| Our Bureau
Bangalore, February 23, 2005
Geojit Financial Services, along with National Multi-Commodity Exchange of India (NMCE) announced here on Tuesday the launch of online trading in coffee futures.
The futures trading has been opened with three contracts scheduled for delivery in May, July and September of this year.
Speaking during the occasion, Kailash Gupta, MD, NMCE said, "The online trading of coffee futures has been put in place to bring together on a common platform all the stakeholders in coffee trading. It is also meant to interlink the farmer and the consumer better, such that a bigger pie of consumers will go direct to the farmer. This will ensure fairer prices and cut down on price fluctuations."
The online trading of coffee futures follows similar initiatives in rubber and pepper. The trading will happen via Geojit terminals across Karnataka and Kerala. The terminals will provide live prices besides international, regional and local market information.
C George, MD of Geojit, said the programme would also involve imparting extensive education to small coffee growers, similar to the one undertaken for rubber plantation owners.
He added that the terminals were ready for banks and mutual funds to trade as and when regulatory permission was available.
"We expect the volumes of trading in coffee to be higher than pepper which trades around 100 tonnes a day, simply because coffee is more known to participants than black pepper," said Gupta.
Replying to a question on when mutual funds would be allowed to trade in futures, S Sunderesan, chairman, Forward Markets Commission (FMC) said, "The three national exchanges have been fully operational only for the last 14 months. In that period around Rs 5 lakh crore or $111 billion has been traded in all of them together. There has been a 400 per cent jump in volumes from the previous year itself. The government is moving fast to cope with the new situation and you can expect a decision sooner than later on trading by banks and mutual funds."
Speaking on regional exchanges L Mansingh, Secretary, Ministry of Consumer Affairs, Food and Public Distribution, said, "There are 25 regional exchanges which were set up earlier. Regional exchanges would have to bridget the dichotomy that exists between them and the relatively new national exhanges which function on the notions of best practices and transperancy. There should be a timeline given to them for the changeover since otherwise it would be unfair to ask them to meet the standards of the national exchanges."
Coffee is the second largest traded commodity in the world. In India, more than 50 per cent of coffee land holding is in Karnataka. Small holders comprise 65 per cent of all coffee growers in India.
NMCE, Ahmedabad is one of the national exchanges of the country along with National Commodity and Derivatives Exchange, Mumbai and Multi Commodity Exchange, Mumbai where futures trading in commodities takes place.
While NMCE began operations in November 2002, the other two exchanges began operations only around the later part of 2003. All of them function under the jurisdiction of the FMC.
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