NMCE, ICEX to merge creating 3rd biggest commodity exchange

National Multi Commodity Exchange (NMCE) will merge with Indian Commodity Exchange (ICEX) creating the India’s third biggest commodity exchange.

More Details About NMCE, ICEX Merger:

  • ICEX will hold a 62.8% stake in the merged entity, while NMCE shareholders will own 37.2%.
  • This is the first merger deal in the commodity exchange space in India.
  • The merged entity will offer the world’s first diamond futures contract along with a wide range of contracts, including bullion, oil, rubber and other agri-commodities.
  • Reliance Capital is the largest investor in ICEX and will continue to be the largest NMCE, ICEX to merge creating 3rd biggest commodity exchangeshareholder post merger.
  • MMTC, Indian Potash, Krishak Bharti Cooperative (Kribhco), IDFC Bank, Indiabulls Housing Finance, Bajaj Holdings, Central Warehousing Corporation (CWC), Punjab National Bank and Gujarat Agro Industries will be the other prominent stakeholders in the merged entity.
  • The merger has been approved by the boards of both exchanges and is expected to be completed by December 2017, subject to regulatory approvals.
  • ICEX MD and CEO Sanjit Prasad has mentioned that the merger will result in greater financial strength, consolidation of clients and members; enhanced product basket and higher operational synergies, helping ICEX further strengthen its position in the fast-growing commodity derivatives market in India.

NMCE MD and CEO Anil Mishra has mentioned that the large base of warehousing facilities of CWC with storage capacity of 9.89 million tonnes will become available to the combined entity pan-India, which will help generate more liquidity due to wider participation of the larger base of active members of the combined entity.

Commodity Exchanges in India:

In terms of volume, Multi Commodity Exchange(MCX) and National Commodity and Derivatives Exchange (NCDEX) are the top two commodity exchanges in India.

  • Till September 2015, Forward Markets Commission(FMC) was the regulatory body for commodity exchanges in India.
  • In September 2015, FMC was merged with the Securities and Exchange Board of India, SEBI.