First Commodity plans pepper, gold futures

First Commodity Exchange, a Kochi-based single commodity trading platform, is planning to introduce futures trading in pepper, rubber, gold and cement shortly.

The regional commodity exchange currently offers futures for coconut oil and copra. While the former is generating good volumes, the latter has remained illiquid since inception. The coconut oil futures are generating a fortnightly turnover of Rs 10 crore.

"A few other exchanges are already trading in pepper, rubber and spices. We are studying the potential of these commodities," P B Alexander, chairman of the exchange, said. The exchange has engaged a group of experts to prepare a feasibility study, which will be announced at its annual general meeting soon.

Besides, the exchange is facing major delivery concerns from private warehouses. Therefore, it is now planning to set up its own warehouses in two places in Kerala. The exchange has earmarked Rs 30 lakh for this purpose. As Kerala is a major gold-consuming state, futures in gold makes sense for trading, Alexander said.

"Cement is a new commodity which no exchange has thought of. Hence, we are in the process of launching cement on our platform which would possibly attract all classes of traders, including short-term and long"�term consumers and corporates,"Alexander added.

Kerala's coconut and copra productions have declined recently. To add salt to the wound, the 4 per cent value added tax (VAT) levied by the state government has forced copra and coconut oil trade to move to Tamil Nadu "� the no VAT state.

"Though the government has announced removal of VAT, the notification is yet to come. Therefore, our strategy is being delayed," said Alexander.

The exchange has plans to make it fully demutualised by issuing shares to large corporates. It is in talks with several large corporates.

The exchange is also planning to launch a market campaign and membership drive to strengthen its presence in the commodity sector.