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After an extended battle, MCX may get the go-ahead to launch new contracts up to March 2015 if not for the whole of the next calendar year. This will be an interim arrangement till its promoter, Financial Technologies (FTIL), gets all regulatory approvals to sell its 15 per cent stake to Kotak Bank.
Market participants, who are facing difficulty in rolling over their investments due to lack of contracts for next year, have asked the Government to allow the exchange to launch contracts for financial year 2014-15, that is up to March, if not for the whole of calendar year 2015.
The country’s largest commodity exchange was banned from rolling out fresh contracts after Financial Technologies was declared not ‘fit and proper’ to operate commodity exchanges following group company National Spot Exchange failing to settle trades worth ₹5,600 crore executed on its platform.
The exchange’s turnover almost halved in July to ₹4.43-lakh crore against ₹7.76-lakh crore in the same period last year. MCX has only two contracts each for trade in gold and silver, while in copper it is left with only one.
Suresh Nair, Executive Director, Admisi Commodities, said volumes in the exchanges have already suffered after the NSEL fiasco and any delay in the launch of new contracts on MCX would affect market sentiment and inconvenience hedgers.
Navin Mathur, Associate Director for Commodities and Currency at Angel Broking, said it would be in the interest of the industry to allow the exchange to launch fresh contracts as the clearance for Financial Technologies’ stake sale to Kotak Bank is a procedural issue.
In line with commodity market regulator Forward Markets Commission’s order, FTIL has divested its entire 26 per cent stake in the exchange. However, its deal with Kotak Bank is awaiting approval from the Competition Commission of India. Incidentally, the Kotak Group already owns a commodity exchange, Ace Derivatives and Commodity Exchange, which is attracting volumes in the agriculture commodity space.
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