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GMBSLG 2000 : 2000 | LUBPDD3 870 : 0 | LUJM5B 650 : 0 | LUJM5C 490 : 30 | LUSD5B 600 : 50 | UBL6 1280 : 0 | UFRA9 1220 : 18 | UFRAUG 1210 : 20 | UHRA6 1480 : 10 | UHRA7 1400 : 20 | UHRB8 1270 : 70 | UHRB9 1210 : 40 | UJMA8 1225 : 15 | UJMA9 1205 : 15 | UJMB5 1310 : 20 | UJMB7 1280 : 10 | UJMB8 1230 : 10 | UJMB9 1215 : 15 | ULK5 1300 : 0 | ULK6 1280 : 0 | ULK7 1275 : 10 | USDE7 1245 : 120 | USUHRAUG 1200 : 1200 | RWPA5 1250 : 240 | WHGS2 4101 : 1 | WHGS3 4101 : 1 | WWSS4 3580 : 230 | WWSS5 3580 : 10 | WWSSUG 3490 : 90
Warehouse
Central Depository
Trading Operations
Clearing and settlement
Market Data
Risk Management
Compliance
 

ECX offers an integrated warehouse system from the receipt of commodities on the basis of industry accepted grades and standards for each traded commodity by type to the ultimate delivery. Commodities are deposited in warehouses operated by ECX in major surplus regions of the country. At the ECX warehouse, commodities are sampled, weighed and graded using state-of-the-art technology grading and weighing equipment. ECX warehouses issue an Electronic Goods Received Note and provide the depositor or his/her representative with a signed print copy. The Electronic Goods Received Notes are not negotiable, transferable or represent legal title to the deposited commodity. The depositor has to get Electronic Warehouse Receipt issued by the ECX Central Depository in order to establish legal title to the deposited commodity. The Deposited commodities are stored using global standards of inventory management which rely on First-In-First-Out principles, rotation, and careful environmental control. ECX Inventory Management system guarantees the quality and quantity of the commodity throughout the pre-determined period of storage. Further, ECX warehouses are insured at maximum coverage to protect against loss and damage of deposits.


Services

ECX warehouses provide the following services:

  • Sampling, Grading, weighing and certifying of the grain and coffee coming to each warehouse using equipment provided by ECX according to ECX established standards
  • Weighing, receiving and issuing Electronic Goods Received Note which matches ECX automated system
  • Recording system for incoming and out going grain and daily stock position reports
    Proper handling of the commodity at the warehouse (store layout stacking, bin no, inventory management)
  • Reporting system and formats for up-to-date information exchange between ECX and the area warehouses
  • Maintain the quality of received products.

    Location of ECX Warehouses

No

Location

Commodity Type

Capacity

Distance From Addis Ababa

Coffee

Grain

Quintals

KM

1

Addis Ababa(Saris)

x

 x

300,000

-

2

Dire Dawa

x

 

50,000

515

3

Nazareth

 

x

165,000

90

4

Bure

 

x

135,000

410

5

Nekempte

 

x

100,000

330

6

Humera

 

x

300,000

988

7

Hawassa

x

 

200,000

273

8

Jimma

x

 

170,000

346

9

Bedelle

x

 

50,000

580

10

Dilla

x

 

280,000

390

11

Gimbi

x

 

135,000

450

12

Gondar

 

x

200,000

738

13

Metema

 

x

240,000

888

14

Assossa

 

x

50,000

685

15

Sodo

x

 

110,000

329

16

Bonga

x

 

110,000

450

 


ECX maintains a Central Depository or Registry of warehouse receipts which guarantee product integrity. The Electronic Goods Received Note issued at an ECX warehouse is a precondition for issuance of Electronic Warehouse Receipt by the ECX Central Depository. The ECX Central Depository is the sole entity authorized to and responsible for issuing Electronic Warehouse Receipts, printing copies of receipts, transferring legal title, and canceling receipts. The Electronic Warehouse Receipt issued by the ECX Central Depository represents legal title to the deposited commodity. The Electronic Warehouse Receipt is transferable and negotiable on ECX through the function of the ECX Central Depository. The Central Depository maintains separate accounts for every depositor. ECX is currently working towards introducing the use of Electronic Warehouse Receipts for the purposes of securing collateral finance or also known as inventory financing in the near future.

