• Chris

A London Mercantile exchange?

Mercantile Exchanges cover a variety of functions – aside from speculative trading. In commodity markets where the quality of what is offered is as important as the price, these markets set quality standards; provide the contracts whereby these goods can be bought, sold, stored and carried and, importantly, resolve disputes between members.

Corn Exchanges were used as important hubs of commerce around the country and the Trade Associations many of them gave rise to, continue to function in providing these roles.

One such, the Grain and Feed Trade Association (GAFTA) operated the London Grain Futures Market and a fully functional Central Clearing House (CCP) for years. Then responding to members’ requests extended their service into a futures market for Soyabean Meal. In the 1980s, GAFTA also sponsored a highly successful futures market for Potatoes and then the London Meat Futures Exchange.

Significantly, many of the floor brokers were from the grain trade.

Yet some 30 years on, with London preening itself at being a global centre for exchange business – where is the London Mercantile Exchange?

Where is the global trading in grains, protein crops, timber, meats and fibres? Who sets the contracts for these internationally traded goods and where are the disputes heard?

We approach Brexit and the agricultural and food industries are on alert. Yes, the Common Agricultural Policy (EU price support system) has had its detractors – but what will take its place on the other side?

The answer may lie in an announcement today by the Iranian Mercantile Exchange. To join trading in Oats and Corn, they are adding Wheat on to the exchange which is welcomed by Iranian farmers and both pasta and biscuit manufacturers alike. And there is talk of potatoes on the way.

The purpose is to provide price guarantees. Stability in another word.

I got shouted at years ago by the Chairman of the Milk Marketing Board (MMB) in suggesting a Milk Futures market to take over from the Board in setting consensus market prices. I was told that my idea would result in a Canadian-style milk industry. Given the rapid decline of the British Dairy Herd since, and our current reliance on Dutch and other EU produced milk, that might not have been such a bad thing.

A UK Mercantile Exchange maybe a post-Brexit necessity – using Blockchain of course!

15 views0 comments

Recent Posts

See All

It seems that new exchanges are being established constantly. So much so that the UK regulator, the licensor of new exchanges, now charges £250,000 just to receive and opine on a new exchange applicat

Background: In 2019 Hembury Associates undertook a survey on corporate Issuers’ views on the continuing value of a Stock Exchange Listing. The context to this question lay in the steady decrease in th