MCX to list by September

First Indian exchange to go for listing; FT to offer shares for sale.

The Multi Commodity Exchange (MCX), India’s top commodity trading platform, is planning to list itself on the bourses by September this year. While most stock and commodity exchanges abroad are listed, MCX would be the first trading platform to do so in India.

MCX Managing Director and CEO Lamon Rutten said the draft red herring prospectus (DRHP) was ready. “We may file it any time with the regulator. It can be as early as next week. One thing is sure that MCX will be a listed entity before September-end... Gaining investor trust and being more transparent is the only motive behind the listing,” he said.

Filing DRHP, which contains company information, with the Securities and Exchange Board of India (Sebi) for its observations is necessary before a company approaches the market to raise capital through listing.

Jignesh Shah-promoted Financial Technologies (FT), which is the main promoter of MCX and holds 31 per cent stake in the exchange, will reduce it to 26 per cent through an offer for stake sale. Under the rules, no anchor investor is allowed to hold more than 26 per cent stake in a commodity exchange. Also, the MCX group’s arch rival, the National Stock Exchange, which has a one per cent stake in the commodity bourse, wants to sell its holding.

On an average, over Rs 50,000 crore worth of commodities are traded on the exchanges, in which 80 per cent market share is cornered by MCX.

The commodity markets regulator had set a deadline of March 31 for the three commodity exchanges — MCX, the National Commodity and Derivative Exchange and National Multi-Commodity Exchange — to restructure capital and bring down the promoter stake to 26 per cent. However, the Forward Market Commission will have to extend the deadline as promoters of none of the three exchanges will be in a position to scale down their stake in just a week’s time.

The MCX listing will be a keenly watched event as analysts say it may put pressure on the other stock and commodity exchanges to list. “They (FT) had used a similar technique to launch currency trading. Rupee trading was launched in Dubai first in 2007 by DGCX, where FT holds the majority stake, when Indian regulators were going slow on it. The national currency’s trading outside India put pressure on the government and the process to start its trading in the country was expedited,” said an exchange analyst with a Mumbai-based broking firm.

FT, through its another venture, MCX Stock Exchange (MCX-SX), is trying hard to foray into the equity trading business, where NSE is the undisputed leader with average daily derivative volumes of around Rs 1.5 lakh crore.

MCX-SX, however, has not been allowed to start equity trading for not adhering to proper shareholding norms, which it has challenged in a court. While the Bombay Stock Exchange (BSE) and MCX have been in favour of listing, NSE has not shown much interest. Both BSE and MCX-SX had strongly opposed the Bimal Jalan committee recommendations of not allowing the listing of stock exchanges.