While the ban on future trading in wheat, rice and pulses continue, the country’s oldest financial stock exchange — BSE has received centre’s nod to take 26 per cent equity control in the state-owned National Multi-Commodity Exchange (NMCE). Highly placed government sources informed The Indian Express that the union consumer affairs and food minister Sharad Pawar had approved the move last week.
The tie up envisages to create a robust agricultural commodity exchange, which can rival the other two private commodity exchanges — MCX and NCDEX.
NMCE will now have access to the large BSE trading platform network besides its expertise in running a large exchange. In addition, the tie-up would also leverage the vast network of agricultural warehouse of the government-owned central warehousing corporation (CWC), which holds 26 per cent control in NMCE.
The Ahmedabad-based commodity exchange, which has a strong presence in rubber and spice trading, is promoted by the government-owned CWC, while another 25 per cent stake is owned by one of the NMCE founder companies – Neptune Overseas Ltd. NMCE’s other promoters include National Agricultural Cooperative Marketing Federation of India, Gujarat Agro-Industries Corp Ltd, Gujarat State Agricultural Marketing Board and National Institute of Agricultural Marketing.
Although there are reports doing rounds that Neptune Overseas Ltd has been mulling to sell-off its 25 per cent stake in the exchange, sources close to the development informed The Indian Express that the BSE’s 26 per cent stake is likely to be achieved by issuing fresh equity and there will be no sale of stakes from the existing partners in the NMCE.
After Parliament’s approval to the bill that makes the warehouse receipts negotiable instruments for credit and other transactions, CWC’s reach throughout the country is likely to provide an easy access to the commodity exchanges to the farmers partnering CWC warehouses.
CWC officials revealed that the firm will now try to exploit its reach across the country. It plans to educate and inform farmers to take advantage of its agricultural commodity exchange for hedging their risks and derive benfits from the commodity markets.
In addition, the NMCE also has plans to increase its trade volume in agricultural commodities other than rubber and spices.
Source: Indian Express