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Wednesday, 11 December 2019

Feasibility study reveals new details on Egypt’s commodities exchange

Feasibility study reveals new details on Egypt’s commodities exchange: The feasibility study for the planned Egyptian Commodity Exchange was leaked by Al Mal yesterday, revealing new details on fees, projected revenues and return on investment, as well as some information on what commodities will be traded on the market.

Fees: Traders will be charged a one-time EGP 1k registration fee and EGP 300 in annual membership fees. The study projects that the market will have around 5k active traders within the first year, attracting 2.5k more in each consecutive year through to 2030. The exchange expects to realize revenues of EGP 83.6 mn a year.

Rate of return: On current forecasts, the study calculated that merchants would see an internal rate of return of 39%, allowing them to fully recover their investment within three years.

Commodities: The study says that six commodities — wheat, rice, corn, potatoes, onions, and oranges — will initially be traded. This differs from what Internal Trade Development Authority head Ibrahim Ashmawy said earlier this year, when he announced that five commodities — flour, iron, oil, corn, and cement — would be traded.

What we already know: The EGP 100 mn company that will manage the exchange is scheduled to be set up before the end of the year, with the exchange opening its doors to traders 36 weeks thereafter. Ashmawy said last month that futures will not be offered on the market — at least not initially — meaning investors will be limited to trading spot contracts.

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