After conducting futures trading in pepper for about six decades, the India Pepper and Spice Trade Association (IPSTA) pulled down its shutters for futures early this week.

The Board of Directors of the Association took the decision following zero trading on the exchange platform for the past one year, which, as per SEBI norms, disqualified the exchange from further trading. It therefore opted to exit, Kishor Shamji, one of the directors, told BusinessLine .

Stringent compliance norms Added to this, he said, is the stringent compliance requirement specified by SEBI, such as ₹100 crore capital for commodity-specific regional exchanges.

Shamji said some multi-commodity exchanges were also looking for mergers so as to comply with the capital base requirement.

Given the IPSTA’s association with pepper for about 60 years and so as to remain in the trade, Mr Kishor, a veteran exporter and former President of IPSTA, said the board of directors, has “prima facie” decided to convert IPSTA as a spot trading hub for pepper.

He said all national exchanges have failed in conducting not only futures trading in this commodity but also spot trading under the Multi Commodity National Exchange banner.

IPSTA’s directors are in the process of reviewing the role the association performed earlier, besides looking at utilising its online trading platform. Under this, the lots coming for sale duly tested by the seller can be either stored in a warehouse approved by the seller’s association or at its own facility in the vicinity of the Kochi Spice market.

With minimal overheads and without much extra cost getting loaded into the price, the trade in general feels there is every possibility that spot trading through the IPSTA platform could gain momentum late this year or early next year. Planters and dealers in Karnataka can also make use of the IPSTA platform.

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