NYSE picks up 5% stake in MCX for about $55 mn

MUMBAI: New York-based NYSE Euronext, which owns the New York Stock Exchange, on Friday announced that it has inked a deal to buy a 5% stake in the Multi Commodity Exchange (MCX), India���s number one commodity exchange. At MCX���s enterprise value of $1.1 billion, the deal works out to about $55 million. ET was the first to report about NYSE���s move in its February 15 edition.

The transaction is expected to be completed over the next 2-3 months, subject to relevant regulatory approvals. Financial Technologies, which is the main promoter of MCX, will see its stake drop to 32%, once the deal is final. Also, the combined foreign holding in MCX will rise to 22%.

Financial Technologies scrip rose 4% to close at Rs 2,180 on Friday on BSE. Earlier in July 2006, MCX and Liffe, NYSE Euronext���s derivatives business, had entered a licensing agreement for MCX to use Liffe futures prices. This enabled MCX to list domestic mini-futures contracts for robusta and white sugar based on Liffe futures prices and to identify other areas of collaboration.

NYSE Euronext president and co-chief operating officer Catherine R Kinney spoke to ET about her group���s plans for India. Excerpts:

What is the rationale behind picking up 5% in MCX?

NYSE is focused on expanding both its preferred products as well as geographic presence. And we have a particular focus on India. So all opportunities, like a 5% stake in MCX, are welcome since they give us an exposure to India, and broadens our presence.

Would you seek board representation?

We really haven���t gone through the terms of the contract. But for now, this is just a 5% stake.

Any plans to increase stake?

The (5%) stake that we have bought now is what has been dictated by the government. But if things change, I am hopeful, they will, we would consider it.

What about NYSE���s India plans?

We continue to look for opportunities in each of the products - equities, derivatives, commodities, fixed income and options. We are open to strategic relationships to consolidate our position.

What are your immediate plans for MCX?

The first step would be to deepen MCX���s relationship with Liffe. There is a plan to facilitate cross-trading of products between MCX and Liffe. But for now, our challenge is to create more opportunities in the commodity space in both our markets, Liffe and MCX.

Does the MCX stake buy rule out similar deal with other commexes?

No. At the moment, we are working only with MCX, but that does not preclude anything.

What about your relationship with NSE?

We are working on a series of ideas with NSE, including cross-listing of securities and cross-trading of products. But nothing concrete that we can speak on right now.