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Kenya Agricultural Commodities Exchange Goes Live Next February, Produce To Be Drawn From Kenya, Uganda & Rwanda

Kenya’s planned agricultural produce exchange is scheduled to go live in February next year, the Trade and Investment Ministry said in a disclosure.

The ministry said the Kenya National Multi Commodities Exchange (Komex) is scheduled to commence mock trading on January 29, 2024 and go live on February 26, 2024.

“The key objective of the Komex project is to provide regulated access to structured trading of multi-commodities, market information, domestic and international markets, trade finance, and trade support services for sector regulators and value chain actors (farmers/producers, aggregators, traders, consumers, and processors),” it said.

The commodities exchange will be an online marketplace where buyers and sellers can trade in commodities with an assurance of quality, delivery, and payment.

“The Exchange is committed to ensuring that the market is assisted with a modern market institution that will bring in much-needed integrity, by providing a guarantee mechanism, for the quality, quantity, and payment,” the ministry said.

“Further, it will make the market efficient by introducing standardised contracts and trading systems. The market will be a fully electronic market; will bring in transparency and empowering the farmers by disseminating market information in real-time to all market players,” it added.

 

Instruments at the exchange will include spot trading in commodities, with the introduction of derivatives trading in futures, options, and index trading later on.

Sectors will include agriculture, metals, minerals, and energy before diversifying into currencies and other asset classes.

The Komex will operate warehouses where farmers will deposit produce for storage pending a decision to sell when prices improve. Traders rarely deliver any physical commodities through a commodities exchange.

Instead, they trade futures contracts, where the parties agree to buy or sell a specific amount of the commodity at an agreed-upon price, regardless of what it currently trades at in the market at a predetermined expiration date.

Commodities exchanges used to operate similarly to stock exchanges, where players would trade on a trading floor for their brokers. However, all trading is now done electronically. While the commodities exchanges do still exist and have employees, their trading floors have been closed.

An initial work plan said the Komex would draw produce from Kenya, Uganda and Rwanda, which have signed co-operation agreements for 18 commodities.

Credit: Business Daily

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