Chicago, Nymex may pick up 5% each in MCX

The country's three leading commodity exchanges are in the final stages of negotiations with their global counterparts for a possible stake sale even as the government is set to announce foreign investment guidelines for comexes in the next few days.

While the Chicago Mercantile Exchange (CME) and the New York Mercantile Exchange (Nymex) are expected to pick up 5 per cent stake each - the maximum to be allowed to a single entity under the policy - in the Multi Commodity Exchange of India (MCX), the US-based Intercontinental Exchange (ICE) is in talks with the National Commodity & Derivatives Exchange (NCDEX).

Exchanges are getting the highest valuations in the global marketplace and sources close to the developments said Nymex may buy stake in MCX based on an enterprise value of $1 billion. The Ahmedabad-based National Multi-Commodity Exchange (NMCE) is also looking at a strategic partner and is in talks with various international and domestic exchanges. The Bombay Stock Exchange is believed to be one of the contenders.

The talks will gain momentum after the Cabinet approves the guidelines stipulating 49 per cent limit for foreign investments - 26 per cent for FDI and 23 per cent for FIIs, which can be invested by the secondary market route only.

The Forward Markets Commission (FMC) had frozen the equity pattern/holding of all commodity exchanges a few months ago as the FDI guidelines were being prepared.

Since a single foreign entity will not be able to hold more than 5 per cent stake, Fidelity, which holds 9 per cent in MCX, and Goldman Sachs, which holds 7 per cent in NCDEX, will have to reduce their stake. It is believed they will get 18 to 36 months to divest the stake.

According to FMC data, the share of MCX in commodity futures is 62.3 per cent, NCDEX's share is 31.7 per cent and NMCE's is 3 per cent.