Date:12/02/2004 URL: http://www.thehindu.com/2004/02/12/stories/2004021203071600.htm

Business

Futures trading in cardamom takes off

By K. Venkiteswaran

KOCHI, FEB. 11. Foreign institutional investors are making serious enquiries about the multi-commodity exchanges and are likely to enter trading, said Navin B. Chawla, Secretary, Union Ministry of Consumer Affairs, here today. He was talking to reporters prior to the inauguration of on-line futures contract in cardamom by the National Multi Commodity Exchange of India Limited through a terminal of Geojit Securities.

Mr. Chawla described the commencement of futures contract in cardamom and major pulses as a landmark one and said these were potential areas of growth for the commodities markets. There had been major gaps in trading in commodities but of late the four major multi commodities exchanges had kick-started trading and volumes had been growing appreciably. The exchanges have been told to adopt best trading practices and to bring in a lot of transparency to win the confidence of the producer segment as well as the consumers.

The commodity futures is regulated by the Forward Markets Commission and efforts are on to strengthen the regulatory mechanism so that the exchanges provided `price security' to the growers and agriculturalists at the same time providing benefit of hedging to traders. He said states like Kerala had the added advantage of on-line trading because of high literacy rates and he wanted the leading market players to undertake a series of training to educate the farmers and traders about the commodity markets. He said the regulator would be strengthened to smoothen the present inconsistencies in the multi commodity exchanges where the ownership pattern should be removed from management. In a couple of years, with the onset of online trading, the geographical monopoly of some states in the multi commodity exchanges would vanish and there would be level playing field, Mr. Chawla pointed out. More than government regulation, his Ministry had been insisting on self-regulation by the market players and to make the system more and more transparent. He said that the Administrative Staff College, Hyderabad, had been asked to provide training to the traders in the multi commodity exchanges on a regular basis.

Answering a question, Mr. Chawla said futures trading in gold had not picked up in some exchanges. Sixty-five per cent of the total demand of 800 tonnes of gold were accounted for by the rural sector and the practices in the retail segment were not upto the mark, he observed. The Bureau of Indian Standards is insisting on hallmarking and will be providing the necessary infrastructure for setting up assaying and testing laboratories around the country, he said. Once Parliament approval is received, options trading would also be introduced in the commodity exchanges which will have a deeper impact.