CALCUTTA, January 30: East India Jute & Hessian Exchange, the only commodities exchange in the east, awaits the final clearance from the union ministry of civil supplies to resume futures trading in jute sackings. Forward Market Commission, the umbrella organisation for all the commodity exchanges in the country, has already given an `in-principal' permission to the hessian exchange, which is now busy amending some bye-laws to shape up the trading system and reduce speculation in the market.President of the exchange Arun Kumar Seth told The Financial Express that the bye-laws have already been proposed to the members and those will be ratified within a couple of days. "We have proposed to reduce the free limit for the ring members from 2,500 bales to 1,000 bales. This will reduce the risk as members will have a lower net open at the end of any delivery.
We have also changed the basic quality of jute sackings from B Twill bags of 1,020 grams to 907 grams. Apart from these, some minor changes are tobe made to fine tune the process of trading," Seth said. Sources in the exchange said that the Forward Market Commission has already received the necessary clearance from the union ministry of law and official notification is expected shortly. "The law ministry has given the clearance and has allowed the hessian exchange to resume futures trading in jute sackings. We are expecting that we will be able to start the trading in February," the sources added. The turnover of the exchange, which at present is trading in hessian only, is also expected to double.
Seth said that at present our daily turnover is somewhere around Rs 38 crore. Once the futures trading in sacking opens up, we feel that we will be able to increase the daily turnover by another Rs 42 crore. In terms of quantity it is most likely that there will be an average trading of about 40,000 bales of sackings. The exchange has 589 members, which includes all the jute brokers, both in raw jute and jute goods, shippers and mill-owners. Apart from themembers there are another 500 non-members who can deal in the exchange through the 77 ring members.The ring members who are already operating in the hessian will have to deposit another Rs 50,000 as security to trade in sackings. "The ring members keep a security deposit of Rs 1,00,000 but now if they want to trade in sackings they will have to deposit another Rs 50,000. For new ring members it will be straightaway Rs 1.5 lakh and will be allowed to trade in both the commodities," Seth noted.The president is also hopeful that `good days' are round the corner.
"Futures trading in jute sackings was banned by the government on August 24, 1983, which is resuming after 15 years. In the meantime we have been able to clean our negative image by checking speculation in the market. Everyone in the industry is waiting for the resumption because this will be a useful measure to cover their risks in jute goods tradings," Seth added. However, futures in the raw jute is unlikely to resume so early because ofreservations against it by the Left Front government of the state.
Representatives of the government have already noted their dissatisfaction in talks with central government officials that they are not eager to resume forward trading in raw jute.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
