Decision on FDI in commexes soon

Decision on FDI in commexes soon
PTI
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First Published: Fri, Nov 02 2007. 05 42 PM IST
Updated: Fri, Nov 02 2007. 05 42 PM IST
Mumbai: The much-awaited decision on foreign direct investment (FDI) in commodity exchanges is expected to be taken by the Cabinet Committee of Economic Affairs (CCEA) in its next meeting shortly, a top official has said.
“The decision on foreign direct investment in commodity exchanges is likely to be taken by the Cabinet Committee of Economic Affairs (CCEA) in its next meeting shortly,” Forward Markets Commission (FMC) Chairman B C Khatua told reporters on the sidelines of a Gold Convention meeting here today.
“The FDI decision is on the agenda of the CCEA’s next meeting,” Khatua added.
“We have recommended a pattern for the government to follow. This should come into effect any time soon, say by year-end,” Khatua said.
It is understood that the government has arrived at a consensus on the foreign investment limit for commodity exchanges, which is set to be pegged at 49%, on the lines of bourses. While the FDI limit will be capped at 26%, FIIs can take up to 23%.
Meanwhile, FMC has given permission to Multi Commodity Exchange (MCX) to reduce its promoters’ stake to 38 per cent, in line with its that promoter holding in commodity exchanges could be up to 40 per cent, Khatua said.
At present, promoter holding in MCX is 54 per cent, which was 64% initially.
To a query on allowing fourth commodity exchange to be set up in New Delhi by Indiabulls Financial Services in partnership with public sector commodities trading company, MMTC, Khatua said, “we have received the application and are examining the same.”
There are three national exchanges -- MCX which offers trades mainly in non-agro commodities, NCDEX and NMCE which are largely into agri-commodities.
Khatua pointed out that futures trading in agri-commodities has a huge potential in the country.
FMC is also expected to meet officials from the commodity exchanges shortly to discuss the possibility of bringing small and marginal farmers to the exchanges, through aggregators. The concept will enable the farmers to discover prices for their produce.
“The aggregators could be business ventures, marketing federations, cooperatives and may be NGOs,” Khatua said.
The options trading may soon become a reality once the proposed amendment to Forward Contracts (Regulations) Act passes through, Khatua stated.
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First Published: Fri, Nov 02 2007. 05 42 PM IST