According to EICA weekly report, the current trading volume will grow further in the coming months when the new crop arrivals will peak. According to EICA estimates, the daily trading volume may go up to around 200-300 units during late November and throughout the month of December.

Further, with the basis of contract finding acceptance, some of the mills and ginners are also expected to participate in the trading in the near future.

This will further boost the cotton futures which is still in its nascent stage.

According to EICA, the focus has been not merely on increasing the volume through wider participation but on modernising the techniques as well. While all post-trading operations have already beencomputerised, consultants retained by the association are working on computerising pre-trading operations so as to switch over to on-line trading as early as possible.

It is worth mentioning that the steps taken in May to augment the participation in cotton futures trading has started paying off. The East India Cotton Association had amended the then existing bye-laws for the futures cotton trading in the last week week of April which were then approved by the Forward Markets Commission (FMC).

The amendments included reduction in daily margin by 33.33 per cent to Rs 100, tightening of penalty rates, authorisation to the controller for clearing tenders, clearing tenders without the mandatory presence of buyers/nominees, reduction in categories of Clearing House Entitled Members (CHEM).

Other amendments were: reduction in deposits, fees, other charges, margins payable by CHEM and increasing free limits, reduction in deposits and other charges payable by trading members and brokers and appointment ofmarket makers.

The bye-law 47 provided for several categories of CHEMs who had to pay high rates of deposits and other charges. It had been found necessary to reduce the existing number of categories of CHEMs for simplification and for avoiding complications.

It had also been considered necessary to reduce their deposits, fees, other charges, margins but increase their free limits wherever so that more members are encouraged to participate in the Indian Cotton Contract (ICI).Similarly deposits and other charges payable by categories of trading members and brokers, it was felt, needed to be reduced suitably. Another requirement was simplification of the terms of appointment of member clients and non-member clients.

Further in order to increase the volume of trading, it was found essential to appoint market makers and recently the association has appointed three such market makers to enhance participation.

Their function is to make futures trading in cotton attractive and appealing to cotton producers,consumers, exporters and speculators. This is the first time that such a concept has been thought of.

At a given point of time, the market makers meet the demand for both buyers and sellers and eliminate the possibility of non- availability of both the elements in trading process.

Apart from this, EICA has also registered about 50 traders as clients to its 15 CHEM's so as to broaden the existing membership base. These clients include a handful of upcountry traders as well.

Modifications were also made in bye-laws 54-B and 60-A. Under these bye-laws, in case of tender, the presence of the concerned seller and buyer or their representatives are not in a position to remain present at the appointed time to draw and weigh the samples.

It has been found necessary to authorise the controller to complete all the formalities ex parte so as to obviate difficulties that might arise on account of the absence of the concerned seller and buyer or their representatives.

Further, it had been felt that the need forpresence of buyer or his nominee may be dispensed with. Also, it was considered that the controller is not required to draw the samples and weigh the bales, if the bale is found to be fraudulently packed and contain extraneous matters.

Similarly amendments have been made in bye-laws 60, 61, 64 and 65 which deal with imposition of penalties on the sellers and buyers if they fail to comply with the requirements in the case of tenders. It has enhanced the rates of penalty taking into account the magnitude of the violation.

In another amendment in bye-law 48C, the daily price fluctuation, taking into consideration the risk vis-a- vis the proposed rate of deposit/margin, was reduced to Rs 100 per quintal from the the present Rs 150 per quintal.Amendment were also made in bye-laws 164 so as to allow CHEMs who are to receive payments to take recourse to legal action to recover their unpaid dues from the defaulting CHEMs.