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Africa to adopt global standards in commodity exchanges

Tunis, July 16 – More than 100 high level experts from across the continent are planning for a forum expected to discuss ways and means to develop the derivatives and commodity exchanges in Africa, through the alignment of the African regulatory framework with global standards.

The “Pan-African Workshop for Regulators of Derivatives and Commodity Exchanges”, from July 25-27, 2012 will bring together in Gaborone, Botswana, representatives of ministries of finance and central banks, commodity exchanges, securities and capital markets authorities as well as representatives of multilateral organizations.

“The workshop will provide African regulators with strategic and technical information to assist in the development of robust and efficient regulatory frameworks that meet prevailing international standards”, said Moono Mupotola, AfDB’s manager in charge of Regional integration and trade.

Considered as one of the most important causes of the global financial crisis that broke out in 2008, derivatives could enhance the liquidity, stability and robustness of financial systems, as long as they are structured and regulated in an appropriate manner.

They are critically important risk management instruments for commodity chains, companies, banks, financial institutions and investors.

In that light, global regulatory reform recommends to trade derivative contracts through Exchanges and to clear derivative obligations through central counterparty clearinghouses (CCPs) by end 2012 at the latest.

Excepting South Africa, derivatives exchanges and CCPs do not yet exist in Africa. However, there has been growing realisation that efficient financial and commodity markets are a prerequisite for equitable, inclusive and sustainable development.

This has been manifested in key policy documents, including the African Union’s Arusha Plan of Action and Declaration on African Commodities, 2005, as well as in the Final Communique from the COMESA-EAC-SADC Tripartite Summit of Heads of State and Government, 2008.

By taking a leadership role in the organisation of this event in cooperation with Bourse Africa Limited with the support of Botswana Investment and Trade Centre (BITC), the African Development Bank is playing its role as a catalytic agent at the heart of Africa’s capital and financial markets, incubating and disseminating best practices and innovative ideas across the continent.

As such, AfDB seeks to help African countries and non-governmental actors understand the benefits that arise from exchanges and the development of paradigm-shifting structures and practices that can revolutionise African capital and commodity markets.

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The AfDB expects to catalyze interest among stakeholders on the importance of exchanges for price discovery, market transparency, financing, hedging and risk management, infrastructure development, job creation and cross-border economic integration.

Distributed by the African Press Organization on behalf of the African Development Bank.

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