International contracts, launched with much hype by IPSTA nearly a year ago under the banner of International Commodity Exchange (ICE), is already in a limbo thanks to the inaction by the exchange. Industry watchers say a major factor that pushed the four-decade old exchange to the brink is the partisan attitude of its member traders.

Top officials of IPSTA, when contacted, confirmed that the commodity markets' watchdog has sent a letter barring IPSTA, from opening fresh futures contract beyond August. The FMC decision came in the wake of the IPSTA management's failure to set up a tradeguarantee system for domestic contracts. The trouble between IPSTA and the regulator began a couple of months ago when a team of FMC officials that inspected IPSTA's trading procedures found them less transparent.

The FMC had then asked the IPSTA management to set up a trade guarantee mechanism that would ensure transparency and efficiency in trade.

However, when the IPSTA management broached the issue with the member traders, a section of them felt that such a system is unnecessary and the existing margin systems were good enough to take care of any defaults. Some of the members even went public accusing FMC of being high-handed. Another section of members, however, felt that the guarantee could be easily ensured through First Commodity Clearing Corporation of India (FCCCI), the clearing arm of ICE. While ensuring guarantee through FCCCI would have saved a lot of time and money for the exchange, a section of the members were adamant in putting up separate guarantee fund much against the advise of twoconsultants appointed by the pepper bourse to study the issue.

While, the wrangling between the members were going on, the deadline set by FMC has expired prompting the regulator to take the extreme step of barring the exchange to conduct futures contract beyond August. IPSTA director board, which met recently, is now planning to seek clemency from the regulator by sending a six-member team to plead before FMC. Under the statute of IPSTA, the exchange should run six contracts simultaneously to ensure smooth trading and risk management throughout the year. At present IPSTA has only one futures contract, August futures, that would come to a close on August 15.

Meanhwile on the international arm, ICE, IPSTA management has done little so far to change the fortune of the nascent bourse. Almost after one year in existence not a single contract was executed through ICE till date.

ICE has got a shot in arm early this year when the Reserve Bank of India allowed to conduct dollar-based contracts in black pepper.However, the proposal went into hibernation as the exchange management's decision to appoint a consultant to root the modalities kicked off another row among members. Though, the Spices Board has promised funds for marketing the only international futures exchange in black pepper in the world in countries of origin and demand, the management has failed to work out a blueprint to sell the concept abroad. It could also not make necessary amendmends in the statute regarding the quality and quantity standards of the contracts.