The Nairobi Coffee Exchange (NCE) is set to resume operations after fulfilling stringent conditions laid out by the Capital Markets Authority (CMA). Figures from the CMA indicate that some 11 co-operative societies have been licensed to sell the commodity directly at the NCE with five more players to be added by the end of this month.
Only 4 of these 11 societies managed to submit samples for coffee to be traded this week with some major millers said to have boycotted the auction.
Industry sources reveal that most coffee co-operative societies are withholding their stocks in warehouses following confusion over the implementation of the new coffee trading rules.
NCE TO RESUME TRADING ACTIVITIES AFTER FULFILLING NEW CMA RULES
The re-opening of the NCE on August 15th 2023 will thus take place amid significant challenges including that only 2.705 bags of the cash crop will be available for sale in a platform that has the capacity to handle between 7,000 and 10,000 bags weekly. A large bulk of this produce is usually destined for the export markets.
Co-operative Bank of Kenya will provide the Direct Settlement System tech platform on which the trading will be conducted. This is one of the conditions that the CMA had given to the NCE.
The NCE was on 1 May 2023 granted a three (3) months extension of its in-principle approval to continue operating as an exchange until 31 July 2023. This extension was meant to give the NCE time to work towards full compliance with The Capital Markets (Coffee Exchange) Regulations, 2020 including procurement of a Direct Settlement System (DSS) provider.
The first coffee auction in Kenya was held in 1935 and replaced in 2006 with the direct sales (2nd Window) method.
The CMA now has the mandate, under the Capital Markets (Coffee Exchange) Regulations, 2020 to license Coffee Exchanges and Brokers.
CMA has been granted the mandate of not only regulating but also facilitating the development of orderly, fair, and efficient capital and commodities markets in Kenya, including coffee brokers.
The NCE will operate under New Trading Rules aligned to CMA rules and that settlement will be conducted through a Direct Settlement System (DSS) for transparent and efficient settlement of all sales proceeds.
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