Ethiopian Commodity Exchange

ECX Citizen Charter.pdf

ECX Head Office

Al-Sam Tower 2, 3rd Floor

Lideta

Addis Ababa

Ethiopia

Tel: +251 11 554 7001

Fax: +251 11 554 7010

P.O.Box: 17341

ECX Head Office
Al-Sam Tower 2, 3rd Floor
Lideta
Addis Ababa
Ethiopia
Tel: +251 11 554 7001 Fax: +251 11 554 7010
www.ecx.com.et

How to be a member at ECX

The Ethiopian Commodity Exchange has two types of members, i.e Ordinary and Limited members. Both types of Memberships are currently closed. , Additional Ordinary or Limited Memberships will be available in the future so please continue to check the website.

ECX members are the core actors of the Exchange. A membership seat is a permanent and transferable right to trade on the Exchange. Members can be any individual, company, public enterprise, or cooperative that meet the membership requirements. Members enjoys the governance of ECX as they have the right to elect the 5 members of board of directors of ECX . Owners of membership seats, or Members, are required to follow the Rules of the Exchange and thus maintain the integrity of the ECX marketplace. Members are liable for the transactions they conduct through ECX.

ECX offers two types of membership:

Ordinary Members, whose membership seat is permanent and freely transferable, and who can trade in any commodity but in one trading position.
Limited Members, created to accommodate smaller actors, whose membership seat is limited to one year, to one commodity, and to one position (either buy only or sell only).these kind of members will not have the right to transfer the membership seat For each type of member, there are two classes of membership:
Trading Member (TM) trades only for his or her own account
Intermediary Member (IM) trades either on his or her own account and /or on behalf of Clients

Members may also appoint Authorized Representatives to trade or otherwise act on their behalf. An Authorized Representative is an individual employed as an agent or is staff of a Member.

Being Non -member direct trader (NMDT)

Having regard to the efficient operation of the Markets of the Exchange, The exchange may avail a trade access to non-member direct trader (NMDT)

NMDT are those traders, any individual, company, public enterprise, or cooperative that meet the NMDT requirements and who can directly trade at ECX platform without being represented by IM.

The following Three categories of NMDT are allowed

a. Small holder farmer

b. Supplier

c. Exporter

Non-member Direct Trader can only trade for himself and may trade as a Buy-only or as a Sell-only trader in transactions to be conducted at the Exchange.

Alike the members , The Non-member direct traders (NMDTs) will not have transferable right to trade on the Exchange and they can not trades on behalf of Clients or they will not involve in the governance of ECX .

NMDTS are required to follow the Rules of the Exchange and thus maintain the integrity of the ECX marketplace. NMDT are liable for the transactions they conduct through ECX.

Test

Ethiopia gains from establishing a competitive, efficient, and organized commodity exchange.

Price discovery - free markets price commodities best and consistently
Quality improvement through grading, standardization, and modern warehousing
Commercialization of smallholder agriculture is the core pillar of poverty reduction strategy
Need to capitalize on gains of recent rapid economic growth (past 3 years)
Large domestic market
Rapid export growth in key commodities
A better functioning domestic market is key to sustaining and scaling up growth

Traders, processors, and exporters benefit from the commodity exchange as it helps them to overcome problems they encounter in the unorganized market including:

High transaction costs and risks,
Poor quality with no standard grades,
Lack of transparent systems of price discovery,
Unreliable supply,
Volatile prices,
Low access to market information,
Counter party default risk due to unreliable trading partners,
Unregulated actors, etc

Impact of commodity exchange on consumers:

Price discovery
Low price volatility across seasons
Low price variations across regions
Good quality products with standard grades
Access to price information

Impact of commodity exchange of small holder livelihoods

Power and participation: farmers are better able to negotiate prices give market transparency
Quality: Farmers are able to get market premium for value added to the product (post-harvest handling)
Market access: farmers are not restricted or captive to local market as they can have access to national market
Risk management: farmers can lock in prices through futures contracts
Planning: Farmers can use futures prices for planting decisions

ECX offers Four Types of Membership:

Trading Member (TM) trades only his or her own account for ANY commodity as a buyer and seller too.
An Intermediary Member (IM) trades either on his or her own account or on behalf of Clients as a seller and a buyer.
Limited Trading Member (LTM) trades only his or her own account for ONE commodity as a buyer or a seller. Only valid for one year.
Limited Intermediary Member (LIM) trades either on his or her own account or on behalf of Clients for ONE commodity only as a seller. Only Valid for one year.

Every TM and IM Member is required to hold two settlement accounts (Pay-In and Pay-Out) with an ECX Designated Settlement Bank (please read Clearing and Settlement section) and to authorize Power of Attorney to the ECX Clearing House to issue Pay-In transfer instructions on his or her behalf. In case of LM’s, every member is required to have one settlement account on the buy or sell side. Those on the sell side as an LIM are required to have two accounts (one for them and the other for their clients) and LTM’s on the buy side need to have settlement account under the existing IM’s as a clearing account.

All Members must be recognized by the Ethiopian Commodity Exchange Authority to enable full integrity to be retained.

An Intermediary Member is required to hold separate settlement accounts for Client trading and is expected to maintain a system for reporting on payment to Clients. Intermediary Members are able to charge commission for their services in trading to a value not exceeding 2% of the trade that took place at that session.

All Members may also appoint Authorized Representatives to act on their behalf. An Authorized Representative is an individual employed as an agent or is staff of a Member. Authorized Representatives can include brokers, who trade on behalf of the Member on a commission basis, and agents, who represent a Member in the market. Authorized Representatives are required to obtain Exchange Actor recognition from the Authority along with a letter of appointment from the Member to act as an authorized representative.

At present Membership applications are only open for Limited Membership.

Limited Member

Limited Members are expected to be on one side of the trade either buy or sell and the financial requirement has been designed to fit the current actors.

Limited Trading Member (LTM)

A Limited Trading Member is a member who can only trade for his own account. Exporters, Consumer groups, cooperative unions and local coffee wholesalers can also fit in this model. The main features of the LTM are:

Joins as a buy or sell only Limited Trading Member
Has full access to the trading floor
Cannot trade for clients
Cannot clear their own buy trades
Can trade on one commodity only
Only valid for one year

Limited Intermediate Member (LIM)

A Limited Intermediate Member (LIM) can trade only for his own account as well as for clients. This is suitable for current Akrabis who also has other Akrabi clients.
The main features of LIM are:

Joins as a sell only Limited Member
Can only trade on one commodity
Can trade for self and client
Has full access to the trading floor
Can charge commission for service provided
Only valid for one year

BEING A CLIENT

A Client can be represented through an Intermediary Member or Sell Only Limited Intermediary Member. A client of IM has the opportunity to buy and sell all of commodities offered by the exchange. Client of SOLIM can only sell one type of commodity.