Pepper body not to dilute identity

The India Pepper and Spice Trade Association (IPSTA), one of the oldest commodity exchanges in the country, is against diluting its identity as a regional exchange.

The bourse, however, added that it was willing to adopt a suitable development strategy to accommodate itself in a changing business environment.

"The National Multi-Commodity Exchange (NMCE) recently approached us and we had an informal discussion with its Managing Director Kailash Gupta. We have suggested them to submit a detailed proposal for our board of directors to consider it," said Mahendra L Parekh, president of the IPSTA.

Parekh added that the NMCE would submit its detailed proposal within the next two weeks and an appropriate decision would be taken based on it.

Major national exchanges such as the NCDEX, the MCX and the NMCE have approached the Kochi-based exchange with proposals, suggesting it to function as their subsidiary and trade on the national exchanges as a member broker.

"It is difficult to remain as a regional exchange in a dynamic business environment. We will adopt a new business model. But, we will not dilute our identity," said Parekh.

The IPSTA logs an average daily volume of 25 tonnes and a liquidity crunch has hampered its day-to-day operations.

The commodity exchange had obtained a licence to start rubber futures two years ago. But, the move has not yet materialised because of poor response from stakeholders.

It had earlier signed an MoU with the MCX to synergise its business, but this too did take any concrete shape.

Beginning its operations on January 15, 1957, the Kochi-based bourse currently has 160 members. "Most of the IPSTA members are not active traders and the business has virtually come to a standstill," said a Kochi-based spice trader.

The exchange has begun online trading, but it failed to take off as national exchanges cornered a larger share of the regional exchanges.