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Newly Launched Service Bids to Be Electronic Exchange for LBM Products

A new business seeking to provide an electronic marketplace for buying and selling various raw materials went live Oct. 28 with a transaction involving a truckload of European spruce to be delivered out of the Port of Houston, the creators of MaterialsXchange (MX) announced today.

Besides European spruce, MX's first listings are for oriented strand board and Southern yellow pine lumber. The Chicago-based venture's first transaction culminates several years of preparatory work by MX CEO Mike Wisnefski, a veteran options trader.

Historically, the markets for buying and selling commodity materials "have been impeded by a lack of price transparency and an inefficient 'call around' structure," an MX press release said. "At the same time, payment processes have been archaic and fraught with credit risk for sellers. ... The [MX] platform's two-sided price format, with continuous updates of transparent data, gives all participants much-needed insight and enables buyers and sellers to easily place bids and offers in real-time without the time-consuming task of price extraction."

MX is hosted in the cloud and thus accessible to anyone on any computer once that person is approved as a qualified user. One of the requirements to becoming a user is that the person must buy in consistent full truckload quantities. Both buyer and seller pay a $40 transaction fee once the deal is completed.

Unlike with other commodities, there's a limited market in electronic futures trading for lumber, and the vast majority of transactions come through personal interaction. Several ventures launched over the years have attempted to automate the process, but none has become a dominant factor in lumber trading. MX resembles the others in that its current focus is lumber, but Wisnefski and his team aim to expand the exchange to handle deals for a wide array of construction products.

The inaugural transaction matched seller Binderholz Timber of Austria with Texas-based buyer Hart Lumber. The parties agreed to be identified for this deal, but normally the identity of the exchange's users is kept confidential.

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