The Hindu Business Line : Futures trading in rubber takes off

FUTURE PERFECT: (From left) Mr Kailash Gupta, Managing Director, National Multi-Commodity Exchange of India, Mr S.M. Desalphine, Chariman, Rubber Board, Mr Jyothilal, Director, Agriculture, Kerala Government, Mr N. Radhakrishnan, President, Cochin Rubber Dealers' Association, and Mr C.J. George, Managing Director, Geojit Securities, at the launch of futures trading in natural rubber in Kochi.

KOCHI, March 15

FUTURES trading in natural rubber was launched for the first time in the country here on Saturday.

The Rubber Board Chairman, Mr S.M. Desalphine, effected the first trade through an on-line trading terminal.

Geojit Securities is offering the futures trading facilities through the National Multi-Commodity Exchange of India Ltd, Ahmedabad.

The market opened with a price of Rs 4,650 for April contract and Rs 4,675 for May contract. While the unit of trading is one tonne, the price quotation is for one quintal.

Speaking on the occasion, Mr Desalphine said the Board had approved futures trading in rubber following the recommendations made by various consultants who were of the view that futures trading would reduce price volatility.

Though the present trading system in rubber was working well, the fluctuations were making the trade a `gamble', he said. It is in this context that the futures trading is being introduced.

The Chairman pointed out that futures trading experiment in Kuala Lumpur had failed because small growers were kept out of it.

The absence of small growers there had resulted in low trading volumes.

He cautioned that such a situation should be avoided in India. This was a mechanism that should benefit all the segments, he added.

He said the Board was also planning to organise seminars to enlighten small growers about futures trading and to create awareness among them about the marketing set up in it.

Mr K.R. Jyothilal, Director, Agriculture, Kerala Government said introduction of futures trading in copra had helped to stabilise its prices in the recent period.

This trend would also be witnessed in the case of rubber.

He said the entire agriculture in the State was moving from scheme led to market-led growth and information technology could be used as a tool for marketing and trade for all commodities.

The Government had come out with a price stabilisation fund to benefit farmers and to give stability in prices, he added.

Mr C.J. George, Managing Director, Geojit Securities Ltd said the company decided to venture into futures trading in rubber to introduce transparency in a commodity that was actively traded.

Fair trading practice ensured through checks and balances built in the system and anonymity of trading participants and effective risk management system would offer free and fair trading.

Mr Kailash Gupta, Managing Director, NMCEIL said the exchange would play a significant role in ensuring the success of futures trading in natural rubber.

The Exchange will use the VSAT-based (very small aperture terminal) network to carryout trading.

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