FMC freezes shareholding pattern in all commexes
The shareholding pattern in all commodity exchanges will be frozen till the government and the regulator come out with the new ownership rules.
By TNN |
MUMBAI: The shareholding pattern in all commodity exchanges will be frozen till the government and the regulator come out with the new ownership rules.
The commodity market regulator, Forward Markets Commission (FMC), has spelt this out in a communique to all exchanges last week.
The development takes place at a point when the government is working on guidelines for ownership in stock exchange. The capital market regulator, Sebi has proposed that no single entity should hold more than 5% in a stock exchange.
The commodity exchanges are awaiting the new norms with some of shareholders, like ICICI in NCDEX, planning to sell off their stake. The two large multi-commodity exchanges, MCX and NCDEX, have institutional shareholding with banks, financial institutions and national stock exchanges like NSE figuring among the stakeholders.
It is unclear at this stage whether FMC and the ministry of consumer affairs would prefer a cap on the shareholding by a single entity in a commodity exchange. If it does, the present stakeholders will have to lower their holdings over a period of time.
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The authorities have been compelled to take up the issue with leading international exchanges showing an interest to acquire strategic holding in Indian stock exchanges. Under the circumstances the question has cropped up as to what would be maximum level of foreign holding in an exchange, be it stock or commodity.The subject resurfaced with some of the biggest fund and securities houses in the world picking up equity stakes of below 10% in the two commodity exchanges. While Fidelity acquired shares in MCX, Goldman Sachs bought into NCDEX. The Fidelity deal was an FII transaction, but the Goldman entry was in the nature of foreign direct investment.
At present there is no regulation or law that bars a foreign institution from picking up stake in an exchange. The present FDI guidelines outlined in Press Note 4, comprise a list of negative items where FDI is banned, another list of items which require the prior approval of the Foreign Investment Promotion Board, while all other sectors not included in the first two lists are free to attract FDI under the automatic route.
While framing the FDI guidelines it never quite occurred to policymakers that foreign exchanges and institutions could be interested in equity ownership in local bourses.
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Sections in the industry feel that the government may be over reacting on the matter. Foreign exchanges and players will not only bring in best practices, but also lower the influence that brokers have in exchanges.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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