Financial Daily from THE HINDU group of publications
Tuesday, Dec 17, 2002
Agri-Biz & Commodities
Spices & Condiments
ICE pepper futures may turn cold on lack of online facility
KOCHI, Dec. 16
THE emergence of multi-commodity bourses with online facility in other parts of the country has given rise to fears that the pepper futures run by International Commodity Exchange (ICE) here may lose sheen.
Ever since the Ahmedabad-based Online Commodities Exchange of India Ltd (OCEIL) became operational, some of the major pepper traders and exporters have voiced their apprehension that in the absence of online trading facility here, the future of ICE could be bleak.
OCEIL went online on November 26 and as many as nine commodities are being traded daily there.
For transparency in trading apart from increasing the volume of trade, screen-based online trading is inevitable, feel traders. The average daily trading of pepper at the terminal market here is around 400 tonnes and, according to official sources, about 250-300 tonnes per day is enough to go for online trading.
Since pepper is a commodity which witnessese good turnover, the Government may not have any objection to grant permission to any of the multi-commodity exchanges if they want to hold futures in the commodity, say traders. Moreover, the authorities are no more interested in single commodity exchanges, especially those without online trading facility, traders say.
The OCEIL has three members from Kochi who were members of the Kochi stock exchange. This is a clear indication of members of stock exchanges fully conversant with screen-based trading now shifting to commodity trading, the sources claim.
For the past two years, the India Pepper and Spice Trade Association (IPSTA), the promoter of ICE, has been trying to reach a consensus amongst its members to introduce online facility. However, owing to the opposition of some members, it has remained a non-starter.
The Government should have come forward to make it mandatory for the exchanges doing futures trading to have such advanced facility, Mr Kishor Shamji, former President of the IPSTA, told Business Line. The authorities failed to act on time and it took two years to commence dollar denominated trading here, he added.
The impervious attitude of the authorities to encourage online trading at single commodity exchanges has been taken as a positive sign by those opposing the introduction of online trading facility here, he opined.
However, of late, the authorities concerned have started persuading the exchanges, albeit in a light manner, about going online and as a result, IPSTA is scheduled to hold an EGM on December 23 to discuss this issue again.
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