A pan-African commodity and derivatives exchange said it will open in the middle of next year.

Bourse Africa, owned 60% by Financial Technologies of India, said it will base its operations in Botswana. The trading platform will link to national and regional markets across the continent.

The Multi Commodity Exchange of India Ltd (MCX) is Bourse Africa’s strategic domain partner. MCX operates a metals and energy products marketplace, out of Mumbai.

The launch announcement was made by Shreekant Javalgekar, finance director for Financial Technologies (India) at the International Convening on Commodity Exchanges in Africa, held in Addis Ababa, Ethiopia.

India-based Financial Technologies Group is looking to create and operate markets across Africa, the Middle-East, India and the Far East.

The $895 million a yer FT Group operates a network of nine exchanges including MCX, the world’s fifth largest commodity futures derivatives market in terms of contracts traded in the first half of this year.

“BAL aims to be seen as a catalyst to underpin Africa’s continued emergence by creating world-class markets that are efficient, transparent and liquid,” said Lamon Rutten, Director of BAL and MD & CEO of Multi Commodity Exchange of India (MCX).

Here is a summary from BAL on the products its platform will handle:

Currency Derivatives Bourse

Bourse Africa will offer cash-settled currency futures in all major African currencies against the US Dollar at launch in 2012. Over time, Bourse Africa will seek to add other African currencies against the US Dollar and against other global and African currencies.
Bourse Africa’s national exchanges will offer complimentary contracts settled in local currency. 
Contract specifications will be designed in close consultation with the market, ensuring the contracts best enable African and international participants to manage currency risk and to facilitate liquidity flow into Bourse Africa’s currency derivatives segment.
All currency contracts will likely be similar in size to facilitate African cross currency trading and intra-Africa trade and integration. Contract trading units will likely be smaller in scale relative to those typically traded in global exchanges in order to ensure accessibility by Africa’s SME sector.

Commodity Derivatives

Bourse Africa will offer physically-deliverable or cash-settled commodity futures in important pan-African commodities across the agricultural, metal, mineral and energy segments, denominated in US Dollar or other hard currency. Over time, Bourse Africa will seek to add contracts on all commodities that are relevant to multiple African producing and consuming economies. 
Bourse Africa’s national exchanges will offer complimentary contracts on nationally or regionally important commodities settled in local currency. 
Contract specifications will be designed in close consultation with the market, ensuring the contracts best enable African and international participants to manage commodity price risk and to facilitate liquidity flow into Bourse Africa’s commodity derivatives segment.
Contract trading units will likely be smaller in scale relative to those typically traded in global exchanges in order to ensure accessibility by Africa’s commodity producers, processors, traders and SME sector.

Commodity Spot

Bourse Africa’s national exchanges will offer physically-deliverable commodity spot contracts for immediate delivery on commodities that are of importance to national and regional economies. 
Contract specifications will be designed in close consultation with the market, ensuring the contracts best enable African and international participants to perform procurement and delivery through an efficient and reliable channel and to facilitate liquidity flow into Bourse Africa’s commodity spot segment.
Spot contracts will separately support the domestic trade and the export trade, with contract specifications reflecting the needs of each specific channel. These exchanges will facilitate risk free and hassle free purchase and sale of quality and quantity specified commodities to commodity market participants including farmers, traders, processors, exporters, importers, arbitrageurs, investors, the retail market participants and international traders. These exchanges will also offer various other services such as quality certification, warehousing, warehouse receipt financing, e-delivery facility etc.

-- This article first appeared on Securities Technology Monitor.