The world’s biggest exchange, the Chicago Mercantile Exchange (CME) is looking at making an India foray by picking up equity stakes in the Indian exchanges, reports the Business Standard. CME is already in talks with several Indian exchanges for buying stakes in them.
CME is also reportedly in talks with the Multi Commodities Exchange (MCX), some of the overseas investors in the National Commodity and Derivatives Exchange (NCDEX) and United Stock Exchange of India (USE).
CME operates two major exchanges C-Bot and Nymex. It provides futures and options products such as interest rates, equities, FX, commodities, and alternative investments such as weather and real estate.
It may be interested in picking up dominant stakes in exchanges. However, since the government does not allow foreign entities to buy more than 5% stake in Indian exchanges, CME would only be able to buy that much stake.
There are a few exchanges in India, in which foreign entities still hold more than 5% stakes. These foreign entities will have to reduce their stakes in the exchanges to 5% by June, as per the government rules. Investment bank Goldman Sachs and New York Stock Exchange-listed Intercontinental Exchange (ICE) hold 7% and 8% stakes in NCDEX respectively. Fidelity holds around 9% stake in Multi Commodities Exchange (MCX), promoted by the Financial Technologies group. These foreign investors are now looking to sell part of their stakes and are also learnt to have been in discussions with CME.
Also, one of the oldest stock exchanges in India, Delhi Stock Exchange (DSE) is restarting its operations. US-based private equity firm Vernon & Park Capital and Cyprus-based Dunbay are picking up a 5% stake in the firm.
Recently, CME Group acquired the Carvill Hurricane Index from Carvill America Inc. and renamed it the CME Hurricane Index. Carvill Hurricane Index (CHI) describes the potential for damage from an Atlantic hurricane. The CHI is now used as the basis for trading hurricane futures and options on the Chicago Mercantile Exchange (CME).