The proposed changes aim at taking stringent measures, including heavy penalties and cancellation of membership, against members engaged in illegal trades outside the exchange. The members trade outside the bourse to avoid commitments, payment of stamp duties and other levies charged by the exchange.

Backed by a set of proposed changes in its bylaws, the exchange authorities have requested the FMC to allow trading in the December 1998 delivery of turmeric futures to maintain continuity. Activities on the exchange, with permanent recognition from the Forward Market Commission (FMC), were halted early April this year, following refusal of the FMC not to permit trading in the July turmeric futures.

These requests form a part of the revival package prepared by a 10-member committee set up by the exchange authorities. The revival package has been sent last week to the FMC.

"We have submitted our proposal to the FMC last week," said a member-director requesting anonymity. "These steps are aimed at providing safety and strength to the exchange as per the FMC's suggestions".

It is after more than four months of closure since March this year, that the Sangli exchange authorities have initiated steps to revive the 40-year-plus exchange trading primarily in turmeric.

Interestingly, the exchange authorities do not seem to be yet prepared to set up the much-required clearing house, under the pretext of "precarious" financial health of the exchange since the past few years. "Given the state of affairs at the exchange it would almost impossible to set up the clearing house at this juncture", the director said.

Clearing house that guarantees all trades done on the exchange, has to be funded by the exchange members. It is, therefore, to be in place before futures trading is permitted either for December 1998 delivery or the March 1999 delivery contract. Given the extreme importance of the clearing house in futures trading, it is unlikely that the FMC would soften its position in permitting the opening of the exchange.

Despite this, the Sangli exchange authorities maintain that instead of the clearing house, the intended doubling of the graded daily margins starting from Rs 6,000 per quintal onwards charged to the member-brokers for carryover of their positions, "would provide the expected reasonable safety to the exchange". There was no safety mechanism before the payment-tangles that emerged earlier this year that finally led to a complete halt in futures trading.

The closure of the exchange in March this year was followed by intense speculation, price rigging, default of couple of member-traders, who finally went to the local court challenging the exchange authorities' decision to settle trades at lower-than-traded levels.

The local court, on its part, had refused to give its verdict till the FMC gave its opinion on the issue. In order to get the first hand information on the activities of the exchange and suggest possible ways of revival, a 3-member FMC team, led by FMC chairman Vijay K Aggarwal, recently visited the exchange. After the visit, the FMC is said to have given its suggestions and asked the exchange authorities to come up with "viable and acceptable'' revival package. Among others proposals, the exchange authorities feel, increasing the membership fees and laga (a charge per atki of 70 kg each payable by the members) are planned to be raised from their current low levels fixed more than a decade ago. These are aimed at strengthening the exchange's financial position. The Sangli commodity exchange is the only exchange that trades in turmeric futures. It has been non-functional since April this year. If it is not able to revive itself, turmeric futures could go out of the exchange on to the Bombay Oilseeds & OilsExchange (BOOE), Navi Mumbai, which has been vying for the same.