Foreign firms must cut stakes by end-June

Foreign firms must cut stakes by end-June
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First Published: Wed, Aug 20 2008. 11 17 PM IST
Updated: Wed, Aug 20 2008. 11 17 PM IST
New Delhi: Foreign firms with stakes in the country’s commodity exchanges in excess of a 5% cap set by the government will have to trim their holdings by 30 June 2009, the commerce ministry said in a statement.
By the same date, the overall overseas holding in any single exchange must be cut to no more than 49%.
In March, India allowed foreign firms to jointly invest up to 49% in commodity exchanges, of which 26% could be through foreign direct investment and 23% in the form of portfolio investment. An individual entity can hold a maximum of 5% in an exchange.
“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.
In May, the chief executive of Intercontinental Exchange Holdings Inc. said the firm may have to sell part of its 8% stake in the National Commodity Derivatives Exchange to comply with the rules. Goldman Sachs holds a 7% stake in the exchange.
The country’s commodity exchanges have attracted foreign investors looking to diversify their product portfolio and geographical reach. NYSE Euronext bought a 5% stake in the country’s largest commodity bourse, the Multi Commodity Exchange, for $55 million (Rs240 crore) early this year.
Exchanges need to furnish a compliance report detailing equity structure by 30 June.
Bloomberg contributed to this story.
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First Published: Wed, Aug 20 2008. 11 17 PM IST