New Delhi: The government has permitted companies with an initial capital of Rs100 crore to set up commodity exchanges, paving the way for players like Anil Dhirubhai Ambani Group and Kotak to establish these bourses.
The Forward Markets Commission (FMC) last week released detailed guidelines for grant of recognition to new commodity exchange under the Forward Contracts Act as the futures market has grown significantly in the past few years.
The guidelines provide the much awaited framework as a number of companies had previously showed interest to launch new commodity exchanges.
Anil Ambani group was believed to be planning an entry in the commodity trading business by setting up a large exchange in the country as part of its plans to capitalise on the vast opportunities in this market.
Besides R-ADAG, another corporate giant Kotak group is also mulling over setting up a commodity bourse by acquisition of some regional exchanges to get the platform and other technical support, according to sources.
However, Reliance group has declined to comment on any specific plans for entering into this business.
As per the guidelines, companies or a consortium of such firms can file applications to the commodity futures market regulator for setting up an exchange with a minimum capital base of Rs100 crore.
However, the guidelines also outline that it should be a public limited company and at least 26% equity stake of any proposed national-level exchange should be held by a government company.
The guidelines also stipulate that institutional investors including stock or commodity exchanges, banks, co-operative societies and federations manufacturing agri inputs should own at least 20%.
Earlier, when asked whether the group might look at entering this business, Reliance Capital’s brokerage and financial products distribution arm, Reliance Money’s CEO Sudeep Bandyopadhyay had said, “We are always open to any opportunity that come our way.”
However, he did not comment on any specific plans regarding this new business. The group is already present in the commodity brokerage business through Reliance Money.
Another emerging conglomerate Indiabulls group has already tied up with state-run trading firm MMTC to start a commodity exchange, for which it is awaiting necessary approvals.
“Corporate houses are getting lured to huge growth potential in the Indian commodity market, which is already of the size of close to $1 trillion and could gain further given a continuing bull run across the world in this segment for over five years now,” sources added.
Kotak Group has a strong presence in financial markets through its banking, brokerage and other businesses. R-ADAG is present across diversified businesses such as telecom, power, financial services, energy, infrastructure and media.
Other guidelines prescribed by the government include that no individual can hold more than 1% stake in the exchange and the total of such individual holdings shall not exceed 25% of the paid up capital.
Besides, any investor holding more than 26% has to bring it down to the level or below it within two years beginning with the fourth year from the date of recognition of the Exchange.
After the expiry of the period it would be obligatory on the investors to align the shareholding pattern as per the guidelines notified by the government from time to time.