MMTC to retain stake in ICEX
State-run trading company MMTC has done a rethink on its equity status in the Indian Commodity Exchange (ICEX) and will retain its residual 9.5 per cent stake in the bourse. Last year, MMTC had decided to offload its stake, which would have marked its complete exit from the bourse. The exchange is a public-private partnership with Reliance Exchange Next, MMTC, Indiabulls Housing Finance, Indian Potash, Kribhco and IDFC Bank as major shareholders.
MMTC’s previous decision to pull out of ICEX stemmed from its lacklustre performance. The commodity exchange did not take off in a big way and trading was suspended for three years. Also, the company thought that being a minor equity participant did not make much sense as it would be deprived of a say in decision making. Later, the exchange regained momentum, prompting MMTC to reverse its decision. ICEX is targeting a daily turnover of ~10 billion from the next fiscal, aided by existing contracts in diamond, steel and rubber as well as new contracts in agri and non-agri commodities expected to be introduced shortly. The National Company Law Tribunal (NCLT) recently approved the merger of National Multi Commodity Exchange with ICEX. Pursuant to the merger, all commodity contracts on NMCE would shift to the ICEX platform.
“We have been observing the performance of ICEX. The exchange has bounced back, restarting with diamond futures. It has also gone for business diversification. The exchange’s turnaround performance
has ignited hope and we don’t see any immediate need to sell our stake,” said a senior MMTC executive.
With the approval of its board in September 2007, MMTC had participated in setting up a joint venture in association with India Bulls Financial Services Ltd (IBFSL) to establish a national stock exchange. On July 17 2008, commodities market regulator Forward Markets Commission (FMC) granted inprinciple approval and subsequently ICEX was incorporated on August 12, 2008. FMC granted recognition to ICEX on October 9, 2009, and commercial operations started on November 27, 2009. On February 12, 2009, a shareholder agreement was signed among MMTC, IBFSL and ICEX. IBFSL and MMTC held 40 per cent and 26 per cent stake, respectively.