Brings down stake to 1.32% in the troubled exchange

State-owned Corporation Bank has offloaded stake worth ₹19.91 crore in the troubled Multi Commodity Exchange in the last four months, and has brought down its stake to 1.32 per cent from 2.10 per cent.

The bank has been offloading shares of the exchange in a staggered manner ever since Forward Markets Commission, the commodity market regulator, declared in December that promoter Financial Technologies and key official Jignesh Shah were not ‘fit and proper’ to operate commodity exchanges, after its group company the National Spot Exchange defaulted on ₹5,600 crore trade settlement.

Corporation Bank, along with the State Bank of India and Bank of Baroda, bought 9.69 per cent stake in MCX for ₹3.94 crore in 2004. The exchange raised ₹663 crore through an initial public offering priced at ₹1,032 a share in 2012. Corporation Bank offloaded 0.48 per cent stake in the IPO to bring down its stake to three per cent.

In January, the bank realised another ₹29 lakh with the sale of about 21 lakh shares, and mopped up ₹60 lakh from the sale of 6.72 lakh shares on April 16. The share price of MCX has fallen substantially ever since the scam broke out in its group company, NSEL.

The market regulator has revamped the entire management to ring-fence MCX from the impact of NSEL. This helped boost investor sentiment and pushed the stock to occasional new highs.

Paras Bothra, Vice-President, Ashika Stock Broking, said the negativity and impact of NSEL default on MCX has already been discounted by the market, and the prospects of the exchange appear to be better with a professional management in place.

He added that commodity exchanges in India are largely used only for executing speculative trades rather than hedging risk. With a leadership position in commodity trade, MCX is well poised for further growth if the Government rolls out the right policy framework, Bothra added.

Blackstone GPV Capital has increased its stake in MCX from 2 per cent to 4.79 per cent by acquiring the entire 2.79 per cent holding of DSP Merrill Lynch for about ₹81 crore.

Religare Finvest has reduced its stake marginally in MCX to 1.59 per cent in the March quarter from 1.92 per cent.

(This article was published on April 18, 2014)
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