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G.K. Nair

KOCHI, Nov. 29

THE recalcitrant attitude of some members of the India Pepper and Spice Trade Association, which manages the International Commodity Exchange, continues to dodge the issue of commencing online pepper futures.

All efforts during the past one year to convince these members about the validity of the futures have turned futile and the only way out now is to call for an extra-ordinary general body meeting and go by the majority opinion, opine a few prominent members of the association.

While some members object to the futures on the grounds of a rise in trading cost, others apprehend about depriving the business of the brokers.

Mr Kishor Shamji, ex-President of IPSTA, told Business Line that there would be no additional expenditure to the members. In fact, at the November 8 meeting of association, it was decided not to recover the cost from them barring the recurring cost. On the other hand, the guarantee fund would cross its targeted level of Rs 1 crore by December 1 and, thereafter, the members would not have to contribute towards this either. Therefore, the apprehension of additional expenditure has no relevance, he pointed out.

To remove the apprehensions of the brokers, around 25 of them were given membership of IPSTA at concessional rates with voting rights. Besides, even after going online, most dealers and exporters would still have to depend on them for a lot of things, he said.

Only a segment of operators, who act as commission agents, stand to lose business and that constitutes only around 25 per cent of the total volume of trading. It was these members, with the support of some others, who were opposing the introduction of online trading, the sources said.

They argued that online trading would make ICE healthier and transparent, apart from bringing in clarity. Besides, it would pave way for more active members joining the exchange. The membership at present stood at 185 and of them five are multinational companies who handle around 75 per cent of the world pepper trade.

The requirement of online trading acquires momentum with the Union Government set to grant permission for setting up multi-commodity exchanges in other parts of the country. When these become operational by April next, the relevance of the only pepper exchange will be lost.

Given this situation, the authorities should make it mandatory for ICE to go online, said Mr Sanjay Mariwala, former Chairman of the Online Committee of IPSTA. Unless the authorities take a tough stand , the exchange would be a non-starter through a consensus approach, he said.

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