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FMC tightens noose on exchange members

Asks them to take nod for change in name, shareholding pattern

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Dilip Kumar Jha Mumbai
Last Updated : Jan 20 2013 | 2:56 AM IST

Gaining further control on the day-to-day activities of national exchanges, the Forward Markets Commission (FMC) has asked members of all commodity exchanges to take prior approval for any change in ownership pattern.

Till now, in events like change in name, shareholding pattern and surrender of membership, members used to take approval from the exchanges concerned only.

“In some cases, we used to take approval from the exchange concerned. In others, after the changes, we used to inform the exchange without taking any prior approval. With this directive, however, we would require to take prior approval from the regulator before any significant change in the company,” said Ashok Mittal, CEO of Emkay Commotrade Ltd, a city-based commodity broking firm.

The FMC circular posted on the website of the National Commodity & Derivatives Exchange (NCDEX), said, “According to the directives of FMC, members of the exchange are required to obtain prior approval from the Commission in case of change of name and transfer/surrender of membership.”

The circular also clarified that proposal of change in shareholding pattern leading to “change in control” of the company requires approval from FMC first. Also, the regulator should approve before any other authority, including the exchange, any proposal of change in proprietor, including cases of transfer within a Hindu Undivided Family (HUF) along with any change in constitution. So far, members were executing all such changes by keeping the exchanges informed.

“Maybe, FMC wants a better control and monitoring and supervising role on the exchanges,” said Mittal.

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According to normal practice, any change in name, for example, is approved first by the Registrar of Companies (RoC), and later certified by the exchange. This remains a time consuming job. For instance, it the RoC approves a changed name, and on sending to the exchange is found already in existence, another change is needed.

FMC has also levied a penalty of up to Rs 1 lakh for members not adhering to its guidelines.

According to Naveen Mathur, associate director of Angel Broking, the guidelines will bring more transparency in the commodity futures eco-system.

For the fortnight ended December 31, overall turnover on futures exchanges jumped 50 per cent to Rs 665,112 crore, as compared to Rs 438,395 crore in the corresponding period of the previous year.

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First Published: Jan 24 2012 | 12:04 AM IST

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