AvenirCommodity

Avenir Warehouse Receipt System

AvenirCommodity is a versatile, value-for-money platform for the registration, life cycle management, funding, trading and settlement of warehouse receipts.

A warehouse receipt is a commodity’s legal record. Its physical properties, storage costs, ability to act as collateral, means of financing and securing, are all scalable with AvenirCommodity

Trading, through bid/offer or auction can be separate or concurrent with intermediation by brokers managing market activity on behalf of buyers and sellers. All activity is public and visible to all players (with private information hidden).

Other producer plug-in modules include access to a farmer database, market price collection and reporting, and SMS messaging.

AvenirCommodity, unlike many alternatives, was designed to support “ground up” development of an agricultural commodities market, with practical solutions to real-world issues. It was designed in conjunction with the African Commodities Exchange (ACE) in Malawi.

Contact database

The contact database sits over all modules of the AvenirCommodity system. It allows the operator and/or its agents (e.g. farmer cooperative societies, brokers and others) to set-up and maintain a database of farmers who are interested in taking part in the warehouse receipt arrangements provided by the operator, either immediately or in the future.

The operator, brokers and organisations have logins to modify the contact database, subject to certain rules.

Market data

The contact database module (see above) allows for the creation of a community of farmers. The market data module leverages this database and allows the operator to selectively send information to groups of farmers.

For example, the operator could arrange (through its own staff or a team of agents) to collect recent prices from the various markets around the country. These prices can be aggregated and form the basis of market data communications to farmers.

Contacts and market prices come together via farmers’ SMS subscriptions. Farmers can set up subscriptions by requesting prices for certain commodities to be sent to them over the season. As new information becomes available, the system checks live subscriptions and current prices and sends out applicable messages.

Ad-hoc messages can also be sent to a group of farmers selected from the contact database. For example: The operator might like to send a SMS message to all farmers who grow commodity X in location A and location B.

Warehouse receipts

A warehouse receipt is a legal record of a commodity, of a particular type and quality, stored in a designated warehouse. The operator may have a number of managed warehouses and acts as an issuer of warehouse receipts. Through this network of warehouses, the operator may maintain a group of managers who are qualified to grade, accept commodities into warehouses and issue receipts.

While the commodity is in a warehouse, charges and fees (e.g. storage costs) are payable – these charges will accrue on a receipt. The operator may not allow release of a commodity until all outstanding charges are paid.

Depending on the commodity, moisture content or other paraments may also need to be tracked if they change over time. This information is entered into the system and the necessary adjustments made automatically

A key reason for creating a warehouse receipt is so that it can be used as collateral for finance (see below).

This module manages creation of warehouse receipts and the various lifecycle activities up to final drawdown. The description below of functionality is based on that for maize but similar features apply to many agricultural commodities.

Finance

The system allows the operator to track bank or alternative financing to farmers and other participants. This finance is secured against a warehouse receipt owned by the farmer/participant up to a pre-determined percentage of the receipt value. The system calculates interest daily and accrues it against the warehouse receipt. Before a commodity can be withdrawn all outstanding charges need to be settled – this includes finance (capital and interest).

The system supports multiple pools for finance – each representing a source of funding (e.g. bank 1, bank 2, an NGO, the system operator). Different pools can be used for different finance and may attract different interest rates.
The module manages the lifecycle of a finance contract starting with issue, then the calculation of interest, and finally settlement.

The finance module is integrated with the warehouse receipt module – all finance will have an attached warehouse receipt. It also links with the customer database for all farmer information.

Trading

The system currently supports two forms of trading:

  • Bid/offer mode
  • Auction mode

Each form is independent of the other but can also occur at the same time. Trading can be intermediated, or happen directly between participants. All activity can be made public and visible by all players (with private information hidden).

Bid/Offer

The bid/offer mode is where a seller or buyer places an order to sell or buy. Participants can either ‘counter’ a bid/offer or accept a bid/offer. A ‘counter’ is similar to a new bid/offer but includes a step to notify an existing bid/offer.

A bid/offer can optionally have a future date setting. This creates a forward transaction (i.e. a trade to be settled in the future). Various delivery patterns can be set for a forward delivery contract

Auction

Various auction types are available.  These include the traditional “Bid Volume Only” and “Offer Volume Only” where there is only one customer or one supplier involved in the auction.

The trading module handles all trading – activity from order creation via contract note generation, to delivery instructions.

As a market develops and requires a more sophisticated solution, AvenirTrade can be seamlessly added to AvenirCommodity

Customers

AvenirCommodity has operated at ACE in Malawi for several years.

Get in touch

It starts with a conversation. Talk to us today.

London, United Kingdom & Wellington, New Zealand
© 2014-2019 Avenir Technology

News

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Warehouse Receipts System goes live

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GMEX Group takes stake in Avenir Technology

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Welcome to Avenir

The future of Financial Market Infrastructure We are a new company with an innovative approach to building post trade systems for the world’s Financial Market Infrastructures (FMIs). Unconstrained by the legacy of existing offerings our ...more