The apex cotton trade body, the Cotton Association of India (CAI), will ink an agreement with the BSE to develop a cotton futures market for commodities derivatives trading in the BSE.

Announcing the signing of a Memorandum of Understanding (MoU) with the BSE, CAI said the two bodies will join hands to work together on developing a cotton futures contract for BSE's commodity derivatives segment.

BSE is to launch a cotton futures contract shortly. In December last year, the Securities and Exchange Board of India (SEBI) had allowed a unified exchange regime wherein stock exchanges would be allowed to offer trading in commodities derivatives from October onward.

"With a view to combine efforts in developing a vibrant and user-friendly cotton exchange to cater to the hedging needs of the entire cotton value chain in India, both the BSE and the CAI have decided to sign an MoU, which will be effective for the next five years," said Atul Ganatra, President, CAI.

This will benefit the entire cotton sector of the country immensely, he added. The MoU will be signed by Atul Ganatra on behalf of the CAI and Ashish Kumar Chauhan, Managing Director and CEO of BSE on Wednesday at BSE.

"This is a milestone moment and will add new chapter in the history of derivatives trading in cotton," added Ganatra.

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