Financial Daily from THE HINDU group of publications
Tuesday, Jul 26, 2005
Agri-Biz & Commodities - Commodity Exchanges
It's curtains for coffee futures exchange Shareholders approve winding up of operations by July 31
Bangalore , July 25
THE Coffee Futures Exchange Of India (COFEI) is being wound up as all efforts to revive the exchange seem to have failed. Shareholders of COFEI, which has been inactive for over two years now, approved a resolution at Monday's AGM seeking closure of operations.
"The exchange will be wound up by July 31 and shareholders will be paid back the remaining capital proportionate to their holdings," Cofei sources said.
Being a single commodity exchange, COFEI had found the going tough as it was financially not viable.
The decline began with a drop in volumes over the last five years as coffee prices hit 30-year lows following which the entire plantation sector plunged into a crisis, resulting in poor trading volumes.
"I am sorry that this is the end of it," said Mr Ashwin Shah, former Chairman of COFEI, who was instrumental in starting the exchange.
"I guess COFEI was too ahead of its times," he said, adding that the situation had changed and that it was time for multi-commodity exchanges.
Mr Shah also said that COFEI members could have used the opportunity in making it a multi-commodity exchange by adding more commodities that are grown along with coffee, which unfortunately that did not happen.
The efforts of COFEI to align with other multi-commodity exchanges such as the National Multi Commodity Exchange and the National Commodity and Derivatives Exchange (NCDEX) also failed as several members were said to be against it.
Also, COFEI did not receive renewal of its licence from the Ministry of Food and Consumer Affairs, which expired on March 31 this year.
The exchange attempted to rope in corporate houses but its efforts were unsuccessful.
Set up in 1998, COFEI had almost stopped trading for over last two years.
In its heyday, an average of 700 lots were traded on a daily basis with the turnover ranging around Rs 1 crore.
COFEI had the distinction of being the first in the world to launch futures in raw coffee in 2000.
It was also the first exchange in the country to go online using the Bangalore Stock Exchange's infrastructure and was also a pioneer in introducing warehouse receipts.
It looks like futures trading of coffee in India will remain confined to multi-commodity exchanges such as the NMCE and NCDEX.
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