Financial Daily from THE HINDU group of publications
Tuesday, Jun 18, 2002
Financial Daily from THE HINDU group of publications Tuesday, Jun 18, 2002 |
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Agri-Biz & Commodities
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Commodity Exchanges `FMC target plan bad for small exchanges' G.K. Nair
KOCHI, June 17 THE strategy of the Forward Markets Commission (FMC) to set targets for all commodity exchanges seems to be aimed at eliminating the small exchanges in the long run paving way for a limited number of them with strong bases. Commodity Exchange sources here told Business Line that many of the small exchanges would not be able to meet the target set by FMC for volume and turnover. Besides, many might not be in a position to introduce online trading because of the cost involved in it setting up. Thus, after some time there would be only be limited number of exchanges with acceptable levels of annual trading volume and turnover equipped with online trading facility. ``The time will come that all those have failed to meet the target might be asked to close down,'' they feared. According to them, such a situation would emerge before the commissioning of the National Commodity Exchange (NCE). The idea of the Government was to have regional commodity exchanges under NCE as it would facilitate their easy monitoring apart from bringing in more transparency. Interestingly, FMC was not insisting these exchanges to have online trading facility. Kerala now has two exchanges, one for pepper and the other for coconut oil and copra. The members of these exchanges are divided over having online facility saying that it would involve a heavy initial investment apart from raising the trading cost. Granting permission to have multi-commodity trading is expected to be based on the availability of online trading. If any of the other exchanges with online facility sought permission to trade in pepper or coconut oil, FMC might not any reservation to accord permission, they said. Therefore, it was inevitable for the exchanges in Kerala to introduce online trading in the long-term interest of these commodity exchanges, they added.
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