KOCHI, July 8: The much-awaited international pepper futures exchange is expected to start regular oeprations from the middle of next month at Mattancherry in the city.

The India Pepper and Spice Trade Association(IPSTA), the body promoting the exchange, is presently in the process of finalising the selection of banks which have shown interest in equity participation in the clearing house of the exchange `the First Commodity Clearing Corporation of India' (FCCCI).

FCCCI is the authorised body which provides guarantee for every contract entered into by the exchange. Already 10 banks have shown interest in participating in the equity capital of FCCCI, according to the chairman of the foward markets commission Vijay K Agarwal, who is presently here in connection with a one-day promotional workshop on pepper futures contract.According to Ipsta sources, financial institutions and banks should account for 45 per cent of FCCCI's total Rs five crore equity capital. The contribution is limited to a minimum of Rs 10 lakh and a maximum of Rs 50 lakh for each bank.

According to Agarwal, one of the member banks to be selected as clearing bank, will be entrusted with the task of ensuring that the trading contracts were properly settled by ensuring the margin position of every member.

Though membership was open to both Indian and foreign traders, unless and until government allowed free flow of funds in and out of India, the exchange was not likely to attract foreign members. Formal government sanction for repatriation of profits and capital was expected by the time the exchange starts operations, the president of Ipsta T Vidyasagar said. Vidyasagar said a Spice Trade Association delegation proposed to visit pepper producing nations to promote the exchange since no foreign participant had sought membership so far. The spice trade is looking up despite credit crunch. He pointed out that if the exchange had to function at international level, it had to attract foreign members. Of the 140 members of the existing domestic pepper futures exchange at Mattancherry, 52 have applied for membership at the new international division.With the commencement of operations of the international exchange and clearing house guaranteeing the contracts, the volume of trade was expected to go up from the present one million quintals a year to as much as 10 million quintals in two years time, Ipsta sources said. Later, speaking at the workshop on salient features of the international pepper futures exchange, formally named as India Pepper and Spice Trade Association International Commodity Exchange (Ipsta-Ice) division Agarwal said the decision to set up the exchange was in tune with the Kabra Committee's recommendations in 1994.y

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