In a bid to bring liquidity to the MCX cotton contracts, cotton trade body Cotton Association of India (CAI) has recommended a premium for cotton ginners to encourage them to deposit their stocks at MCX godowns so as to enable genuine traders to participate on the exchange platform. At its meeting held on Monday, MCX’s new product committee accepted the CAI proposal and agreed to give a premium, which wasn’t provided till now. The trade felt it necessary because of the increased delivery expenses, charges, and handling costs among others.
Increasing liquidity
Atul Ganatra, President, CAI, said, “There was a need to increase liquidity in cotton contracts on the MCX platform. Due to higher expenses and costs involved in storage at the godowns, ginners refrained from depositing their stocks with MCX godowns. It caused a lack of liquidity on the exchange.” “CAI had proposed that Indian ginners be granted ₹650 per candy (356 kg) as premium for depositing cotton bales in MCX godown. After discussions, the Committee agreed on this proposal. Now, MCX and CAI will decide in eight days the exact premium to be paid to ginners for delivery expenses of cotton deposited at MCX godowns,” Ganatra said after the meeting, which was held in Mumbai at the Textile Commissioner’s office. The three-member committee which has MCX, CAI and Confederation of Indian Textile Industry (CITI) as its members, will take the call on premiums and discounts. Further, the ginners raised a demand for new delivery centres, for which CAI has proposed before the MCX product Committee opening centres at Indore (Madhya Pradesh), Raichur (Karnataka), Hyderabad, (Telangana), Guntur (Andhra Pradesh), Bhilwara, (Rajasthan), Salem (Tamil Nadu) and Adilabad, (Telangana). The committee has approved the same. CITI Chairman T Rajkumar has been appointed as the chairman of the MCX Product committee for a period of one year.