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M.R. Subramani

CHENNAI, Aug. 25

THE National Multi-Commodity Exchange (NMCE) is unlikely to become functional before the middle of next year as the Government is yet to finalise who will run the exchange.

The Forward Markets Commission (FMC) had forwarded a list of parties that could be allowed to run the exchange, the Food and Consumer Affairs Ministry has sought some clarifications, according to official sources.

The FMC has sent the clarifications, but the Government could take another month and a half before it puts its seal of approval on the party/parties that will run the NMCE.

The FMC, an arm of the Food and Consumer Affairs Ministry, supervises the functioning of the commodities and futures exchanges in the country.

"The Government approval could come around October 15. And then the selected party/parties will be given 10 months time to launch NMCE. The selected parties will take 8-10 months to put things in place. It means the exchange will start functioning from sometime after the middle of 2003," the sources said.

Earlier, the FMC Chairman, Mr A.K. Bhatt, had said that the commission would recommend more than one name for setting up the exchange.

Asked about reports that the Government had cleared setting up of NMCE, the sources said the Centre had only approved a package in which the multi-commodity exchange also figured.

This is the second attempt by the Government to launch a multi-commodity exchange as part of its objective to popularise futures trading and ensure wider participation across the nation.

NMCE is intended to be screen-based trading linked to various parts of the country and dealing in futures of various commodities. The Government had intended to allow NMCE to trade in 21 commodities, mainly oils and oilseeds. NMCE is also seen as one than can give fillip to commodity futures in the country when most of the exchanges are witnessing poor volume turnover.

Permission was given to a consortium comprising the National Stock Exchange, Mahindra & Mahindra, ICICI and Punjab Warehouse Corporation (PWC) in July 2000 to set up NMCE. However, the plan fell through as the consortium members could not come to an agreement on the issue from where the exchange's headquarters would function. While PWC insisted that the exchange be headquartered in the satellite town of Mohali, near Chandirgarh, the rest wanted it to be in Mumbai.

A sort of via-media was proposed where in the registered office was to be in Mohali and the corporate office in Mumbai but PWC did not agree to it.

With the FMC patience running out, it came out with a notification in March this year inviting new players for setting up the exchange.

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