The Hindu Business Line : New norms soon for commodity bourses stakes

The Forward Markets Commission (FMC) is likely to adopt a flexible view compared with SEBI, the capital market regulator, while preparing guidelines for shareholding norms for commodity markets. The new norms are likely to be finalised in January.

Sources said considering the existing nature of entrepreneurship and stake-holding in commodity exchanges, FMC might allow a single entity to hold "significant" majority stake. However, to ensure the presence of varied opinions in the boardroom, the regulator might impose a ceiling of anywhere between 26 and 49 per cent on maximum stake-holding by a single entity.

This is in contrast to the five per cent ceiling imposed by SEBI on stake holding of a single entity in the stock market.

A flexible view is also expected on the issues related to stake holding by foreign institutional investors, funds and security houses.

Foreign funds have already picked up stakes in two leading forward exchanges NCDEX and MCX. Fidelity deal in MCX was an FII transaction, Goldman Sach's entry in NCDEX was treated as FDI .

Though maintained that the norms are still under discussion and far from being finalised, sources said that the spellbound growth of commodity future market during last two years, underlined the importance of organisations holding significant equity stake.

"Unlike stock market commodity market evolved in a different environment and era. There is no way we can deny the role of organisation in steering the market towards further growth. At the same time it is to be ensured that the exchanges fulfil their social obligation and not driven by narrow profit interests. The balance may be struck by limiting the prospects of organisations holding too dominant a position in the board room," said a source close to the development.

FMC official sources, however, said the new guidelines were under preparation and would be in force, soon.

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