The Egyptian Exchange (EGX) has completed the feasibility study for the holding company that will be set up to manage the country’s first exchange market for industrial and agricultural commodities.
Informed sources told Daily News Egypt that the completion of the establishment of a private company for the commodity exchange will be within days.
The Ministry of Supply and the EGX will provide the capital, in addition to other parties and institutions of government that are now being negotiated. The company will take overall tasks related to the management of the commodity exchange, including the provision of trading systems, quotations, pricing and control mechanisms, risk management, and other tasks related to the management of a commodity exchange.
The sources told Daily News Egypt that an agreement between the Supply Ministry and the EGX set five conditions for accepting goods to be traded on the exchange. The commodity should be standardised, priceable, able to be stored, and have a large volume of trading by merchants and consumers, such as iron, cotton, and wheat.
This came on the sidelines of the opening session of trading on Sunday at the EGX headquarters, in the presence of Mohamed Farid, Chairperson of the EGX and Ali Moselhy, Ministry of Supply, Ibrahim Ashmawy, head of the Internal Trade Development Authority, and El Sayed El Kosayer, chairperson of the Agricultural Bank of Egypt.
Mohamed Farid, Chairperson of the EGX, said that the establishment of a commodity exchange for the present market aims to have an organised market for the storage of tradable goods. “it will provide a market that competes with regional and international stock exchanges,” he added.
Farid stressed the importance of the regulated market for the storable goods is an for pricing through the market mechanisms of supply and demand, and a mechanism for the rehabilitation of stores that will be used as qualified warehouses to deal in the stock market as well as data on the quantities offered and required.
Aly Moselhy, Minister of Supply and Internal Trade, said that the commodity exchange will provide some protection to small farmers by collecting, classifying and pricing their production, as well as providing transparency in the pricing process in a way that will increase the export capacity of small farmers’ products.
“The existence of an organised market for the circulation of goods enable the state to plan well for the needs of basic commodities,” he said, adding that there are 18 logistics zone in Egypt now.