* New global contract needed to reflect global market
* ICE seeking amendment of cotton act to list in the U.S.
* Malaysian agricultural regime overhaul delayed launch (Adds detail, quotes)
By Maha El Dahan
DUBAI, Oct 2 (Reuters) - IntercontinentalExchange plans to launch its postponed global cotton futures contract early next year, a senior executive said on Thursday, which should provide a more accurate reflection of international prices.
Cotton traders have argued that a new contract is necessary because the United States contract currently used as the global benchmark relates only to deliveries of U.S. cotton, but ICE's new market has been delayed by regulatory changes planned in Malaysia.
The first alternative for merchants, mills and growers to pricing on ICE's U.S. benchmark, will be the world's first international contract with physical delivery.
ICE had planned to launch the contract before the end of this year, but ICE Futures' vice president of product development said it is now penned in for the first quarter of 2015 because Malaysia is poised to announce changes to its agricultural import rules in January.
"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," ICE's Tim Barry told a meeting of the International Cotton Association in Dubai.
"If Malaysia remains workable, we will include it; if not, we have to look at additional delivery points," he added, indicating that Taiwan and Sri Lanka are being considered as possible alternatives or additions.
Discussions had slowed amid debate over specifications for a world contract, including whether the contract would be based on 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.
Barry also said that ICE was seeking congressional action to remove a legal hurdle to listing in the United States. Under the U.S. Cotton Futures Act, only the U.S. Department of Agriculture is allowed to class cotton for delivery.
"When that act was written there was no contemplation of a global contract or allowing delivery of other origins," Barry said.
Should ICE fail in its efforts to have the act amended, it will look to list the contract in London or Singapore, though neither would be its first choice.
"We very much want to keep the contract in the U.S. for a variety of reasons," Barry said, adding that one of the reasons is that ICE wants to work as closely as possible to the existing contract for clearing and trading purposes.
Reporting by Maha El Dahan; Editing by Rania El Gamal and David Goodman