India’s national commodity exchanges are trying to go global through equity route. Global commodity exchanges are queuing to pick up equity stakes in Indian commodity bourses.
After India’s largest commodity bourses—the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX)—divested stakes to foreign bourses, now it is the turn of the National Multi Commodity Excahnge (NMCE) to sell minority stake.
NMCE, based at Ahmedabad in Gujarat and known for launching rubber futures in India for the first time, is in talks with the Singapore Commodity Exchange (SICOM) to divest stake.
SICOM officials confirmed to Commodity Online that NMCE officials have held two rounds of talks with the exchange in the recent past. NMCE is said to be keen to divest 5% equity stake to SICOM as the exchange is mainly powered by futures trading in rubber.
”NMCE is a leader in rubber futures trading in India. We feel that a NMCE-SICOM tie up would help both the exchanges, as we are looking at India for growth,” a senior SICOM official told Commodity Online.
The Indian government has suspended rubber futures trading for four months. India’s apex commodities regulator—the Forward Markets Commission—has asked the government to withdraw the suspension when it expires in September. Traders are hopeful that rubber futures will commence soon, and NMCE hopes that the exchange would get a strong footing in the futures market once rubber is back on the exchange platform.
NMCE’s move to sell stake to SICOM comes in the wake of the exchange’s decision to divest 26% equity to the Anil Ambani-led Reliance Money for over Rs 100 crore. Already, Reliance Money’s CEO Sudip Bandhopadhyay has been appointed as a Director in NMCE. The exchange is also shifting its headquarters to Mumbai, India’s financial nerve centre.
Indian law permits foreign exchanges or institutional buyers to hold only a 5 per cent stake in any Indian exchange. Earlier, the country’s two largest commodity exchanges, the MCX and the NCDEX, sold stakes to foreign exchanges and institutional buyers.
In February, NYSE Euronext bought a 5 per cent stake in MCX for around Rs 220 crore. Earlier, Fidelity had picked up 9 per cent stake in the exchange.
Similarly, Goldman Sachs and the US-based Intercontinental Exchange had bought 7 per cent and 8 per cent stake respectively in the NCDEX.
SICOM is promoted internationally and Singapore Stock Exchange (SGX), Tong Teik and Regional Rubber Trading are represented on its board.
Singapore is already a major market for rubber futures and the world's largest natural rubber trading centre.
Rubber futures have been traded in Singapore since the 1920s. Clearing facilities for the futures transactions were then provided by the Singapore International Chamber of Commerce Rubber Association. These were subsequently taken over by the Rubber Association of Singapore, which was privatised in 1992 as the RAS Commodity Exchange. This was in turn renamed the Singapore Commodity Exchange in February 1994 to better reflect its mission to be a broad-based commodity exchange.
Source: Commodity Online