The National Multi-Commodity Exchange (NMCE) is in talks with a few domestic and foreign investors to sell a stake in India’s third biggest commodity bourse, a top official said on Tuesday.
“Foreign investors have also shown interest to pick up stake in NMCE. Right now talks are on,” Chief Executive Anil Mishra said in an interview, but declined to reveal names of likely investors.
If foreign investors pick up a stake in NMCE, the bourse would join the league of bigger rivals Multi-Commodity Exchange and National Commodity and Derivatives Exchange, which have significant foreign investment.
Indian laws do not permit a foreign entity to buy more than 5 percent stake in the country’s commodity bourses, subject to a total foreign investment limit of 49 percent, including 26 percent foreign direct investment.
NMCE’s trade turnover rose 142 percent to 615 billion rupees in 2008/09. This was the fastest trade growth among the 22 Indian commodity bourses last year. Volume rose 285 percent to 18.4 million tonnes during the same period.
This was due to addition of new members, Mishra said.
“Total number of members last year was about 200 members and is now more than 300.”
Also, the launch of futures contracts in products such as coffee, cotton and re-launch of poorly traded contracts like guar seed, rape seed have also helped, he said.
“Number of active products on the exchange is about 20 now from 8 a year ago.”
NMCE plans to continue its focus on agri-products in the current year rather than dabbling in metals and “exotic” contracts, he said.
“Price discovery and risk management are prime objectives of a commodity futures market. In metals futures it’s not there right now. The focus will be on agri-commodities.”
Many analysts attribute the growth in NMCE’s business to its association with Reliance Money, which picked up a 26 percent stake last year.
However, Mishra said, the growth has been achieved by the exchange itself with participation from across India.
NMCE’s other stakeholders include Neptune Overseas Ltd, Central Warehousing Corporation (CWC), National Agricultural Co-operative Marketing Federation, Gujarat Agro-Industries Corp and Gujarat State Agricultural Marketing Board.
The NMCE-Reliance Money-promoted National Agriculture Produce Marketing Company of India Ltd (National APMC Ltd), an electronic spot exchange, is expected to be launched in 2-3 months, in an effort to integrate spot and futures trade, Mishra said.
“We are hoping to launch our spot exchange in 2-3 months. There are products like rapeseed, kapas, jeera and castor where spot trading can start.”
The spot exchange has obtained a licence to operate in Rajasthan and is awaiting clearances in Gujarat, he said
National APMC Ltd is the third electronic spot exchange after NCDEX Spot Exchange Ltd and Financial Technologies India Ltd. promoted National Spot Exchange Ltd.