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S. Shanker
Suresh P. Iyengar

MR JOSEPH O'NEILL

Mumbai March 18 With the New York Board of Trade (NYBOT), one of the oldest exchanges in the United States, stepping on to the electronic platform from the open cry system on February 2, its Senior Vice-President, Mr Joseph O'Neill, who was in Mumbai this week, spoke of the transition in an exclusive interview to the Business Line.

Was the switchover to the electronic mode smooth?

We have been at it only from February 2. Sugar, coffee, cotton, cocoa, orange juice and wood pulp (paper) are being traded. About 60-65 per cent of agricultural futures are traded on the electronic platform. Shifting options trading also to electronic mode may take more time. Only 20-30 per cent of cotton futures are electronic now. Traders' response in general has been very encouraging.

What are you doing to bring the entire trade onto the electronic mode?

Many traders are still used to the old way of trading and enjoy it. Moreover, the floor is not just for trading but also for exchange of information. And, for many traders it is the only source of information. We are not going to force anyone to shift to the electronic mode... the change has to happen naturally.

Don't you feel the changeover has taken quite a lot of time?

A lot of factors had to be taken into account. And, mind you, the floor has been around for a long time as a centralised market place. Further, we were looking for the right system. The Intercontinental Exchange's platform works excellently and is vibrant. It makes more sense to use an existing platform instead of developing a new one.

Has the change impacted the exchange's turnover? Was there any resistance?

Generally the acceptance is encouraging. In February, total contracts traded went up from 4.5 million to 4.9 million. In cotton, it rose from 4,40,000 to 4,90,000. Each cotton contract was worth between $26,000 and $27,000. Sugar contracts were worth $12,000 each with about 2.5 million contracts traded.

New players are showing interest. Volumes go up but the fun of the floor is lost. But then, those who did not want to call on the floor are now showing interest. Some traders like it, some don't.

Indian exchanges face quality-related problems on delivery. How is your quality control mechanism?

All goods delivered on NYBOT are certified by the United States Department of Agriculture. The Board has also its own quality inspectors. We hire inspectors for coffee and cocoa. It is important the certifying authority is respected and accepted by all. Having a Government agency for certification will go a long way in addressing the issue.

How much will be your investment in NCDEX? Can we look forward to any tie-up in the near future?

It is not NYBOT, but the parent company that has invested in NCDEX. NYBOT became a wholly owned subsidiary of ICE (InterContinental Exchange) only on January 14. I cannot really comment on this.

The fact that ICE has interest in both (NYBOT and NCDEX) makes sense. Our focus is on coffee, sugar and cotton.

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