The Exchange Central Depository provides the following services:

    * Create Electronic Warehouse Receipts;
    * Maintain and edit required electronic warehouse receipt data;
    * Maintain a register of Depositors;
    * Effect settlement of contracts traded on the Exchange by transferring Electronic Warehouse Receipts between holders;
    * Issue Delivery Notices after transfer of Electronic Warehouse Receipt;
    * Void or cancel Electronic Warehouse Receipts;
    * Reconcile records daily

 

Trading @ECX

The Ethiopia Commodity Exchange (ECX) is a spot exchange established in Addis Ababa, Ethiopia. More than 200 different spot contracts are traded by the ECX members or their authorized representatives through open outcry trading system.

The Trading Floor-

The trading floor is an octagonal area where open outcry trading takes place. Operating during regular business hours, the ECX trading floor holds various sessions for transacting different commodity contracts.

Trades are made in the pits by bidding or offering a price and quantity of contracts, depending on the intention to buy (bid) or sell (offer).

This is generally done by using a physical representation of a trader's intentions with his hands. If a trader wants to buy ten contracts of grade 1 of Jimma A, at a price of three hundred, for example, in the floor he would yell " Jimma A1 at three hundred” , stating grade before price, and turn his palm inward toward his face. If the trader wants to sell the same, he will yell the same quote, and show one hand with the palm facing outward. The combination of hand-signals and vocal representation between the way a trader expresses bids and offers is a protection against misinterpretation by other market participants

Trading system

Transaction orders for sales and purchases in standard lot sizes of standardized commodity grades (referred to as contracts) are recorded on Order Tickets. The ECX automated back office system ensures the existence and validity of the Warehouse Receipt backing the sale, the availability of buyer funds in a deposit account, and where applicable the validity of the Member-Client agreement. This automated reconciliation takes just minutes and is key to giving all market players confidence in the market.

Trading sessions-

 No.

Session Namexml:namespace prefix = o />

Days

Starts

Ends

1

Grains

Wednesday

9.00 AM

9.30 AM

2

Sesame

Daily

10.00 AM

11.00 AM

3

Local Coffee

Tuesday, Wednesday, Thursday

11.30 AM

12.30 PM

4

Export coffee

Daily

2.00 PM

6.00 PM

 

Clearing & Settlement

ECX’s zero default, fast and efficient Clearing and Settlement department assumes Central Counter Party (CCP) risk for all members trades. It establishes the net obligations of each member, informs the members of their daily net obligations and transfers cash funds and commodity ownership among members.

The Settlement Transactions

Balance Enquiry on Pay-in accounts (Locked for trading)
10:00 on the day of trading (for afternoon Trading)
15:30 on day before Trading (T-1)
Member Pay-In (to ECX)
08:00–09:00 next working day (T+1)
Member Pay-Out (from ECX)
11:00-12:00 next working day (T+1)


 Banks and Branches

Currently ECX is working with eleven settlement banks. These banks have dedicated ECX settlement team in their Head Office:

Commercial Bank of Ethiopia (CBE)
Dashen Bank S.C
Awash International Bank S.C
United Bank S.C
NIB International Bank S.C.
Wegagen Bank S.C.
Bank of Abyssinia S.C.
Oromia International Bank S.C.
Lion International Bank S.C.
Construction & Business Bank S.C.
Cooperative Bank of Oromia S.C.

All ECX accounts MUST be in a networked branch.

 

The ECX Market Data strategy involves harnessing the power of modern information and communication technologies (ICTs) to empower all market actors, including smallholder farmers to access markets more efficiently and profitably. The key market dissemination channels at ECX are rural based Market Information Tickers, mobile phone Short Messaging Service (SMS), Interactive Voice Response (IVR) service, Mass media (TV, Radio, Newspaper) and Website (www.ecx.com.et).
ECX collects, processes, updates and disseminates market information in real-time to all market actors and other market intermediaries through the MIS. Market information includes prices of commodities in different markets, and commodity offers to sell and bids to buy, as well as short extension messages.
The application of ICTs is taking the market to the door-step or farm-gate of the farmer, commodity dealers, processors , exporters and importers. The components of the ECX MIS are:

  • Electronic Tickers
  • Mobile Phone Short Messaging Service (SMS)
  • Interactive Voice Response (IVR) service
  • Bulletins – Market Commentary
  • Mass media (radio, TV, print)
  • Information Center

These components are briefly described below.

