The Hindu Business Line : Commodity bourses: FMC may propose ‘anchor investor’

Kolkata, Dec 11 The Forward Markets Commission (FMC) is finally set to appreciate the role of private entrepreneurs in promoting the commodity markets.

After a year-long stalemate, the commission will submit its final proposal before the Union Ministry of Consumer Affairs on the ownership structure of commodity bourses this week.

Contrast to Capital market

According to the FMC Chairman, Mr B.C. Khatua, in sharp contrast to the capital market, the ownership norm for commodity bourses will emphasise on the role of an “anchor investor” holding a controlling stake.

The anchor investor, however, will not be allowed to hold a clear majority stake of 51 per cent and “it may be somewhat binding on him” to rope in equity participation from different important constituents of physical commodity markets such as logistics, warehousing, producers and others “over a defined period of time.” The proposed norms will come into force as soon as the Ministry clears the proposal.

Deviation from initial outlook

“In a deviation from our initial outlook, we may now propose to allow an anchor investor for better operational efficiency of the commodity bourses,” Mr Khatua told newspersons on the sidelines of a seminar organised by the Indian Chamber of Commerce here on Tuesday. “We expect to submit the proposal to the Union Ministry this week,” he added.

On the equity stake restrictions to be imposed on the anchor investor, he indicated that the regulator might propose a ceiling of well below 49 per cent much higher than the 5 per cent ceiling in the equity bourses.

Ceiling on equity holding

“It will be binding on the anchor investors to bring down their stake to a particular level over a period of time” Mr Khatua said.

He had declined to give an indication of the proposed time frame for meeting such equity restrictions.

Parallel to the ownership structure, a decision is also expected shortly on issues related to the FDI in commodity bourses.

According to Mr Khatua, the Union Department of Industrial Policy and Promotion (DIPP) has submitted a final proposal in this regard last month.

The proposal is due to be considered by the Cabinet Committee on Economic Affairs (CCEA).

On the sharp decline of the share of agri-commodities in forward trading, the regulator admitted that lack of consistency in the Government policies in regard to trading of agri commodities has shaken up investors’ confidence.

More Stories on : Commodity Exchanges | Regulatory Bodies & Rulings

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