Citing an example, he said that earlier, Soyabeen Processors Association of India was unwilling to adopt online trading for proposed soya futures, while now they have agreed to implement online trading, but demanded more time. FMC is positive about this, provided a time frame is given," said Agarwal.``As far as modernisation is concerned, Government and FMC are taking various measuresto improve functioning of commodity futures exchanges. ""As part of reform agenda most of the exchanges have adopted daily clearing system, which was done earlier on weekly basis. Now they should be getting ready for online trading, they should also start more futures. The exchanges having multiple commodity future will be useful to the participant. In such exchange one can operate in more than one futures from the same exchange.'' he said.

"At present, the financial state of the exchanges is a matter which demands attention. Exchanges have to increase their earning. Most exchanges have very low income. For instance, ASMA had an annual subscription of Rs 100 till recently, which was a mockery. The fee has since been increased to Rs 300 per year, but still it seems inadequate." Exchanges must increase transaction fee, he urged.

Regarding current policy, he said that any entity can apply to government for futures trading. At present, eight exchanges are recognised for the Gur future, while two proposals arepending, he said.

In reply to a query regarding illegal futures, he said that FMC is aware about parallel future markets, but is not in a position to stop it, as such powers are vested with the respective state police department departments. "Aiming to curb illegal forward trading, we are organising seminars all over the country, where the participants are informed on how to read cryptic contract notes and how to book traders indulging in illegal activities." Recently two such seminars were organised in Gujarat, he informed.

According to Jayesh Shah, president of Ahmedabad Seeds Merchant association (ASMA), computerisation is a good idea. "We had discussed the issue of online trading with the FMC chairman, who had made some suggestions. The board will discuss the matter. At present, ASMA is implementing computerisation. The exchange has customised software to monitor open positions in castor futures. Volume in castor futures is increasing, and the exchange is maintaining a vigil on the market. At present,we have approximately 200 members, out of which 55 to 60 are active members. ASMA had conducted cottonseed future trading in the past. We have necessary bylaws and infrastructure for more futures," he indicated.

"In the past years, there has been much hue and cry about futures trading. As far as ASMA is concerned, transparency could boost confidence of the trade. As the economy opens up, futures markets will have to transform themselves. At present, business is dominated by individuals. But eventually, it will be institutionalised. For vibrant markets, financial safety, transparency and liquidity are prerequisites. Manipulation and manoeuvering can hinder the growth.'' said an insider.

``Parallel markets and 'dabba' ie. bucket shop should be removed. At present, illegal futures are traded at various places like Bhabhar, Surendranagar, Indore, Akaola and Delhi. Traders use illegal derivatives called jota-fatak in big way. It gives huge financial leverage to operators, hence some time, prices overshoot dueto such derivatives."

"For healthy and transparent futures markets, jota and fatak should be banned. Supporters of these illegal derivative often describe them as options, traded in overseas markets, which is not true. Options have the support of clearing houses, thus eliminating counter-party risk. "In these local illegal derivatives, exchanges have no role to play. They don't have the support of clearing house. In case of overshooting, it can jeopardise the entire system.'' he added.