained staff like the central trading centre. The new trading system will have 10,000 active traders, including ECX members and their clients.
The ECX’s chief technology officer explained that the new system is not limited in its trading capacity: “Due to the number of commodities currently being traded we have projected the number of traders, but if the number of commodities increases in the future the number of participants can increase.”
Solomon said that the online trading, which will be a 24 hour service, will save expense and time wasted by traveling to the centre to trade. According to the officer, in the future, ECX also has plans to facilitate trading from abroad for members who are out of the country.
The spot trading application system will eventually be fully replaced by a future trading application after the project is completed. The present spot trading system lacks some functions, like a trade matching engine and futures trading capability. But Solomon said initially both trading systems will be in place.
Currently, most exchange centres in the world are using the online technology. According to Solomon, the traders will be trained on the new system before it is introduced.
Future trading is trading on the future price of a commodity, while spot trading is based solely on the current price. Most commodity exchange centers in the world, such as the New York Coffee Auction, started with future trading, but ECX is the only one to initially limit itself to spot trading.
For the implementation of the new trading system, modern telecommunication technologies and power supply are essential. In the past week, the CEO of the Ethiopian Telecommunication Corporation, Amare Amsalu, held talks with the ECX about the contribution needed from the corporation to the project. Similar discussions are to be hold with the Ethiopian Electric Power Corporation, Solomon said.
The ECX is to tender a contract to install the new technology on credit from the International Development Association (IDA) as part of the government’s Rural Capacity Building project. The tender will open on November 30.
ECX is currently trading in coffee, sesame, wheat, maize, peas and haricot bean at the headquarters in Addis Ababa. Recently, it added two coffee trading centres in Awassa and Jimma.
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