The Ministry of Consumer Affairs has given in principle approval to the proposal of Indiabulls and MMTC to set up the country's fourth national-level commodity exchange to facilitate trade in commodities across all sectors. The exchange was proposed to be set up in Gurgaon on the outskirts of the national capital.
Confirming the development, Rajeev Agarwal, member of the Forward Markets Commission (FMC), said, "The in principle approval is as per the guidelines."
Indiabulls Financial Services and MMTC are among several companies keen to start commodity exchanges after trading in futures rose 9 per cent to $922 billion in the year till March in Asia's third-biggest economy.
Indian companies planning commodity exchanges need to partner state-owned enterprises or financial institutions and hold stakes of no more than 40 per cent. Applicants need minimum paid-up capital of Rs 100 crore and shareholders will have no trading interest in the exchanges either as a member or client, according to FMC guidelines.
Investments in new exchanges will be subject to a lock-in period of three years from the date of recognition of the exchange. Any new exchanges will compete with the Multi Commodity Exchange (MCX), which has Fidelity International, Merrill Lynch and Citigroup as investors, and with the National Commodity & Derivatives Exchange, part-owned by Goldman Sachs Group, Intercontinental Exchange Band the local unit of Standard & Poor's.
Source: Business-standard 19/July/2008
