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ICE to buy SMX for $150M from Jignesh Shah’s Financial Technologies

Financial Technologies (India) Ltd has sold its unit Singapore Mercantile Exchange (SMX), a pan-Asian multi-product commodity and currency derivatives exchange, for $150 million to American commodities exchange player IntercontinentalExchange, Inc. (ICE). The Jignesh Shah-promoted company, which has taken major hit with the National Spot Exchange (NSEL) crisis, will also sell its wholly owned subsidiary SMX CC to ICE Singapore Holdings Pte. Ltd., an arm of ICE. 

Shares of Financial Technologies jumped by 11 per cent in early trade, and the scrip was up 5.78 per cent to Rs 191.8 at 10:04 am. 

Financial Technologies said that it will "primarily use the amount towards repayment of outstanding debt towards external commercial borrowings (ECB) and foreign currency loan (FCL) to banks subject to regulatory approvals, if any, pursuant to which FTIL will become debt/lien-free." The company owns 100 per cent stake in SMX through its step-down subsidiary Financial Technologies Singapore Pte. Ltd. 

The deal has been approved by the board of Financial Technologies and is subject to certain customary closing conditions and approvals. Moelis & Company acted as exclusive financial advisor to Financial Technologies on the deal. 

SMX, which is regulated by Monetary Authority of Singapore (MAS), had average daily turnover of $200 million and average daily volume of 5,614 contracts in FY13. But this seems to have come down during Q1FY14, as average daily turnover was $81 million and average daily volume was 2,064 contracts, according to a presentation. SMXCC is its clearing house. 

Products traded on SMX include precious metals, base metals, energy, currency pairs, agricultural commodities and indices. 

Financial Technologies is under investigation over suspected violations of rules on contracts at the NSEL, one of the commodities exchanges it owns.

(Edited by Joby Puthuparampil Johnson)

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