Survival first: NMCE considers merger with ICEX
MUMBAI: The country's oldest commodity futures bourse, the Ahmedabad-based National Multi Commodity Exchange (NMCE), is exploring a merger proposal with Reliance Capital-promoted Indian Commodity Exchange (ICEX), which is readying for a re-launch soon, two persons aware of the development told ET.
NMCE, which came on stream late in 2002, years after the Atal Behari Vajpayee-led NDA government relaunched commodity futures after a 40-year ban, is struggling for survival after seeing turnover plummet to a fourth in recent times. It is best known for its rubber futures contract, traded by rubber tyre makers and farmer cooperatives of Kerala.
The exchange also has to meet the Rs 100 crore net worth criterion laid down for commodity exchanges by markets regulator Sebi before May 5, 2017. The exchange's net worth is presently Rs 75 crore, according to its CEO Anil Mishra.
The merger, if successful, would stave off the threat to NMCE's survival at the same time giving ICEX a ready contract in the form of rubber, said one of the persons.
ICEX itself suspended operations almost two years ago amid stiff competition from metals and energy bourse MCX and the country's largest agri exchange NCDEX.
The exchange plans to launch the world's first diamond futures con tract upon relaunch over the next few months, its CEO Sanjit Prasad told ET earlier.
“There is a plan for integration with other commodity exchanges,“ NMCE's Mishra told ET when asked to confirm the development.
He declined to comment on whether the exchange in question was ICEX, which itself is slated to recommence operations on or before April this year. Interestingly, Reliance Capital also holds around 9% of NMCE's equity capital.
“ There is a proposal ( from NMCE) with ICEX for a merger and preliminary round of talks have been held between the two exchanges,“ a person aware of the development told ET.
A query to Prasad of ICEX went un answered till press time on Sunday.
ICEX has launched a Rs 85 crore rights issue, closing by mid March, to comply with Sebi net worth norms. Its net worth is cur rently Rs 45 crore and it has so far raised around Rs 65 crore through the current rights issue, another person aware of the development told ET.
“ICEX is comfortably placed to comply with Sebi's net worth criterion,“ he said. MCX's average daily turnover so far this month was Rs 20,213 crore, NCDEX's is Rs 1,365 crore and NMCE's, according to Mishra, is Rs 275 crore. This puts NMCE's market share at 1.14% against MCX's 92.4% and NCDEX's 6.2%.
Central Warehousing Corporation holds 29.7% of NMCE's equity. Other shareholders include Reliance Capital (around 8.7%) and Punjab National Bank (8.12%). ICEX's share holders include Reliance Capital (26%), MMTC (14%), Indiabulls (14%) and IDFC (around 5%).
NMCE, which came on stream late in 2002, years after the Atal Behari Vajpayee-led NDA government relaunched commodity futures after a 40-year ban, is struggling for survival after seeing turnover plummet to a fourth in recent times. It is best known for its rubber futures contract, traded by rubber tyre makers and farmer cooperatives of Kerala.
The exchange also has to meet the Rs 100 crore net worth criterion laid down for commodity exchanges by markets regulator Sebi before May 5, 2017. The exchange's net worth is presently Rs 75 crore, according to its CEO Anil Mishra.
The merger, if successful, would stave off the threat to NMCE's survival at the same time giving ICEX a ready contract in the form of rubber, said one of the persons.
ICEX itself suspended operations almost two years ago amid stiff competition from metals and energy bourse MCX and the country's largest agri exchange NCDEX.
The exchange plans to launch the world's first diamond futures con tract upon relaunch over the next few months, its CEO Sanjit Prasad told ET earlier.
“There is a plan for integration with other commodity exchanges,“ NMCE's Mishra told ET when asked to confirm the development.
He declined to comment on whether the exchange in question was ICEX, which itself is slated to recommence operations on or before April this year. Interestingly, Reliance Capital also holds around 9% of NMCE's equity capital.
“ There is a proposal ( from NMCE) with ICEX for a merger and preliminary round of talks have been held between the two exchanges,“ a person aware of the development told ET.
A query to Prasad of ICEX went un answered till press time on Sunday.
ICEX has launched a Rs 85 crore rights issue, closing by mid March, to comply with Sebi net worth norms. Its net worth is cur rently Rs 45 crore and it has so far raised around Rs 65 crore through the current rights issue, another person aware of the development told ET.
“ICEX is comfortably placed to comply with Sebi's net worth criterion,“ he said. MCX's average daily turnover so far this month was Rs 20,213 crore, NCDEX's is Rs 1,365 crore and NMCE's, according to Mishra, is Rs 275 crore. This puts NMCE's market share at 1.14% against MCX's 92.4% and NCDEX's 6.2%.
Central Warehousing Corporation holds 29.7% of NMCE's equity. Other shareholders include Reliance Capital (around 8.7%) and Punjab National Bank (8.12%). ICEX's share holders include Reliance Capital (26%), MMTC (14%), Indiabulls (14%) and IDFC (around 5%).
