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Kohinoor Mandal
Calcutta: Almost after seven months the Forward Markets Commission (FMC) has allowed The East India Jute & Hessian Exchange to restart forwards and futures transactions in hessian and jute sackings.
The commission has accepted all the amendments made by the board of directors regarding the inspection and delivery of jute goods and creation of an in-house arbitration council.
The exchange received an official clearance from the commission on Wednesday evening. Trading at the exchange resumed from Thursday morning for the November delivery precisely after six months and 15 days. However, there was not much of activity among the ring members during the first two days of trading.
The Hessian Exchange has made drastic changes in their bye-laws regarding inspection and delivery, which created all the problems during the February delivery, this year. The previous clauses regarding arbitration has been totally replaced by a new chapter on in-house arbitration.
However, a section of the board members feel thata number of contentious issues have not been addressed properly in the amendments that were made recently. The ring members and traders have their apprehensions too.
"Even on the second day of trading no transaction was registered for hessian and as such no benchmark price could be fixed on this commodity. The ring members are not too sure of the changed bye-laws and they are apprehending that the reopening may become a short-lived affair," sources said.
Officials of the exchange said that the amendments had plugged all the loopholes in the bye-laws. "All activities related to inspection and delivery of goods have been streamlined and there is hardly any loophole left. This will help the exchange to function smoothly," officials said.According to the officials the proposed in-house arbitration council will handle all monetary disputes between the members and no director can become a member of the arbitration council.
However, sources asked about the fate of the other issues which are not directly"monetary" in nature. "Suppose, if the president or the board overrules a decision of the clearing house committee, as it has happened in the past, the matter will have to go to the high court. So there are a lot of other issues, which is not under the purview of the arbitration council," sources said.
The board of the Hessian Exchange has not yet decided on the body which will oversee the constitution of the in-house arbitration council. Another disputed issue -- creation of a list of approved jute mills under the fresh guidelines -- have also been left out for the time being.
Even a number of legal matters, including the one on last year's election of the board members, are still pending at the Calcutta High Court. The aggrieved parties have not withdrawn their cases. The fate of all these legal cases are still unknown.
During the last six months the Hessian Exchange has missed two delivery dates, May and August, after the disputed closure of the February delivery. However, the board and exchangeofficials are jubilant to see that things have started rolling again.
Sources said that the new FMC chairman wanted the trading to start off before settling all the disputed issues. "The exchange came to a grinding halt during the regime of the former FMC chairman VK Aggarwal. The new chairman KC Mishra wanted the exchange to start trading first. He is of the view that things will be sorted out in the process," sources said.
During the last seven months, the 17-member board of the exchange suffered major jolts, one of them being the resignation of as many as five directors. FMC's executive director DS Kolamkar also questioned the role of a number of directors sometime in January, this year.
This year's election process have already started at the exchange. The results will be declared on September 21, followed by the Annual General Meeting (AGM) on September 22. The AGM would be addressed by the present FMC chairman KC Mishra.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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