Govt tells foreign investors to shed holding by June 2009.
Goldman Sachs, Fidelity International and Inter Continental Exchange (ICE) have got time till June next year to pare their stakes in Indian commodity exchanges to 5 per cent.
Goldman Sachs holds a 7 per cent stake in the National Commodity & Derivatives Exchange (NCDEX), while ICE owns 8 per cent in the exchange. Similarly, Fidelity has a 9 per cent stake in the Multi Commodity Exchange of India (MCX), with Citigroup, Merrill Lynch and NYSE Euronext owning 5 per cent each.
The exchanges need to furnish a compliance report to the government detailing the equity structure by June 30, 2009, the commerce ministry said in a statement on Wednesday. By then, the overall overseas holding in an exchange must be cut to 49 per cent, it added. “It has been brought to the notice of the government that some of the existing commodity exchanges had foreign investment above the permitted level,” the statement said.
Under the existing guidelines, the government has capped foreign direct investment (FDI) in commodity exchanges at 26 per cent, while foreign institutional investors (FIIs) can acquire another 23 per cent once the exchange lists.
The rules are on the lines of those for stock exchanges. But unlike stock exchanges, where the individual holding for all investors is capped at 5 per cent, Indian promoters cannot hold over 40 per cent stake in a national commodity exchange.
Institutions connected with financial and commodity markets may be allowed to hold up to 20 per cent, while foreign investors can hold a maximum 5 per cent.
At present, none of the exchanges is listed, though MCX has the regulatory approval to float an initial public offer. While many companies have deferred their public offer plans due to volatility in stock markets, MCX has maintained that it has not shelved its plans.
If the shareholding of the smaller players is added, the FDI in MCX is close to the 26 per cent cap. An increase in trading volumes has attracted many investors, including international players, to invest in the Indian commodity exchanges.
While many global majors have already rushed in, some from Asia and Europe are in talks with Indiabulls and the National Multi Commodity Exchange to acquire equity.
