Among others, EICA proposes to introduce for the first time the concept of market makers, curbing of various categories of members to five from the present eight, reduction of deposits, permitting higher trading limits to members and relaxing the stringent norms.

Currently, EICA bylaws do not have a provision for market makers. In order to make trading in cotton futures attractive and appealing to the cotton producers, consumers, exporters and speculators, the EICA now proposes to appoint five market makers from among the existing and prospective clearing house entitlement members (CHEMS) on first-come-first servedbasis.

The market makers will provide two-way quotes and will be expected to remain present throughout the trading hours.

Disturbed with the consistently lukewarm response to the trading of ICC futures since its inception, EICA has convened a meeting of its authorised representatives on Friday April 23, at the association's cotton exchange premises in Sewree.

After the members approve to the proposed changes, the body would forward these amendments to the Forward Markets Commission (FMC) for its approval.Subject to the FMC's approval, trading in ICC futures with renewed set of bylaws is expected to be commenced from early May this year.

At present, EICA has 22 members who trade in ICC indicating that vast majority of cotton traders are either unconvinced to take up trading in cotton futures or find the entry level too high and laws too stringent. The amendments are aimed at attracting more number of cotton traders, including from centres other than Mumbai, for which EICA even proposes to set upoffices in cotton growing centres like Punjab, Gujarat and Coimbtore.

During the first day's trading among few enthusiastic cotton traders, some 19 units of 55 bales each (of 170 kg each) of ICC were traded. However, since then, the average daily volume of trading in ICC futures has been restricted to around just four to five units till mid-February. This, the association claims, has slowly improved to around 10 units, even though this too is considered to be very low.

The EICA's Hedge Contract Committee and the board of directors have been reviewing the performance of ICC futures each week. The association's office bearers after consultations and periodic meetings with prospective member-traders and cotton consuming mills, suggested these main changes:-

* Amendments in about 20 clauses and sub-clauses of bylaws 47, 48 and 49 of membership;

* Amendments in bylaw 54 B and 60 A that has provision for tendering activities;

* Amendments in bylaws 60, 61, 64 and 65 that imposes penalties on sellers andbuyers for failure to comply with the requirements in case of tenders (penalties are proposed to be made stiffer);

* Amendments of bylaw 148 that provides for automatic stoppage of trading in any deliveries of ICC whenever the prices fluctuate by more than Rs 150. (proposed amendment seeks to lower this limit to Rs 100);

* Amendment of bylaw 164 providing for proportionate distribution of non-recoverable dues of a defaulting CHEM. It is proposed to provide for recovery of losses of CHEMs who are to receive full payments and help CHEMs to take legal course against defaulting clients.

At its meeting on April 10 at Akola (Maharashtra) with large number of cotton producers and traders from Nagpur, Andhra Pradesh and adjoining regions, EICA office bearers were convinced that if the association makes changes in its bylaws, many upcountry brokers would be inclined to join the cotton futures trading.

These and other changes are proposed to be incorporated to make trading in cotton futures moreuser-friendly.

Suresh Kotak on ICAC advisory panel

East India Cotton Association (EICA) president Suresh A Kotak has been nominated for the private sector panel of the 60-plus members of the USA-based International Cotton Advisory Committee (ICAC).

The ICAC is a standing committee comprising mainly of government representatives from major cotton producing countries. It is for the first time ICAC has decided to set up a panel of members from the private sector to assist the committee in advising the standing committee on matters relating to production, consumption and prices of cotton. Subsequent to his nomination, Kotak will attend the ICAC's advisory panel's first meeting in Washington, which will be held on June 8, 1999.