Tickers


ECX envisages disseminating its market information during on and off trading hours to 200 strategically selected regional market sites across Ethiopia. The ECX Electronic Displays are transmitting real time (under 4 seconds) prices of all commodities traded on its platform.
Currently, the electronic displays are operational in 21 locations Such as 6 Coffee sites: Addis Ababa, Nazareth, Shashemene, Awassa, Nekempte, Jimma, Dire Dawa, Harar, Gonder, Bahir Dar, Dessie and Mekelle.
ECX plans to rollout 200 tickers by end of 2002 E.C of which, 40 new tickers in crtical market sites by the end of this year.

The Mobile Phone SMS

SMS is text messages sent and received with mobile phones. ECX is harnessing this technology to disseminate market information and intelligence. ECX is the process of developing an SMS market information via Ethiopia’s mobile phone service provider. The SMS system will allow anyone from anywhere in the country where the mobile phone network exists can in easy steps access market prices, commodity related news headlines, weather forecasts, and other relevant market information. ECX plans to go live with the SMS service in September 2009.

The IVR System

The ECX Interactive Voice Response (IVR) system is a fully automated telephone based system that will allow stakeholders to access price information 24 hours a day, 7 days a week. Once it goes live, the IVR system may be accessed using mobile / wireless/ fixed line telephone networks which makes critical market price information within the reach of stakeholders located in all parts of the country. The IVR system features a voice menu that disseminates real –time and historical (up to 7 days) price information in Amharic, Oromiffa, Tigrigna, and English languages. ECX plans to go live with the IVR service in September 2009.

The Website

The ECX website (www.ecx.com.et) provides real time market data on all commodities traded. It also provides historical data, research, news, graphs, contract specifications and other key information.

Media (TV, Radio, and Newspaper):

ECX is disseminating market information on daily basis via radio, television and newspaper. Prices are disseminated in Amharic, Oromifa, Somali and English languages.

  • TV- ETV is transmitting ECX market updates three times a day (noon, afternoon and evening).
  • Radio –National Radio stations, FM Addis and regional FM radio stations are transmitting ECX market updates four times a day (morning, noon, afternoon, and evening)
  • Newspaper – daily, bi-weekly and weekly newspapers are publishing ECX market updates.

Market Intelligence

  • Market Bulletin - ECX provides a summary of price comparisons with local and international prices; analysis and market developments via its weekly market bulletin. The analysis includes graphs, commentary and research on international markets and commodities traded on its platform.
  • Market Hotline - ECX provides real time market information and updated international market prices for ECX members via a dedicated telephone line.
  • Info Center - ECX info center provides a variety of market information such as, daily domestic and international prices, market trends, production and weather forecast, market related news and events, etc.

 

 

ECX risk management systems are designed to support a spot market infrastructure, and manage risks at all times to protect its:

  • Members and general stakeholders
  • Employees
  • Business objectives
  • Quality of service delivery
  • Assets and property
  • Contractual and statutory obligations
  • Image and reputation


ECX risk management strategy does not only focus on risk avoidance but also the identification and management of an acceptable level of risk. ECX accepts risk in almost every activity it undertakes in pursuit of its business objectives, from membership acquisition to final delivery of commodities, and so senior management periodically defines its risk appetite against key drivers of success.

Some of the risks managed within ECX domain are:

  • Operational risks
  • Credit risks
  • Market risks
  • Liquidity risks
  • Reputation and image risks
  • Operational Risk

In ECX operational risk is the category with the widest diversity in terms of sophistication of practices and risk management effort. These are risk associated with ECX activities, processes and systems, and include deal entry errors, breakdown in trading processes, documentation failures, physical production and delivery of commodities. ECX has a specific approach for operational risk which includes assessing the likelihood and impact of the risk and mitigating.

Market Risk

ECX ensures that clearing members have daily allowable trade limits, and they can only trade within this limits.ECX has software in place to ensure that all clearing member’s transactions are assessed against their relevant limit, and reporting processes for limit breaches. ECX operates at a daily price limit to limit loses to investors from significant market movements.

Credit Risk

Credit risk arises when a clearing member fails to meet their payment obligation until a date in the future. ECX has policies requiring members to be approved before they trade; ensuring that they have pre-paid into their trading accounts. Credit risk due to shortfall in members account is mitigated by netting agreements and cash deposits in the form of settlement guarantee fund.

