The training programme was held here recently at the aegis of the World Bank and Forward Markets Commission supported programme to upgrade trading and risk management skills among commodity trading community.

"Set your house in order, see whom you wish to cater to, move forward," he exhorted. "There is no point in looking at what happened in the past. Talking of online trading where there was some reservations expressed by stock exchanges, Kolamkar said web-based trading was the emerging scenario. Cost of hardware was coming down and automation could make floor-based trading redundant. On its own merits a multi-commodity exchange having its active members scattered would find online trading a boon. This would be a situation where the volumes would compensate for the cost". "Competition cannot be wished away," Kolamkar said adding "The threat of competition need not be from other newly setup commodity exchanges, it could be from the exchange's own operators who could find that the stock exchange was a better place to go to, he said.

In order to keep members from straying, exchanges were asked to introspect on their current systems, procedures, management -- the chief areas of attracting customers.

According to Kolamkar, commodity exchanges should also figure out on what kind of organisational structure was needed. Demutualisation should be need based, not a goal in itself.

But the issues to ponder as outlined by Kolamkar was the capital required to modernise and face threat of globalisation, and whether present membership structure was adequate to provide this. He cited the example of the Bombay Oilseeds Exchange which had 60 active members out of 600. "Are exchanges complacent about cash flows and reserves? Are they being too member-oriented rather than customer-oriented and charging inadequate security deposits?" Kolamkar asked.

While Kolamkar expressed his appreciation on exchanges opting for common clearing houses, he said that they should also look at self regulatory mechanisms. Currently self regulation in exchanges is by way of social control with one person handling the responsibilities. But the time may come to migrate to rule-based systems rather than trust-based systems as a trust base may not always be professional.

As far as the FMC was concerned, it would help with the goal of self regulation by dealing with an apex body - an association of associations exclusively formed for the purpose. There would be customer protection by insisting on segregation of accounts - currently client accounts and member accounts are not needed to be maintained separately. There would be regular audits and disclosures on a regular basis, Kolamkar said.