Atlanta-based Intercontinental Exchange (ICE) has made a $16 million impairment charge regarding its 8% stake in the National Commodity and Derivatives Exchange of India (NCDEX). ICE had picked up the stake for $37 million from ICICI Bank in 2007, valuing the exchange at more than $460 million. ICE may also sell a 3% stake in NCDEX as commodity markets regulator Forward Markets Commission (FMC) allows only a 5% stake to foreign entities according to its new rules. ICE, one of the largest energy trading platforms, said in its statement that it may cut its stake in NCDEX from 8% to the 5% threshold by June 30, 2009.
Another foreign investor in NCDEX is New York-based Goldman Sachs acquired 7% stake for Rs 106 crore. Goldman may also have to cut its stake by 2% in order to meet the new FMC guidelines. NCDEX is the second largest commodity exchange in the country, and the largest one
is Multi-Commodity Exchange of India Ltd (MCX). NYSE Euronext picked up a 5% stake in MCX for $55 million, valuing the exchange at more than $1 billion.
The write down in value has come as the government suspended trading in several key agricultural contracts in response to political pressure regarding high commodity prices in 2007. This has impacted the turnover of NCDEX, which has fallen by 28% to Rs 29,815 crore in December ’08 as against Rs 41,485 crore in December ’07. Also MCX has a bulk of share of the commodities market in India.