The Hindu Business Line : FMC stops trading at Kolkata jute exchange

THE future of forward and futures trading of jute in the country is precariously positioned and the Forward Markets Commission (FMC) has a crucial role to play.

FMC has stopped trading at East India Jute & Hessian Exchange Ltd (EIJHE) from February 23. Permission for the May and August trading is yet to be given to EIJHE, which is the oldest commodity exchange of India.

On the other hand, it has already cleared the jute futures trading proposal of the National Commodity and Derivatives Exchange Ltd (NCDEX). The written approval will be forwarded soon and NCDEX proposes to start jute futures by the end of this month.

Activities at EIJHE had come to a still due to the confrontation between two sections of the directorial board. Litigations and counter litigations have affected the normal activities of the exchange since August last.

As a result, the members failed to conduct the annual general meeting for 2002-03 and adopt the annual accounts by the scheduled date of September 30, 2003.

According to sources, FMC officials have said that they will give permission to EIJHE for futures trading only if it conducts its annual general meeting and elects a new board of directors.

A senior member of EIJHE feels that this posture of FMC is further aggravating the situation in the exchange. "We know we will have to elect a new board and conduct the AGM. But why stop trading in the exchange. Without the FMC permission, we are killing the jute futures market", sources told Business Line.

NCDEX is banking on the stalemate at EIJHE. It felt that the important players of EIJHE would shift over to its exchange. NCDEX is scheduled to start jute futures along with black pepper, gram dal, rubber and gur.

However, another section of the jute industry feels that NCDEX will face the same consequences as that of EIJHE, if corrective steps are not taken at the beginning. Moreover, the players will remain the same.

"For example, as far as we know, NCDEX is not creating its own warehouses. This will be a problem. Unless and until, the exchange has its own warehouse, differences over supplies will continue to remain a contentious issue", sources explained.

Meanwhile, EIJHE's bid for the introduction of futures trading in raw jute has taken a back seat.

The members have almost forgotten about raw jute, as they are mostly busy with sackings and jute hessian.

NCDEX, on its part, is contemplating introduction of futures trading in raw jute. According to a senior NCDEX official, the exchange is currently studying the subject and a formal application to FMC is yet to be made.

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