The Forward Markets Commission (FMC) on Tuesday came up with new guidelines for ownership of commodity exchanges. The new norms pave way for institutionalising commodity exchange holdings with the FMC allowing commodity exchanges, stock exchanges, depositories, banks, insurers and public finance institutions to hold 15 per cent stake in the bourses.
Resident Indian ownership has been capped at 5 per cent, while public holdings will be at least 51 per cent in a commodity exchange.
Clearing corporations cannot hold any stake in a commex while FIIs’ holding has been capped at 23 per cent and FDI, at 26 per cent.
The FMC said it is mandatory for commodity exchanges to maintain a minimum net worth of ₹100 crore.
Announcing a slew of measures akin to the one spelt out by stock market regulator SEBI, on ownership and governance of exchanges, the commodity regulator said that exchanges with a net worth lower than ₹100 crore will be given three years to meet the norm.
Commodity exchanges cannot distribute profits to shareholders pending compliance and have to submit audited net worth certificate by end-September every year.
FMC said that the ‘fit and proper’ criteria would apply to all commex shareholders. Any shareholder who ceases to be fit and proper has to compulsorily divest his shareholding and exchanges have to been directed to ensure this.
Pending divestment of shares, the voting rights of such a person shall stand extinguished and any corporate benefit (such as bonus, rights, dividend) in lieu of such holding shall be kept in abeyance/withheld by the exchange, said FMC.
Brokers and FIIs have been barred from holding a board seat in a commex.
Stake buy For any stake buy by any entity exceeding two per cent, an FMC nod is mandatory and has to be sought within a fortnight. If approval is not granted then the entity has to mandatorily divest the stake.
In addition, shareholders holding more than two per cent in commexes have to compulsorily file a ‘fit and proper’ declaration within 15 days of the end of every fiscal.
Exchanges have been directed to disclose their shareholding pattern besides naming their top 10 shareholders along with their shareholding every quarter.
FTIL reaction On the FMC norms, Financial Technologies India Ltd (FTIL) in a statement said: “The legality of issuing guidelines under Forward Contract Regulation Act (FCRA) is already before the Bombay High Court and despite that FMC has issued another set of norms which are exceeding the provisions of FC(R) Act 1952 and hence ultra-virus.
“The timing of the announcement of the norms appears to have been done without consulting all the stakeholders. We are affected more directly as our original entry conditions are being changed mid-course by the FMC to further compel us to exit our shareholding under policy distress with the new norms, ignoring natural justice.
“We were amidst a divestment process to ensure that our shareholding is divested with similar right to new shareholder which this notification of revised norms has prevented. The timing, content and haste in announcement of the revised norms leave doubt on the purpose.”