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M.R. Subramani

CHENNAI, Jan. 18

THE launch of Web-based futures trading by the Coffee Futures' Exchange of India (COFEI) Ltd has been delayed as it is yet to finalise the service providers to enable Internet trading.

"Interactions with a few service providers and software companies are continuing. They are yet to be finalised," COFEI sources told Business Line.

COFEI, which reverted to the conventional outcry system from October 15 last year, planned to start Web-based trading from this month.

"It appears to be too early for launching Web-based trading before the end of this month," the sources said.

This would mean that the outcry system, which was to continue only till this month, would be extended. COFEI, which began trading in July 1998, shelved its online electronic trading system in view of its prohibitive costs in using the information technology infrastructure. In fact, COFEI was using the Bangalore Stock Exchange's (BgSE) infrastructure and premises for the online trading. COFEI's outgo on the infrastructure was Rs 23 lakh per year. The agreement with BgSE was terminated when it was up for renewal for another year.

Besides, COFEI had also launched online remote trading from the coffee growing areas of Hassan, Chikmagalur and Kodagu (Coorg). The online trading was conducted through the VSAT (very small aperture terminal) system. The online system did not attract the expected revenue as a majority of the small growers, who constitute 98 per cent of the total coffee farmers, were not ready to take part in the futures trading.

In a bid to attract the small growers, COFEI had also launched futures in raw coffee in June 2000 but that, too, failed to yield the desired results.

COFEI planned Web-based trading since it was viewed to be an inexpensive one. It is planned to be launched on use-and-pay basis and a revenue-sharing arrangement involving the service provider is likely to be put in place so that trading could be done from the members' premises.

Meanwhile, Canara Bank has joined COFEI as an institutional clearing member. It will entail the bank to take part in clearing functions.

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