The Ethiopian Commodity Exchange (ECX) executives were taken aback by an unexpected decision from the State Minister for Trade & Regional Integration, Kassahun Goffe, who placed a hold on the four-month-old customised forward trading initiative two weeks ago.

The new scheme had emerged as a response to the more traditional 14-year-old spot trading system, marking a significant evolution in the trading landscape. Unlike spot trades that call for instantaneous settlements of transactions, customised forward trading provided room for future deliveries and payments across 23 commodities traded at the Exchange. However, the swift pause has stirred controversy and uncertainty in the commercial corridors.

Given its short existence, forward trading had rapidly gained traction, carving out a sizable niche against the established spot trades. Contracts on this floor stipulated a flexible settlement time frame, ranging from seven days to a more extended three months. Many in the trading community find its flexibility an attractive proposition.

The remaining two modalities included selling from the ECX warehouse with suppliers allowed to find buyers and deals between buyers and sellers under the purview of the Exchange for the future handover of commodities after the Exchange’s involvement. Although they restricted the over-the-counter modality, citing difficulty in tracing and registering commodities, they were left in the dark with the indefinite suspension not followed by an explanation.

However, the rationale behind the sudden freeze from the Ministry seemed rooted in concerns about the system’s integrity and the potential risk of monopolistic practices.

Mesfin Abebe, an advisor at the Ministry, pointed out instances where dominant players allegedly conspired to corner specific markets, leading to skewed dynamics. He blamed certain exporters for entering agreements without guaranteed supply contracts. Coupled with the perceived oversight lapses by the Exchange, this has cast a shadow on the integrity of the forward trading scheme.

“We never implied having solely upright traders,” Mesfin told Fortune, suggesting that stringent regulatory supervision should be central to the scheme.

Such concerns led to a cascading effect, with the ECX promptly halting one of its three trade modalities.

Dawit Mura, acting communications head at the ECX, voiced the collective sentiment of the Exchange, expressing confusion about the sudden proscription, given the lack of a “comprehensive rationale.”

“We’re trying to grasp the underlying reasons,” said Dawit.

While the controversy rages on, there is a broader acknowledgement of the momentum forward trading had amassed in its brief operation window. Over 400tn of commodities worth 285 million Br had already been transacted through the scheme in the two months since its introduction. Managed by Wondimagegnehu Negera, the third CEO since its launch in 2008 as Africa’s first commodity exchange platform, the ECX has a robust 24 billion Br annual transaction value, trading a quarter of a million tonnes of commodities.

Some business community members have expressed significant disappointment.