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ICEX faces uncertain future; trading suspended for over 12 months |
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MUMBAI: Indian Commodity Exchange (ICEX), anchored jointly by Reliance Capital and MMTC, faces an uncertain future because its trading operations have remained suspended for more than 12 months.
A recent regulatory note said that if an exchange "is not in a position to revive its trading operations within 12 months from the date of suspension of trading, after the expiry of 12 months, a show cause notice (SCN) shall be issued by the Commission (Forward Markets Commission) to the exchange to explain why its registration should not be cancelled and why the Commission should not recommend withdrawal of its recognition to the central government."
ICEX had suspended trading from April 15, 2014. "After considering the reply to the SCN, the Commission shall take a view in this regard and act accordingly," the note said.
For ICEX, the writing on the wall is clear. The bourse's main shareholders, R Next, a wholly-owned subsidiary of Reliance Capital, and MMTC, both of which hold 26% each in the bourse, will have to present a credible revival plan before FMC to prevent the government from cancelling its licence.
A senior government official said no SCN had been issued to ICEX yet. "But the note is clear in its import," he added. Email queries sent to a Reliance ADA spokesperson and MMTC's corporate communications executive on Thursday remained unanswered as of press time.
However, Rajnikant Patel, former MD and CEO of ICEX, said he felt the exchange would submit a revival plan to the regulator. ICEX went live in November 2009 but exchange volumes were never commensurate with expenses amid competition with established rivals like metals and energy bourse MCX and farm bourse NCDEX, which began in 2003.
The NSEL scam, imposition of 10% duty on gold and introduction of transaction tax in July 2013 further hurt volumes, forcing the bourse to suspend trading operations. The exchange has refunded most of its members' deposits, base minimum capital, with just a sum of Rs 50 lakh left to be paid.
"There has been no problem in refund," said the government official. Apart from R Next and MMTC, which together hold 52%, other shareholders of ICEX include Indiabulls (14%), Indian Potash (10%), Kribhco (5%), IDFC (5%) and others (14%).
Of the 3 exchanges which became operational after 2008, when the government allowed setting up of new commexes, none have been sustainable. Apart from ICEX, Ace-promoted by Kotak Mahindra said it would temporarily suspend trading from this month. UCX, another bourse promoted by IT firm Commex Tech, suspended trading in July, 18 months within becoming operational. This left just three national level bourse bourses — MCX, NCDEX and Ahmedabadbased plantations bourse NMCE — in the fray.
Source : economictimes.indiatimes.com
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