KARACHI, May 24: All Pakistan Textile Mills Association (Aptma) has joined hands with Karachi Cotton Association (KCA) in a row with the Karachi Stock Exchange (KSE) on resumption of futures trading in raw cotton.

Sources close to Aptma told Dawn that the association had lodged a ‘protest’ with Commerce Minister Abdul Razak Dawood over the unilateral action taken by the Securities and Exchange Commission of Pakistan (SECP), allowing the KSE to set up a commodity exchange company.

A representative body of over 450 textile units, Aptma is one of a major stakeholder along with growers, ginners and exporters in cotton economy, and used to participate in futures trading in raw cotton operated by the KCA till 1975, when the government nationalized the entire cotton trade.

KSE chairman Salim Chamdia on May 16 told newsmen that the SECP had issued a licence to the National Commodity Exchange Ltd. (NCEL) for setting up a commodity exchange. Chamdia also disclosed that the NCEL, besides starting futures trading in other commodities, will also take up forward trading in cotton.

This sudden development shocked the original stakeholders in the cotton economy as they were already working on framing of new regulations as directed by the commerce minister in a meeting held in the TCP offices on April 11, 2002.

During the meeting the commerce minister formed a committee headed by chairman KCA, with representatives from growers, ginners, SBP, SECP, ADBP and Aptma. The committee was given the powers to opt for any other person to assist in formulating the regulations for hedge trading in cotton.

Chaired by Commerce Minister Abdul Razak Dawood, the April 11 meeting was also attended by senior SECP representative Shahid Ghaffar. The committee was asked to finalize its report by end of June 2002, encompassing the modus operandi, proper discipline and regulation and the time frame for restarting the futures market in cotton.

Aptma in its complaints said: “We fail to understand how the SECP has allowed the KSE to form this company, especially in view of the fact that their representative was present in the April 11 meeting and also gave his consent to be a member of the committee.”

KCA chairman Zahid Bashir told Dawn that no where in the world commodities like rice, sugar, tea or cotton are traded on stock exchanges.

He further said that there was separate exchange for cotton, like New York Cotton Exchange. Even in India, he said, the futures market of cotton was run by East India Cotton Association.

Zahid Bashir said in US, commodities other than cotton, were also traded from a separate platform i.e. Chicago Board of Trade and not stock exchange.

He apprehended that by allowing trading of commodities on stock exchanges it would tantamount to putting growers before speculators or ‘wolves.’

He further said that the KCA’s board was a representative board, which had members from all stakeholders in cotton trade and also include nominees from ministry of agriculture, finance and commerce. In all there are 21 board members, which include eight sellers, seven buyers, two growers and four government nominees.