SEBI allows Cotton Association of India to exit bourse business, withdraws CAI’s recognition

Market Regulators learnt of investigating the company further

MUMBAI | AHMEDABAD | RAJKOT – Equity and Commodity regulatory entity in India – Securities Exchange Board of India (SEBI) today allowed Cotton Association of India (CAI) to exit the bourse business and withdrew its recognition.

Following no trading activities on platform of Cotton Association of India since last one year, SEBI had informed the body of being eligible to exit the trading business, which the association voluntarily agreed to submit the recognition granted to the body as trading entity in form of deemed commodity exchange.

Cotton Association of India, was previously known as East India Cotton Association Ltd and was granted recognition in June 1955, for organizing and regulating forward contracts in cotton throughout the nation.  The decline in cotton trading volumes started from financial year 2001-02 and the trading volumes in fiscal year 2006-07 was almost nil, no trading of commodity was conducted since financial year 2006-07.

SEBI orders said of trading entity having complied with the regulator’s conditions for exiting the bourse business and therefore it was a fit case to allow exit.

“From the valuation report and undertaking of CAI, it is observed that all the known liabilities as on date have been brought out … and that CAI has substantially complied with the conditions contained in the exit circular, 2016,” SEBI order said.

The orders also instructed the entity to comply with the tax obligations and further the entity will not be allowed to use the word ‘exchange’ it its name, among other entities.