Kochi pepper bourse to begin online trading

The Kochi-based India Pepper & Spice Trade Association (IPSTA) is likely to get a new lease of life within a fortnight as the premier exchange on pepper trade will switch over to online trading from open outcry now.

The 180-member strong IPSTA, despite its domain knowledge and rapport with farmers, producers and traders, lost on volumes to the bigger comexes, especially the Ncdex. The exchange's volumes have dropped to about Rs 2 crore a fortnight from Rs 50 crore.

"Basically, we did not have any vision which took us into losses. But, now the scenario has witnessed a dynamic change and we are confident of turning around," said Mahendra L Parekh, president of the exchange. IPSTA has obtained a technology from a local online technology supplier, Corporate Oil Merchant, at a nominal charge and with an assurance of smooth functioning of trade.

The Forward Market Commission (FMC) has renewed IPSTA's licence as an international exchange up to December 2009 and permitted overseas traders to trade in black pepper on this platform. With this renewal, either one or two parties to the contract can be foreign participants.

"The FMC and RBI had already granted us the international exchange status and, so far, we have not been able to attract foreign participants despite our efforts," said Mahendra L Parekh, president of the exchange.

"You arrange your shop only then shall we come was the response from traders in Canada, US, Singapore, Vietnam when we went to market our exchange," Parekh said adding "but now we hope to attract overseas traders on our online platform".

Without divulging the name of the existing overseas participant, Parekh said a trader from Rotterdam was taking part in the open outcry platform and was very happy, he added. The association has delivery centres each in Vietnam, Singapore, Malaysia, Brazil and Indonesia.

The association further claims to have dollar contracts, before the launch of national commodities exchanges, three years before. Though the exchange has obtained FMC's permission to launch contracts in rubber, turmeric and chillies, it wants to concentrate on black pepper.