The Hindu Business Line : Brokers' indecision holds up tea futures take-off

THE futures trading in tea does not seem to be taking off as brokers, the major players in the tea trade, are yet to decie on their participation in the Upasi Commodities Exchange Ltd (UCEL).

It is understood that the brokers, who had not openly rejected their participation, still apprehend that their interests would not be safeguarded once the futures trading is launched.

According to market sources, when futures trading is introduced through the exchange, transactions would take place between producers and buyers directly, which might curtail or even eliminate the role of the intermediaries. The tea broking firms, which have been in the business for several decades and some even for a century, might be looking for some way out to protect their interests, they said. At present, six firms are said to be controlling the tea auctions at the three South Indian centres — Coonoor, Coimbatore and Kochi — involving about 40-48 lakh kg.

UCEL officials have already held several rounds of discussions with the broking firms and the next is expected some time next week.

UCEL has already entered into a tie-up with the National Multi Commodity Exchange of India Ltd (MCX) for conducting futures trading in tea.

Under the tie-up with MCX, the UCEL would be a Trading-cum-Clearing Member (TCM), which would provide the latter the right to trade, clear and settle transaction for its members, UCEL sources said.

By enrolling as a TCM, UCEL members will also get an advantage of participating in futures trading in all the plantation commodities such as pepper, rubber, cardamom and coffee, at a later stage, so that they can hedge their risk in the highly competitive commodity market, they added.

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