Sources in IPSTA said that a high-level delegation led by its president Sanjay Mariwala had met the market regulator on Saturday last. The delegation had briefed the FMC chairman VK Aggarwal of the steps belong taken by IPSTA to comply with the guidelines issued by the FMC. The delegation among other things told the FMC that efforts are on a war-footing to set up a trade guarantee system for the domestic futures contracts entered into on the exchange by its members.

However, the market regulator has not taken any decision on the basis of its meeting with IPSTA delegation. FMC has reportedly told the IPSTA team that it would inform them of its decision later. The IPSTA delegation also informed the FMC that the bourse is alsomulling to set up online trading for pepper on its own. The management of the association has initiated talks with a slew of companies for setting up the online trading system.

IPSTA has already amended its by-laws to enable online trading in pepper, sources said. IPSTA is planning to launch its online trading if possible with multiple commodities. The association has already written to FMC seeking it permission to start futures trade in coconut oil.

The pepper market here had plunged into a chaos when the market regulator turned down IPSTA's request to open July and August contracts last month on the ground of lack of guarantee system. Following this, the IPSTA director board held an emergency meeting and decided to meet FMC to present its case.

The director board took an in-principle decision to ensure guarantee for future contracts on IPSTA. The board has also decided to consider two options; either extending guarantee through the First Commodity Clearing Corporation of India (FCCCI), the clearingarm of International Commodity Exchange (ICE) or by setting up a separate trade guarantee fund for the domestic futures.

IPSTA management has sought a detailed project report from the FCCCI on the matter. IPSTA has asked FCCCI to prepare a project report which would keep the transaction cost at a bear minimum level. The association has also asked the FCCCI to spell out its views on how long it could provide guarantee for the domestic contracts. IPSTA has also asked the recently appointed Mumbai-based consultants, RSM & Company and Nanavati Associates to prepare a project report on setting up a separate guarantee fund for the domestic trade. Among other things, the consultants were asked to look into the legal details regarding setting up a separate guarantee fund. They would also look into the financial requirement need to set up a new guarantee fund. Both FCCCI's proposal and consultants reports are expected to be submitted before June. IPSTA would seek the consent of its members before inking the deal.

IPSTA now has only one futures contract for June in operation as the May contracts ended on Saturday last. If FMC stuck to its stand the futures trade in pepper in the country will come to a halt on June 15, when June contracts closes.