AHCX Model

A Malawian Commodities Exchange

AHCX will be a marketplace where buyers and sellers can transact trade of commodities with a assurance on quality, delivery and payment. The Exchange is committed to ensure 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 payments. Further it will make the, market efficient, by introducing standardized contracts and trading systems. The market will be a fully electronic market, bring in transparency and empowering the farmers by disseminating market information in real time to all market players; and at a later stage, will provide the market with options for risk management by offering futures trading.

The model of AHCX is developed after a careful evaluation of the Malawian reality and though, tires to borrow best practices from exchanges in Chicago, London, India, or South Africa, it still is designed on the Malawian realities. The reality of very small informal actors, a challenging unorganized sector and IT infrastructure, and the hopes and aspirations of the small holders from the initiative are the key factors to address. In the absence of supporting institutions and business partners such as independent collateral managers and clearing houses, in order to be Malawian model, AHCX has a broader than usual scope of operations. Thus, AHCX has five key operations:

1. Quality Grading and Certification
2. Electronic Warehouse Receipting (Collateral management)
3. Trading floor operations
4. Clearing and settlement ( Clearing House operations)
5. Market Information Dissemination (Real time and discrete)

In addition, the Exchange has several major support functions:

1. Member Client Management
2. Compliance & Arbitration
3. Market Surveillance and intelligence
4. Risk Management, including a Settlement Guarantee Fund

The AHCX model is based on a holistic and integrated approach in linking all of its business and support operations into a single technology platform. The integrated AHCX system is a cohesive approach powering the end-to-end operations from membership to quality certification in laboratories to collateral management to trading to clearing and settlement to market information dissemination.