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National Multi Commodity Exchange (NMCE) has decided to merge with Anil Ambani-owned Reliance Group Indian Commodity Exchange (ICEX) which had suspended trading in 2014.
The merger has been approved by the Boards of both exchanges and is expected to be completed by end of this year. The merger will not only help both the exchanges to face competition amid tight regulatory regime but also make them the third largest behind MCX and NCDEX.
ICEX shareholders will hold 62.8 per cent stake while NMCE shareholders own the rest in ICEX, post merger. Reliance Group has equity interest in both the exchanges.
The new exchange will offer wide range of contracts including bullion, oil, rubber and other agriculture commodities. It will also offer the world’s first diamond futures contract which has received ‘in-principle’ approval from the regulator.
In April, ICEX raised ₹50 crore through its maiden rights issue valuing the exchange at ₹250 crore. R-Next, the wholly-owned subsidiary of Reliance Capital, the anchor investor hold 26 per cent stake and MMTC owns 16 per cent stake in ICEX
ICEX went live in November 2009 but the exchange volumes and revenue never matched with expenses amid intense competition from established rivals such as metals and energy bourse MCX and farm-focused exchange NCDEX, which began operations in 2003.
Apart from ICEX, Ace Commodity Exchange, promoted by Kotak Mahindra and United Commodity Exchange, owned IT firm Commex Tech also suspended trading few months after going live.
Anil Mishra, Managing Director, NMCE said: “The large base of warehousing facilities of CWC with storage capacity of 9.89 million tonnes will be available to the combined entity pan India. This will help generate more liquidity due to wider participation from larger base of active members of the combined entity”.
Sanjit Prasad, Managing Directo, ICEX said: “The merger will result into greater financial strength, consolidation of clients and members, enhanced product basket and higher operational synergies, helping ICEX to further strengthen its position in the fast growing commodity derivatives market in India.”
The merged entity will have prominent shareholders from both exchanges including MMTC, Indian Potash, Krishak Bharti Cooperative (Kribhco), IDFC Bank, Indiabulls Housing Finance, Reliance Capital, Bajaj Holdings, Central Warehousing Corporation, Punjab National Bank and Gujarat Agro Industries.
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