- Kenya’s Komex exchange, launching on Feb 26, 2024, promises structured trading for multi-commodities.
- Online marketplace to offer guarantees of payment, quality, and delivery for both buyers and sellers.
- Komex plans to start with spot trading and later include futures, options, and index trading in agriculture, metals, mining, and energy sectors.
Kenya’s intended agricultural output exchange is expected to launch in February of the following year, according to a release from the Trade and Investment Ministry.
According to the government, the Kenya National Multi Commodities Exchange (Komex) is set to launch on February 26, 2024, after simulated trading begins on January 29, 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 operate as an online marketplace with guarantees of payment, quality, and delivery for both buyers and sellers.
“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 standardized contracts and trading systems. The market will be a fully electronic market; will bring in transparency and empower the farmers by disseminating market information in real time to all market players,” it added.
The exchange will first offer commodities spot trading, followed by the inclusion of futures, options, and index trading derivatives trading. Agriculture, metals, mining, and energy are the sectors that will be included before branching into other asset classes and currencies.
Farmers will be able to store their goods in these warehouses run by the Komex until they decide to sell it when prices rise. Rarely do traders use a commodities exchange to supply any actual goods.
Rather, they engage in the trading of futures contracts, in which the parties commit to the purchase or sale of a specified quantity of the commodity at a fixed price, irrespective of its actual market value at the contract’s prearranged expiry date.
In the past, participants on commodities exchanges would trade on a trading floor on behalf of their brokers, just like they did on stock markets. But these days, trade is conducted entirely online. The commodities exchanges have stopped their trading floors, despite the fact that they are still operational and employ people.
According to an original work plan, Kenya, Uganda, and Rwanda—three countries that have signed agreements to cooperate on eighteen commodities—would supply output to the Komex.