Shareholding in comexes under focus

The issue of public shareholding and foreign investment in commodity exchanges has come to the centrestage following the Securities and Exchange Board of India's (Sebi) limit on public shareholding in recognised stock exchanges.

While the Sebi is silent on the issue of foreign investment in bourses, as it expects the finance ministry to take a stand on the issue, it has capped individual holding in bourses at 5 per cent.

In the case of new-age commodity exchanges, which are demutualised, the ministry of consumer affairs is preparing guidelines for foreign investment.

It is learnt that these guidelines will be better than the norms for demutualising of stock exchanges, such as the BSE, which will find it tough to bring in strategic investors given the 5 per cent cap.

Leading commodity exchanges MCX and Ncdex have already sold their stakes to Fidelity (9 per cent) and Goldman Sachs (7 per cent), respectively. The government has treated these investments as FDI, informally treating these as FDI limits for comexes, said sources.

Commodity exchanges are treated as front-end regulators by the ministry. The ministry is of the opinion that they cannot be treated on par with other corporates, where foreign and other investment criteria are more liberal. They will be treated differently when compared with stock exchanges, as the new-age comexes have begun operations as demutualised entities.

When contacted, Forward Markets Commission Chairman S Sundaresan said, "Once the ministry forms a view on foreign investment, we will prepare the regulations, which will be in tune with the norms of the RBI for foreign investment and the Sebi norms for IPO."

Currently, the FMC has no power to decide on the equity pattern of comexes. After the proposed amendment to the FCRA, the regulator will get the powers. The Bill for the amendment is expected in the Winter session of the Parliament.

Meanwhile, the MCX IPO has been put on hold for want of clear guidelines on foreign investment.