Kotak may cut stake in Ahd Commex to 40%

Mumbai: The Kotak group will have to reduce its equity stake from current 51% to 40% in the Ahmedabad Commodity Exchange (ACE) within a year from the date of in-principle approval, as per the new guidelines issued for formation of national commodity exchange.
The forward markets commission (FMC) has accorded an in-principle approval to the ACE to upgrade and convert itself into a national multicommodity exchange on the basis of an application made in 2008.
With this in-principle approval, ACE has become the first regional commodity exchange to get the status. The permission has been granted on condition that ACE upgrades itself by replacing its “open outcry” system with online trading.
After getting approval for status of national commodity exchange by regulator, the Kotak Group will soon initiate the acquisition process of the ACE in-line with FMC guidelines.
As part of its plan to become corporatised and demutualised national exchange, ACE had offered 51% equity stake to Kotak Mahindra Bank in January 2008. The acquisition price per equity share of ACE was decided at Rs 321.
“We have proposed to acquire equity stake of 51% in the exchange but as per the new guidelines, we will have to reduce our stake to 40% as an anchor promoter. Firstly, we will complete our acquisition process. We will also go for the demutualisation as per the guidelines,” T Raghunath, head of group strategy for Kotak told FE.
“I think it will take atleast one or two months to complete the process of acquisition and demutualisation,” he said.
There are three major national commodities exchanges in the country, Multi-Commodity Exchange (MCX), National Commodity and Derivative Exchange (NCDEX) and National Multi Commodity Exchange (NMCE).
Apart from these three commodity bourses, India Bulls and MMTC are also jointly setting up new exchange.
“It is an important milestone in the history of commodity exchange. We would transform ourselves from a regional to national player by undertaking demutulisation process and implementing online trading system,” Pravin Thakkar, president, ACE said.
ACE, which currently trades in castor seed and cotton seed with a daily turnover of Rs 25 crore, may introduce all permitted commodities including bullion on its platform in a phase manner, he added. The exchange currently has 212 members.
As per the new guidelines, the regional commodity exchanges are not permitted to list more commodities unless the trading system is online.
In 2008, the exchange passed a resolution and proposed to issue and allot to Kotak Mahindra Bank and/or its associates or subsidiaries up to 1.02 lakh equity shares at a price of Rs 321 per equity share and up to 10.50 lakh share warrants. ACE convened an extraordinary general meeting on February 2008 to seek its shareholders approval for offering stake to Kotak Mahindra Bank. (Source: Financial Express)

Transaction charge row: NCDEX to move apex court

The National Commodity & Derivatives Exchange (NCDEX) has decided to move the Supreme Court against the Bombay High Court order on the Forward Market Commission’s (FMC’s) jurisdiction over the exchange’s transaction charges. The decision was taken at its board meeting on Tuesday.
A source close to the development said that the exchange, India’s second largest commodity derivatives platform, would challenge the Bombay High Court’s order shortly in the Supreme Court, but the ground on which it is planning to move the apex court was not ascertained.
The commodity market regulator, the Forward Markets Commission (FMC), had not approved the exchange’s decision to drastically cut charges for trading in the evening session. NCDEX challenged the powers of the regulator saying that transaction charges fell in the jurisdiction of the exchange.
NCDEX officials, including MD & CEO Ramalinga Ramaseshan and Chief Business Officer Unupom Kausik, were tight-lipped and denied to comment on the development.
“What is discussed in the exchange’s internal board meet need not be disclosed to the media,” Ramaseshan said.
“We cannot say anything,” was the response of Kausik.
The High Court had on February 5 rejected the NCDEX plea on the lack of merit in the writ petition and refused to admit it. The Court had also directed FMC to decide the matter within two weeks from the day of pronouncement of this judgement.
The HC had observed that the decision of such expert bodies should be left to the authorities empowered to take such decisions. The questions with regard to the jurisdiction of the regulator over transaction charges is seen to have a direct bearing on the agrarian economy and on the business of agricultural as well as non-agricultural commodities, especially those traded on the NCDEX.
The court had further said that these are important and larger issues relatable to the economy and commercial principles, which should be examined properly by an expert body and judicial interference preventing such a process would neither be just nor fair, the HC said.
The dispute between the NCDEX and FMC started on January 28, after the exchange re-issued its circular on revision of transaction charges, which was stayed by the regulator.
On December 29, 2008, the exchange had rationalised transaction charges up to Rs 3 per lakh of value of all trades in all commodities between 10 am and 3.30 pm. Also, the transaction charges for the period between 3.30 pm and 11.30 pm were brought down to 5 paise per lakh of value of all trades in all commodities. This revision was stayed from implementation by the FMC.
Later, on January 28, the exchange re-issued the circular with a slight modification in the time to 5 pm. This decision was also disallowed by the FMC and it was challenged in the HC by the NCDEX.
Meanwhile, the NCDEX withdrew its circular on February 7, following the HC order.
(source: Business Standard)