Ghana Commodity Exchange Market Must Have Strong Legal Backing

Members of the Ghana Securities Industries Association (GSIA), have said there should be full enforcement of a robust regulatory and legal framework to stimulate trading and participation of all market actors on the Ghana Commodity Exchange (GCX), when it becomes operational.

They made the suggestion when the GCX Project team met with members of the GSIA at an Awareness and Sensitisation programme, organised by the Ministry of Trade and Industry, in Accra, a release copied to the GNA, on Thursday, by the GCX Project has said.

The GCX Project is a Public-Private-Partnership (PPP) initiative designed to transform Ghana’s Agricultural sector through the establishment of the first modern commodity exchange in the country. 

It is the first of its kind in the West African Sub-region and is expected to become operational by late 2016.

GSIA is the umbrella body for all brokerage firms in the country.

The meeting was used to update stakeholders on the commodity value chain of the status of the operations of the Project and also to share information on the Membership Structure and Recruitment Design and opportunities open to market actors when GCX becomes operational.

Mr. Robert Dowuona Owoo, the Acting Project Director, who led discussions at the programme, explained that the objective of the GCX was to transform the lives of Ghanaians, especially those who participated in the agriculture value chain.

He announced that a concept of partial mandating was being explored to ensure that the Exchange had the needed volumes so as to make trading attractive to its members.

Mr. Owoo said the partial mandating concept would encourage sustained active participation of market actors on the Exchange, allowing the Regulator from time to time to require that certain commodities or volumes of commodities be traded on an Exchange.

“This policy, if adopted, would also compel institutions that made purchases of huge volumes of all commodities of the quality that GCX will trade in the future, to be executed on the Exchange through Brokers,” he said.

Making a presentation on the Membership Structure and Requirements Design for the GCX, Mr. Richard Ankrah, the Membership Manager of the GCX, explained that there were five categories of membership namely: “Institutional, Trading, Brokering, Clearing and Associate”.

He explained that the categorisation of the membership structure had been done to enable all market actors to participate in GCX activities through any category as part of the all-inclusiveness policy of the Exchange.

Mr Ankrah said the participation by Brokerage firms on the Exchange would afford them the opportunity to increase their clientele in terms of access to aggregators, farmers, traders and processors.

It would also facilitate the process of trade, which would enable them to execute orders to buy or sell commodity contracts on behalf of clients and charging a commission.

He said becoming members also afforded opportunity to own propriety rights to membership seats in the trading pit, which could increase in value over time, thereby making it possible for broking members to also trade on their own accounts to make profits.

Mr Ankrah urged representatives of the Brokerage firms to consider investment opportunities in other areas of the GCX eco-system.

The sensitisation exercise also afforded the stockbrokers the platform to know more about the regulatory and policy environment to ensure successful operations of the Exchange, the opportunities for auxiliary services in the transportation, logistics, haulage and warehousing continuum of the eco-system.

It would also make them aware of the technological infrastructure to be deployed and protocols or policy on standards and grading of commodities to be traded in among other concerns.

The Participants stated their willingness to participate in a similar sensitisation engagement on the Central Depository and Clearing and Settlement models of the GCX.

Source: GNA