Commodity market regulator Forward Markets Commission (FMC) has told Indiabulls Financial Services to reduce its stake in the proposed commodity exchange to 40 per cent. In the proposed exchange, to be called International Commodity Exchange, Indiabulls was planning to hold 74 per cent stake while the rest was to be held by Mineral and Metal Trading Corporation (MMTC). According to news reports, FMC has given one month deadline to the promoters to revise their shareholding pattern.
According to FMC guidelines, an individual promoter should not have more than one per cent while a single entity must not hold more than 40 per cent of equity in the exchange. Indiabulls is now talking to other organisations to pare down its holding.
Indiabulls is setting up the fourth national multi-commodity exchange. The exchange is to be set up in Gurgaon and has already received approval of commerce ministry. The proposed exchange is to have equity capital of Rs 100 crore and shareholders MMTC and Indiabulls will invest their share of equity capital on a pro-rata basis. MMTC is the India’s largest international trading house with an annual turnover of $4 billion.
Other national commodity exchanges are Multi-Commodity Exchange of India Ltd (MCX), National Commodity and Derivatives Exchange (NCDEX) and National Multi-Commodity Exchange (NMCE). Reliance Money has recently entered into an agreement with NCME to pick up a 26 per cent for Rs 100 crore.
As per revised guidelines, a player has to have one or more initial partners and among members of the promoter consortium must be a government company to contribute at least 26% of the paid-up equity capital of the company. In 2007-08, the three national commodity exchanges recorded a combined trade turnover of Rs 38,26,138 crore.
Also according to FMC guidelines, overseas investors controlling equity holdings of over 5 per cent in commodity exchanges would have to disinvest to conform to new rules on investment. Intercontinental Exchange Holdings Inc has an 8 per cent stake and Goldman Sachs has 7 per cent stake in NCDEX, who will have to reduce their holding.
There are several other players who are interested in commodity exchanges. Kotak Mahindra Bank has aligned with Ahmedabad Stock Exchange, where its waiting for FMC’s approval for its acquisition of majority stake in Ahmedabad Commodity Exchange. Malvinder Singh promoted Religare is also said to be looking at investment in commodity exchanges.