The Hindu Business Line : FMC selects BCE to launch tea futures -- UPASI, First Commodity may be asked to tie up

THE Forward Markets Commission (FMC) has selected the Bombay Commodity Exchange as one of the bourses that will receive in principle approval for opening a futures exchange for tea.

Confirming this to Business Line, Mr A.K. Bhatt, Chairman of FMC, said: ``However, this is subject to obtaining a no-objection certificate from the Tea Board. Though tea falls under the `free' category of items eligible for futures trading under the Forward Contracts Regulation Act (FCRA), tea trading is governed under the Tea Act, 1953 and the Tea Board is the administrative agency under the Act.''

Among the other contenders for a tea futures exchange, the First Commodity Exchange of Kochi and United Planters' Association of Southern India (UPASI) have been found to be having some strengths and also weaknesses. FMC may try to harness the mutual strengths of these two to form a joint platform for tea futures, sources in the commission indicated.

Of the two aspirants from Kolkata, one has been told to redraw its plan, which FMC will review later after submission. The East India Jute & Hessian Exchange, which had expressed its intention to establish a tea futures platform, did not appear before the commission for presentation of their project proposal. The presentations were held recently following formal application and initial screening.

National futures commodity exchange: FMC has also set in motion the process of inviting fresh proposals from corporate entities for floating a multi-commodity futures exchange.

``We have decided to issue the an advertisement and applications will have to be made with a requisite initial fee and a deposit at a later stage, which will be forfeited if the applicant does not follow the proposal during implementation,'' the FMC chairman explained.

A consortium of corporate entities may apply but FMC will also insist on a formal and prior agreement among the consortium members. A loose consortium will not qualify for the project.

Meanwhile, in view of the Union Government's intention to open up all agri commodities for futures trading, FMC has suggested that the 81 items, which are currently banned from futures ambit under FCRA be reviewed.

``Some of the items— in which the Government wishes to introduce futures trading— may be brought under the `regulated' category under the provisions of the Act,'' Mr Bhatt observed.

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