Currently, no commodity exchange in the world offers futures trading in the refined, bleached and deodorised (RBD) palmoil, not even the former Kuala Lumpur Commodity Exchange (KLCE), which offers futures trading only in the crude palm oil (CPO). Palmoil, Malaysia's mainstay, has been gaining increasing importance in the country's edible oils basket. The monthly imports at around 4-4.5 lakh tonnes have jumped over 30 per cent since the past more than one year. Despite the last week's hike in the import duty to around 45 per cent (from 35 per cent earlier) the imports of palmoil are expected to remain high given the huge demand for the oil in the country.

With India being the major importer of both RBD palm and CPO, it becomes inevitable for the RBD palmoil traders both in Malaysia and in India to hedge their export/import contracts and avoid the various related risks including payment defaults by the importers.

In its efforts to become the country's first multi commodity exchange, the BOOE hopes to kick off the much-awaited futures trading in the RBD palmoilein by the end of this month alongwith futures trading in two other edible oils - groundnut oil and sunflowerseed oil. Currently, BOOE is among the 18-plus commodity specific commodity exchange in the country.

Last week the exchange received clearance from the commodity futures regulator Forward Markets Commission (FMC) for conducting futures trading in these commodities in addition to castor seed (domestic futures) and castor oil (international futures). The formal clearance from the government is expected this week.

The BOOE has already incorporated the clause of foreign traders becoming members of its exchange while finalising the laws for its castoroil (international) futures, which, for various reasons is yet awaited to take off after the formal launch last year.

Making the BOOE a multi-commodity exchange in the country is feared to be a tall order for its office bearers, given the relative reluctance on part of the 550-plus BOOE members themselves to trade on the official markets.

Majority of the exchange members prefer the unofficial, rather illegal, markets of Gujarat and Mumbai to hedge if at all their trade contracts.In order to curb this practice og trading in the illegal markets, the FMC has forced the BOOE to adopt drastic changes in the structure of its board.

Given the inevitability of the subject, the BOOE at its extra ordinary general meeting held in Mumbai on June 9, finally formalised the demands of the FMC.

Accordingly, the BOOE's 24 member board will now have eight non-trading members (from four earlier) overseeing the BOOE's activities. These directors from outside will be assisted by 16 others from the panels of dealers (four), brokers (four, halved from eight earlier), four from the exporters and importers community and two from the crushing industry (represented by the Solvent Extractors' Association which has infused funds in the BOOE's kitty as also on the Prime Commodity Clearing Corporation of India, the BOOE's clearing arm).

The BOOE's main thrust therefore, will now be to not just activate the dormant members as also get new members from the cross section of the edible oils industry, including from Malaysia. The marketing efforts to woo players from the stock markets can materialise only after the BOOE's officebearers are able to increase volumes on the exchange, say observers.

The Malaysian palm oil trading community is said to be keen to participate on the BOOE. In this direction, the BOOE has organised a one day seminar on June 21 wherein experts from all related segments - both domestic and international - will address the participants. Lastly, it may be recalled that the Malaysian authorities have been a worried lot following the Indian government's recent step of hiking the import duty and restriction on the use of the CPO by the vanaspati industry here.

Over the past couple of months, there have been repeated delegations from Malaysia to champion the cause of palm oil in India, hinting that the Indian authorities refrain from hiking import duty.