IntercontinentalExchange plans to launch its global cotton futures contract in the first quarter of next year, a senior executive said on Thursday, helping to reduce the potential for international price distortions.

Cotton traders have said that a new contract is necessary to better reflect the global market and avoid distortions that can can be created because the existing benchmark only allows for deliveries of US cotton.

The launch had been planned for the final quarter of this year but was delayed while Malaysia looked at a new system for agricultural imports, said Tim Barry, vice president of product development for ICE Futures.

"We hope for the launch to be in first quarter of 2015 with first delivery in the months of May and July," Barry told a meeting of the International Cotton Association in Dubai.

The contract, the first alternative for merchants, mills and growers to pricing on ICE's US benchmark, will be the world's first international contract with physical delivery.

Malaysia said this year that it would be announcing a new regime for the import of agricultural products, Barry said. The new system was initially planned for July but then was pushed to January next year.

"For seven of the nine origins in the new contract Malaysia is the delivery point, so we have been seeking clarity from Malaysia on the new rules," Barry told the conference.

"If Malaysia remains workable, we will include it; if not, we have to look at additional delivery points," he said, adding that ICE was looking at Taiwan and Sri Lanka as alternative points of delivery.

Discussions have slowed amid debate over specifications for a world contract, including whether the contract would be based an origin or destination.

Some traders have questioned whether the new contract will attract sufficient liquidity to operate alongside the U.S. contract currently used as the global benchmark.

Questions also remain over the ability to deliver certain commodities to Malaysia and other logistics and grading issues.

Barry also said ICE was seeking congressional action to remove legal hurdle to list in the United States.

"If that doesn't work we could list in London or Singapore," he said.-Reuters