Two brokers get FMC nod for overseas ops

The Forward Markets Commission (FMC) has granted permission to two commodities trading companies Mumbai-based Navratan Commodities and Hyderabad-based Karvy Comtrade to set up wholly-owned subsidiaries abroad.

The commodities market regulator had earlier granted similar permission to the Mumbai-based Man Financial Commodities India, Bonanza Commodity, Sunidhi Commodities and the Kolkata-based Dynamic Commodities to set up subsidiaries abroad.

Although Ashok Mittal, country head of Karvy Comtrade, was unaware of the development, he was enthusiastic over the clearance.

"All companies look for expansion opportunities and we are no exception. This would surely help us set up offices abroad to explore commodities markets abroad," Mittal said. Mittal wants to open wholly-owned subsidiaries in Hong Kong, Dubai, Singapore and the US to begin with.

"As the FMC's permission became mandatory, we applied for it. But, we had started our Dubai operation soon after the DGCX was launched," said Preeti Gupta, head, commodities, at Navratan Commodities.

Navratan Commodities, a subsidiary of the Anand Rathi group, had taken up membership of Dubai Gold & Commodity Exchange (DGCX) long before the FMC regulation for compulsory membership took effect.

The RBI's $50,000 trading limit in overseas exchanges has induced domestic traders to set shops abroad and exploit the opportunities there.

Meanwhile, the FMC has put forth conditions for trading companies before setting up their wholly-owned subsidiaries abroad.

Accordingly, the overseas subsidiaries proposed to be floated should be registered with the appropriate regulatory authority of the foreign country and incorporated as a separate legal entity.

The overseas subsidiaries should obtain necessary approval from the respective regulator for taking up commodities-related business activities.