Turkish Mercantile Exchange Electronic Warehouse Receipt Market Celebrates its 2nd Year
Electronic Warehouse Receipt Market (EWRM) Market, launched on July 26, 2019 by Turkish Mercantile Exchange (TMEX) with the aim of advancing commodity trading in order to consolidate liquidity under a national exchange framework enabling farmers’ access to finance, continues to shape the agricultural ecosystem.
PRODUCTS ARE NOW GAINING VALUE AT THE EXCHANGE
Through a secure and transparent market structure that guarantees cash and EWR clearing, TMEX’s EWRM has achieved significant growth in 2 years, with 90,000 investors, a trading value of 20 billion Turkish Liras, and a trading volume exceeding 13 million tons. This has resulted in a 2.5 times increase in EWR trading volume in just 2 years compared to the 5-year period before TMEX’s inception.
Licensed warehouses where EWR-represented products are stored are a fundamental pillar of product trading. As of July 2021, there are 138 licensed warehouses in 30 cities, 118 districts, and 203 locations, with a licensed storage capacity of 7.6 million tons, which has grown by 90% in the past 2 years.
TMEX PRODUCT INDICES: AGRICULTURE’S PULSE, FARMERS’ AND INVESTORS’ GUIDE
TMEX has introduced Agricultural Commodity Indices which are calculated based on transactions in the EWR Market. These indices, including Barley, Wheat, Corn, and Grain Price Indices, were established with a base value of 1000 as of April 1, 2021. They serve to fill the gap in tracking opportunities in agricultural products and enable to follow relationships between the global and Turkish agricultural commodity markets.
TRANSPARENCY IN THE AGRICULTURAL SECTOR
TMEX enhances transparency in the agricultural sector by centralizing the publication of EWRM data. In the near future, we plan to take this a step further with the introduction of the Agricultural Disclosure Platform.
RESEARCH AND DEVELOPMENT ACTIVITIES FOR DIGITAL TRANSFORMATION AND AGRICULTURE 4.0
TMEX has continued to improve its infrastructure since the start of operations. Within its Information Technology Unit, the TMEX Research and Development Center, consisting of 6 projects and 26 staff members, was approved by the Ministry of Industry and Technology on March 23, 2021. The center aims to increase the efficiency and productivity of the agricultural sector, provide comprehensive and innovative solutions to the problems of the agricultural exchange ecosystem, work on their commercialization, and provide opportunities for qualified human resources.
FINANCIALIZATION OF AGRICULTURE
Significant collaborations have been initiated with regulatory authorities:
The Banking Regulation and Supervision Agency, with a regulation enacted on July 6, 2021, increased the max acceptable collateralization ratio for EWR to be considered on Bank’s lending activities. This move is expected to contribute to improving the functionality and depth of the EWR market, a component of the Istanbul Finance Center Action Plan prepared by the Presidency Finance Office.
The Capital Markets Board, in its meeting on July 1, 2021, approved the inclusion of EWR within the definition of “financial assets” in the Regulation on Investment Services and Activities and Ancillary Services. This decision would allow EWR to be included in individual portfolio management activities.
UPCOMING PROJECTS TO SHAPE THE AGRICULTURAL ECOSYSTEM
As part of its investment in technological infrastructure, TMEX aims to gradually complete a new trading platform over the next 3 years. This infrastructure would:
– Serve both spot and derivative products.
– Include a local solution for participation finance, as well as meet the requirements of ongoing legislative and technical infrastructure developments.
– Enable the integration of Commodity Market Intermediary Institutions as part of the transition to an intermediary system.
Established in June 2018, TMEX engages in exchange activities facilitating trading of electronic warehouse receipts issued by licensed warehouses and futures contracts with an underlying of electronic warehouse receipts. TMEX collaborates with key stakeholders including the Turkish Union of Chambers and Commodity Exchanges, the Turkish Ministry of Trade, the Turkish Ministry of Agriculture and Forestry, the Turkish Ministry of Treasury and Finance, and other partners. Its collaborative efforts extend to various areas such as the digitization of the food supply chain from farm to fork, the widespread use of electronic warehouse receipts, the development of contract farming and the promotion of licensed warehousing.