Abstract
Purpose: The Ethiopian Commodity Exchange (ECX) was established to revolutionize Ethiopian agriculture and transform the economy through introducing a dynamic, efficient and transparent marketing system. Properly implemented and regulated, commodity exchanges can contribute greatly to the achievement of a country’s economic and developmental goals and strengthen the bargaining power of participants. Hence the overall objective of this study is to assess the trading practices and challenges of the newly established commodity exchange in Ethiopian. Design/Methodology/Approach: The study adopted a descriptive cross-sectional research design . Using a structured questionnaire survey by interviewing a sample of 80 randomly selected participants an analyzed using both descriptive and inferential data analysis techniques. F indings: The study found that practicing an open outcry and spot contract trading system. Results of the econometric-model analysis revealed that time of participation, limited membership seat, membership seat fee and occupation were found to be significant predictors that influence the choice of membership category. Result of the study also indicated that lack of adequate warehouses, grading and sampling system, higher penalty cost related to warehouse service, availability of in-store credit, higher membership seat fee and transaction cost, were found to be some of constraints that hinder participants from the smooth functioning of transactions in the exchange. Originality/value: This study is important especially to policymakers and development practitioners to make informed decisions in an effort to transform the economy through strengthening transparent marketing system in the country. In this regard, this study provides valuable information and evidence on the performance and challenges of ECX. Keywords: ECX, ECX participants, trading practice, quality grading system, market information system DOI: 10.7176/RJFA/11-17-04 Publication date: September 30 th 2020
Highlights
In the era of globalization, how the commodity market exchange is organized and coordinated is increasingly became a fundamental concern of all nations across the world
Primary data source was collected through employing questionnaire and key informant interviews in order to assess trading practices and to identify the main challenges of the Ethiopian commodity exchange participants
Brief Description of the Study Population As depicted below in table 1, about 85% of the respondents were male and only 15% were females. This shows that the major participants in the Ethiopian commodity exchange were dominantly male business owners
Summary
In the era of globalization, how the commodity market exchange is organized and coordinated is increasingly became a fundamental concern of all nations across the world. Linking buyers and sellers into the commodity market for the effective and efficient transactions among the participants is the most challenging task in most developing countries, as they lack the basic infrastructure for the exchange. In response to this and following market liberalization and increasingly affordable information technology since 1990, commodity exchanges have mushroomed around the world. Instruments (contracts) traded on commodity exchanges include futures, options and other derivatives. Trading in these instruments began with floor trading, called open outcry systems. Commodity futures markets help with price discovery and provide a way to hedge for producers and buyers of commodities (Thomas, 2008)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
