The Hindu Business Line : IPSTA brokers strike work against online trading

BROKERS at the pepper terminal market here went on strike on Monday in protest against the proposed introduction of online trading at the International Commodity Exchange (ICE) for futures trading.

This was despite the India Pepper and Spice Trade Association (IPSTA), the promoter of the exchange, convening a general body meeting on Monday to discuss the issue.

As the brokers struck work, member-to-member trading took place at the terminal market. ``If the brokers showed militancy then that is only going to hurt them,'' Mr Kishor Shamji, President, IPSTA, told Business Line. He said there were 37 brokers and of them 27 were made members of ICE at concessional rate leaving only 13 functioning as brokers. Now those who had become members wanted to function both as brokers as well as members of ICE and that ``is not possible'', he said.

He said the board of directors of IPSTA had decided to go ahead with introducing online trading, as it would be advantageous to ICE in many ways especially to bring in transparency in trading. But, some ICE members and even three directors of the board, who were present when the decision was taken, had come out openly against online trading. Therefore, a general body meeting had been called on Monday to discuss and seek the permission of the members. He said majority was in favour of introducing online trading.

Those opposing online trading were citing the failure of the Coffee exchange, which had gone online making an investment of Rs 23 lakh.

Besides, they argued that it would raise the trading cost. According to Mr Kishor Shamji, IPSTA was in a hurry to go online. He said only after getting the green signal from the general body ``we will go ahead with the project with the help of expert consultants''.

ICE was better placed in terms of volume of trading and turn over unlike many other exchanges.

``We are having a daily trading of Rs two crore and a volume ranging between 300 tonnes to 350 tonnes,'' he said.

Many exchanges such as Bombay Commodity Exchange, the Indore-based National Board of Trade, the Rajkot exchange and E-sugar are all in the process of going online.

ICE was in an advantageous position because of its better infrastructure, he said. Therefore, there was no point in opposing the proposal. On the other hand, it had almost become mandatory for all exchanges to introduce online trading.

In the future such a situation could emerge that exchanges might not get permission to do futures if they did not have this facility. Hence, ``it is suicidal to oppose the proposal'', he said.

According to him, these members were demanding that ICE should go for multi-commodity trading before going online.

But, he said, the Forward Markets Commission (FMC) had already received 16 applications seeking its permission to do trading in multi-commodity.

These applications were still under scrutiny, he said. He had just returned after attending a meeting with FMC officials in Mumbai.

He said ICE had good infrastructure could go for multi-commodity trading such as in rubber, tea etc. ``But, unless we introduced online trading that might not happen,'' he added.

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