Liquidity Risk

ECX has strategy to measure and monitor the liquidity of settlement guarantee fund and to ensure that there are sufficient funds to meet clearing member’s transaction exposures. This is done by preparing scenario analysis over an appropriate timeframe of likely inflows and outflows of funds.

Reputation and image risk

ECX has a policy of openness, transparency and fairness to all stakeholders to ensure that its reputation or standing in the community is not diminished.ECX has strong communication and media team seeing to that. The selection of an appropriate risk management strategy to address each domain of risk is based on sound understanding of the underlying risk after a comprehensive assessment of the risk and a good sense of ECX appetite for risk. ECX risk appetite is periodically reviewed, defined and ratified by senior management.

ECX Surveillance operations

  • Trade Survillance

ECX believes that fairness of commodity trading and adequate protection for its members is essential for a quality market and prerequisite for price discovery.
The main activities of ECX market surveillance operations are to preserve the integrity of price discovery process by monitoring the market to detect and deter the following:

  • Market manipulation practices- an act by a market participant or a group to deceive in prices or volume of a commodity
    Insider trading – commodity trading made by ECX employee or affiliate based on insider information
  • Misstatement – Rumors or false information to mislead the public in making a commodity trading decision.
    ECX uses software models for generating real time price, volume, alerts for each clearing member’s unusual trade activities. The software has the ability to link transaction prices and trades volumes in each commodity traded in real time, and in the past and if there is unusual changes in trading pattern alert the market surveillance team .
    Market surveillance team investigates all unusual trading pattern and pass on evidence in a report to the ECX Compliance department for further action if there was sufficient evidence that the exchange’s rules have been bridged.

Warehouse surveillance
ECX also undertakes warehouse surveillance to minimize risk to the exchange and its members in sampling grading and storage of commodities
ECX warehouse surveillance will comprise the following elements:

  •   Verification and Sampling and grading process at all ECX warehouses 
  •   Spot  tests of sampling ,weighing process ,and the grading process 
  •   Spot tests at loading and unloading of commodities 
  •   Verification of laboratory tests on commodities 

 

 

The Compliance Division is responsible for formulating and enforcing the Rules of the Exchange and all other relevant laws affecting the operation of the Exchange. To achieve this broad objective, the Rules of the Exchange establish four separate units with specific mandates. These are: (1) Rules and Regulations; (2) Compliance Monitoring and Investigation; (3) Discipline and Enforcement; and (4) Arbitration Tribunal. The Compliance Division also serves the official liaison with all local and international regulatory bodies and provides overall legal counsel to divisions of the Exchange on the proper and sound operation of the Exchange.


Rules and Regulations Unit: The Rules and Regulations Unite (“RRU”) is responsible for the drafting of Rules of the Exchange; the research and analysis of regulatory issues requiring new rules and regulations; the amending of the existing rules based on feedbacks received from members, customers and other stakeholders; and the interpretation of the Rules of the Exchange.


Compliance Monitoring and Investigation Unit: The Compliance Monitoring and Investigation Unit (“CMIU”) is responsible for overseeing that compliance is maintained with the relevant law of the Exchange, Rules and policies of the Exchange, and Directives of the Ethiopia Commodities Exchange Authority at all levels the Exchange’s operations; conducting and coordinating investigations of violations of the Rules of the Exchange, the Authority’s Directive and other pertinent laws. The CMIU is also responsible for the reviewing of membership applications for compliance with the applicable laws of the Exchange and the Authority, the conducting of on-site Member visits, the inspection of Member books and accounts, and the monitoring and reviewing of Members’ annual and other regular compliance reports.


Discipline and Enforcement Unit: The Discipline and Enforcement Unit (“DEU”) is responsible for enforcing the Rules of Exchange and other pertinent laws through a disciplinary rules enforcement mechanism. The DEU works closely with the Authority and relevant law enforcement agencies to protect the integrity of the Exchange’s price discovery Mechanism as well.


Arbitration Tribunal: The Arbitration Unite (“ABU”) is responsible for facilitating the resolution of disputes between Members or Members and the Exchange during the course of trading at the Exchange. The Exchange has two types of alternative dispute resolution mechanisms: (1) Expert Determination: a grade dispute resolution mechanism for Quality disputes between the Exchange and its members, and (2) Trade disputes between members inter se, and between members and their clients