In order to lend confidence to the players of the soya complex, the SBOT plans to conduct deliveries of the three soya products that will be traded through warehouse receipts system. For this purpose SBOT has already initiated talks with the officials of the various state-owned warehouses, including the Markfed and the MP Oilseeds Growers' Federation (Oilfed).

The warehouse receipts system ensures the member traders the delivery of commodities at the time of delivery of the deliverable goods. These warehouses will be certified for effecting deliveries and help members avoid locking their monies on stocks required for the futuredeliveries.

Even as the 11-odd commodity exchanges are debating over the modalities of a composite multicommodity exchange in the country, SBOT has gone ahead and sought FMC nod to trade in futures of mustardseeds and its oil and the palmolein.

SBOT, set up by SOPA, has received the Certificate of Registration from the FMC and the Government of India last month. The 12-member SBOT board will be headed by Kailash Shahara. Included in the list of members of the board are, Birla VXL's CL Rathi, ITC Ltd's S Sivakumar, Liberty Oil Mills P Arvez Kader and Alfred Teopher's Atul Parekh. Teopher is one of the leading international agro-products trader.

The importance of the soya complex emenates from the increasing use of all the three soya products in the country as in the international markets.

While the high protein soyaoil is used for edible purposes, the industrial applications is fast expanding to the areas like resins and plastics, inks, paints, and varnishes, fatty acids, soaps and feeds biodiesel,solvents among others. Soya flour is used in noodles, candy products, beer, bakery ingredients and yeast. The deoiled soya cakes (DOC) is used by the bird and animal feed industry.

Says SBOT chairman Kailash Sahara: "With the commencement of futures trading SBOT will provide state of the art systems oriented trading clearing and settlement mechanism with full transparency in working and integrity to the trade". According to SBOT executive director Jeyakumar AS: "There is ample of underutilised capacities at various government-owned warehouses. We intend to tie up with these to lend confidence to the delivery needs that are likely to arise from the futures trade in the soya complex."

SBOT will thus become the second commodity exchange in the country to take up the warehouse receipts system based deliveries, after Bombay Oilseeds and Oils Exchange had announced earlier this year that it will resort to the warehouse receipts for deliveries. SBOT has identified Indore (and 60 kms around Indore) as thedelivery centre of all the three soya products which that will be traded on the SBOT.

The system also facilitates bank finance on these commodities to ensure timely availability of funds to stockists and helping members with information on commodity stock position that will help farmers take decisions and prevent distress sales when prices fall. India's soyabean crop, estimated to be around six million tonnes, is said to be a third of global production of 157 million tonnes. Of late, India has been giving tough competition to the big soyabean growers like US, Argentina and Brazil in supplying DOC (deoiled soyabean cakes) to southeast Asian markets.It is here that the futures trading will be of immense importance to the soyabean growers and DOC exporters.

Asked if the futures trading at SBOT will attract the players in the illegal trade conducted at both Indore and Mumbai, Jeyakumar says: "If any exchange can offer efficient, and confident services, there is little reason for players to route tradesthrough any illegal channel. Of the 70-plus application forms that we have sold till date, more than 50 per cent are said to be from the illegal channels". Says Jeyakumar: The tough entry levels for SBOT will ensure that only the serious players participate in futures trading".

Accordingly SBOT has two tier membership - trading member and trading cum clearing member. While the trading member has to chip in around Rs 2.70 lakh, the trading cum clearing member has to chip in Rs 13.70 lakh.SBOT will have eight contracts running throughout the year. These are November deliveries, December, January, March, April, May, July and September. The unit of trade will be one tonne each for both soyabeans and soyaoil while it will be 10 tonne for DOC.

The tick size will be Rs 5 per tonne each for soyabeans and DOC, it will be Rs 10 for soyaoil. The deliverable quantity will be 50 tonnes for DOC while it will be 10 tonnes each for soyabeans and its oil. The delivery point will be Indore and within 60 km radius.

Therewill be daily clearing of the futures trades during the five-hour trading commencing from 11 am to 4 pm. The trades will be allowed to be conducted throughout the week, except Sunday. The last trading day will be the 15th day of the delivery month (same as contract month). The price variation per Unit of trade will be Rs 150 for soyabeans, Rs 400 for soyaoil and Rs 1000 for DOC. Further, outstanding positions on the last trading day of the contract month will result in taking/giving deliveries.