Sur­vival First: NMCE Con­sid­ers Merger with ICEX

If suc­cess­ful, will give ICEX, which is slated for a re­launch soon, ready con­tracts in rub­ber fu­tures

The Economic Times - - Markets & Commodities -

Mum­bai: The coun­try’s old­est com­mod i t y fu­tures bourse, the Ahmed­abad-based Na­tional Multi Com­mod­ity Ex­change (NMCE), is ex­plor­ing a merger pro­posal with Reliance Cap­i­tal-pro­moted In­dian Com­mod­ity Ex­change (ICEX), which is ready­ing for a re-launch soon, two per­sons aware of the de­vel­op­ment told ET. NMCE, which came on stream late in 2002, years after the Atal Behari Va­j­payee-led NDA gov­ern­ment re­launched com­mod­ity fu­tures after a 40-year ban, is strug­gling for sur­vival after see­ing turnover plum­met to a fourth in re­cent times. It is best known for its rub­ber fu­tures con­tract, traded by rub­ber tyre mak­ers and farmer co­op­er­a­tives of Ker­ala.

The ex­change also has to meet the ₹ 100 crore net worth cri­te­rion laid down for com­mod­ity ex­changes by mar­kets reg­u­la­tor Sebi be­fore May 5, 2017. The ex­change’s net worth is presently ₹ 75 crore, ac­cord­ing to its CEO Anil Mishra.

The merger, if suc­cess­ful, would stave off the threat to NMCE’s sur­vival at the same time giv­ing ICEX a ready con­tract in the for m of rub­ber, said one of the per­sons.

ICEX it­self sus­pended op­er­a­tions al­most two years ago amid stiff com­pe­ti­tion from met­als and en­ergy bourse MCX and the coun­try’s largest agri ex­change NCDEX. The ex­change plans to launch the worl d ’s first di­a­mond fu­tures con­tract upon re­launch over the next few months, its CEO San­jit Prasad told ET ear­lier.

“There is a plan for in­te­gra­tion with other com­mod­ity ex­changes,” NMCE’s Mishra told ET when asked to con­firm the de­vel­op­ment. He de­clined to com­ment on whether the ex­change in ques­tion was ICEX, which it­self is slated to recom­mence op­er­a­tions on or be­fore April this year. In­ter­est­ingly, Reliance Cap­i­tal also holds around 9% of NMCE’s eq­uity cap­i­tal.

“There is a pro­posal (from NMCE) with ICEX for a merger and pre­lim­i­nary round of talks have been held be­tween the two ex­changes,” a per­son aware of the de­vel­op­ment told ET.

A query to Prasad of ICEX went unan­swered till press time on Sun­day. ICEX has launched a ₹ 85 crore r i g ht s i s s ue, cl o s i ng by midMarch, to com­ply with Sebi net worth norms. Its net worth is cur­rently ₹ 45 crore and it has so far raised around ₹ 65 crore through the cur­rent rights is­sue, an­other per­son aware of the de­vel­op­ment told ET.

“ICEX is com­fort­ably placed to com­ply with Sebi’s net worth cri­te­rion,” he said. MCX’s av­er­age daily turnover so far this month was ₹ 20,213 crore, NCDEX’s is ₹ 1,365 crore and NMCE’s, ac­cord­ing to Mishra, is ₹ 275 crore . This puts NMCE’ s mar­ket share at 1.14% against MCX’s 92.4% and NCDEX’s 6.2%.

Cen­tral Ware­hous­ing Cor­po­ra­tion holds 29.7% of NMCE’s eq­uity. Other share­hold­ers in­clude Reliance Cap­i­tal (around 8.7%) and Pun­jab Na­tional Bank (8.12%). ICEX’s share­hold­ers in­clude Reliance Cap­i­tal (26%), MMTC (14%), In­di­a­b­ulls (14%) and IDFC (around 5%).

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