The National Stock Exchange (NSE)’s effort to gain a larger share in India’s second-largest commodity exchange, the National Commodity & Derivatives Exchange (NCDEX), may prove futile again. The Forward Markets Commission (FMC) may not grant its request.
Last year, the stock exchange, which currently holds 10 per cent stake in NCDEX, had urged the commodity derivatives market regulator to consider it a “promoter exchange” and not treat it as any other stock exchange, and allow it to increase its stake to 15 per cent.
NSE, which promoted NCDEX along with ICICI Bank and a host of others, argued that as a leading stock exchange in India it should have special privileges. FMC not only quashed the arguments, but also asked NSE to reduce its stake to five per cent by September 30 this year.
As the deadline draws close, NSE has started exploring options. Apart from engaging some big Indian and foreign corporate in talks for stake sale, the exchange has urged the commission to reconsider the earlier decision.
According to sources, NSE had sought special permission from FMC a month ago to retain its 10 per cent existing stake in NCDEX. A copy of the letter was sent to Rajiv Agarwal, secretary, ministry of consumer affairs, which controls FMC. But, the request is likely to be rejected by the FMC again.
Confirming the receipt of such a request, a senior FMC official said, “It is impossible to consider it.”
Under the revised shareholding guidelines introduced by the FMC in 2010, a stock exchange should hold a maximum five per cent stake in any commodity exchange. Hence, NSE would have to reduce its stake to five per cent by September 30, or seek further periodic extension. The guidelines allow an entity and individual to hold up to 15 per cent stake in any nationalised commodity exchange, but restrict stock exchanges to five per cent.
Initially, NSE held 15 per cent stake in NCDEX, a part of which was later sold to Shree Renuka Sugars, the newly-inducted major share holder (12.5 per cent). Widening of NCDEX’s capital base has brought down NSE’s stake to 10 per cent.
NSE says it has discovered some synergies with NCDEX such as common membership and the nature of business. The stock exchange also claims to have capacity for value addition, including suggesting avenues for improvement in the business.
| EQUITY SHAREHOLDING PATTERN (as on May 3, 2012) | ||
| Name of the shareholders | No of shares | Total capital (%) |
| Jaypee Capital Services | 11,340,000 | 22.38 |
| Shree Renuka Sugars | 6,336,000 | 12.50 |
| LIC | 5,625,000 | 11.10 |
| Nabard | 5,625,000 | 11.10 |
| NSE | 5,067,577 | 10.00 |
| Iffco | 4,500,000 | 8.88 |
| PNB | 3,694,446 | 7.29 |
| Canara Bank | 3,055,519 | 6.03 |
| CRISIL | 1,875,000 | 3.70 |
| InterContinental Exchange | 1,500,000 | 2.96 |
| Goldman Sachs Investments (Mauritius) | 1,500,000 | 2.96 |
| Build India Capital Advisors LLP | 557,436 | 1.10 |
| Individuals (2 ) | 22 |
Rest |
The last deal of NCDEX’s share was executed at Rs 59 each when the commodity exchange inducted Delhi-based Jaypee Capital Services as an anchor investor with 11.34 million shares (for 22.38 per cent stake ) and allocated 1.836 million shares to Shree Renuka Sugars at the same price. Before this deal, the exchange issued rights shares at Rs 110 a share.
Overall turnover on NCDEX has shot up 62 per cent despite temporary suspension in highly liquid guar contracts on the exchange platform. Total turnover on the exchange platform was recorded at Rs 84,052 crore during the first fortnight of May compared to Rs 51,749 crore in the corresponding period last year.
