| The commodity exchange works like a stock market because the seller offers a price and if the buyer is comfortable with it, a deal is sealed. Unlike spot markets where middlemen control the information and distort the price, the middlemen at the commodity exchange act as brokers and they are fully licensed by the regulator.
“The purpose of these exchanges is to guarantee availability of the product and helping in the process of price discovery,” explains Robert Mathu, the executive director of the Capital Markets Authority (CMA). “The second role is to transfer the true value of the farmer’s produce directly to the farmer. Having a commodity exchange helps to alleviate poverty, and improve the welfare of the producers.”..............................................Full Article: Source
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