NMCE sells 26% stake to BSE

The National Multi-Commodity Exchange (NMCE), the first bourse to start futures in commodities four years ago, is considering various proposals, including cost-effective linkages with warehouses of its partner Central Warehousing Corporation (CWC).

The Ahmedabad-based exchange is also considering offering a discount in fee to the members of the Bombay Stock Exchange (BSE), which on Monday picked up a 26 per cent stake in the commodity exchange.

Signing the agreement to sell its 26 per cent equity stake to BSE on Monday, NMCE Managing Director Kailash Gupta said BSE's technology would facilitate its members to trade on the NMCE platform.

BSE would not have to invest further in infrastructure to trade on the commodity bourse, which otherwise would require Rs 6-7 lakh, said Gupta.

"This is the initial offering (trading on NMCE) BSE members would get from NMCE and many more would follow in due course," said Gupta.

"Do not go by value, go by quality," said Rajnikant Patel, the MD and CEO of BSE, when asked about the deal value. "We took greater interest in NMCE because of its linkages with the entire supply chain, including trading, warehousing and delivery," Patel added.

According to sources, BSE will infuse capital in addition to modern technology, skilled workforce, strengthened market surveillance and best trading practices to gear NMCE up in trading agricultural, non-agricultural and cash crops.

Sources said BSE was likely to spend Rs 50 crore in addition to Rs 100 crore that has been chalked out for its expansion in commodities futures.

BSE's foray into the commodities market would bring 133 years of expertise, global brand value, technology, best corporate governance practices and nationwide reach, Patel said. Asia's oldest stock market may take part in day-to-day activities of NMCE.

Speaking on the occasion, B C Khatua, chairman, Forward Markets Commission, said expertise from the capital market, domain knowledge from the commodities market and infrastructure, including storage and delivery from CWC, would change the exchange's dynamism.

Currently, NMCE has 171 members and a handful of commodities are traded in bigger volume, constituting an average daily turnover of Rs 40 crore.