Govt clears decks for jute futures

KOLKATA: East India Jute and Hessian Exchange have secured permission from the Union ministry of consumer affairs, food and public distribution to resume futures trading in raw jute, which had been suspended by the government in ''64.
The clearance comes in the wake of the ministry''s announcement last month, allowing futures trading in 54 commodities including raw jute. In a sequel to the announcement, EIJHE has been renewed recognition by the ministry as an appropriate authority to conduct futures trading in sackings, hessian cloth and raw jute, under section 6 of Forward Contracts Regulation Act, 1952.
Under the new dispensation, EIJHE has been authorised to conduct futures trading in raw jute and the two other jute goods for the next three years, starting from April 1, ''03 to March 31, ''06.
The exchange is now all set to extract approval from Forward Markets Commission (FMC) to resume futures trading in jute fibre. “Once we get green signal from the regulator, all futures trading in raw jute will be undertaken under separate contracts of the exchange, which will be known as Standard Contract No-III,� a EIJHE official said. Right now, only forward trading in raw jute is done by the exchange.
The exchange has been doing futures trading on hessian cloth since October ''92 and on sacking bags since March ''98. Futures trading on hessian cloth is being carried under Standard Contract No-I while that on sackings under Standard Contract No-II. Besides, the exchange also conducts forward trading on those jute goods.
The exchange will deal with futures trading on TD-5, ex-West Bengal varieties. Subsequently, it will be extended to other basic and alternate tenderable varieties of jute fibre, the official said. Without the requisite infrastructure for online trading, the new line of trading will be done through the open outcry system.
EIJHE has been trying hard for quite some time to get the approval from FMC to resume futures trading in raw jute, particularly in the past 3-4 years. Even prior to receiving the clearance from the ministry on this issue, it had submitted the draft amendments on bye-laws before FMC about two years back, seeking the regulator''s permission on the trading. But with no clear guidelines coming from the concerned ministry on the issue till February ''03, FMC had too bid its time in giving its approval to the matter.
Now, before acting on the issue, FMC seeks full co-operation from the West Bengal government. EIJHE too has appealed to the state government to support the move for the sake of jute farmers. EIJHE says farmers can now plan for their jute crops on the basis of the fibre''s price movement over a period of at least six months.