NMCE buys out 5% stake in FCCCI for Rs 8.6 lakh
National Multi Commodity Exchange (NMCE) has picked up nearly 5% stake in the First Commodity Clearing Corporation of India (FCCCI), the proposed clearing-house of the nonstarter International Commodity Exchange (ICE), an arm of Ipsta.
NMCE through its promoter Neptune Overseas bought out the stake of India Pepper and Spice Trade Association (Ipsta) worth Rs 8.65 lakh, recently.
NMCE managing director Kailash Gupta said that the exchange was looking at different options and would take a decision soon.
The immediate reason for buying out Ipsta’s stake was the latter’s pressure as it wanted to sell-off its stake in the clearing corporation owing to financial needs.
FCCCI was proposed to be the clearing-house of ICE, the international arm formed by Ipsta nearly a decade ago. With high hopes on launching dollar-denominated trade and bringing in international players during the heydays of Ipsta, the pioneer in pepper futures in the world, the exchange had formed the international arm. FCCCI was formed as a limited company with the support of three major banks, Ipsta and a few traders.
While the three banks – Union Bank of India, IndusInd Bank and the then Global Trust Bank – together had a stake of Rs 1.1 crore, a few individuals in the trade held shares worth Rs 40 lakh and Ipsta had a stake worth Rs 8.65 lakh.
Spicy Affair
• NMCE bought out the stake of India Pepper and Spice Trade
Association (Ipsta)
• FCCCI was proposed to be the clearing-house of ICE, the international arm formed by Ipsta nearly a decade ago
• FCCCI was formed as a limited company with the support of three major banks Union Bank of India, IndusInd Bank and the then Global Trust Bank
But with ICE not going beyond its formation, the clearing arm too remained nonfunctional. With the entry of national exchanges, Ipsta lost its sheen and remaining a single-commodity exchange practically no trade takes place.
It had been going around seeking tie-ups with other exchanges first signing a MoU with MCX and later talking to NCDEX. But with no tie-up concretising, the exchange is now struggling for existence. Gupta said that when contacted by Ipsta officials a few months ago for sale of its stake in the clearing-house, NMCE stepped in and bought out the stake recently.
It had still not taken a formal decision on its future plans with the clearing-house and would soon be discussing with other stakeholders before finalising a plan, he added.
Meanwhile, there have been charges that FCCCI has not only remained non-functional since inception, but also no AGMs or EGMs have been called for the last few years. During the recent AGM of Ipsta, it is learnt that the issue found mention and some of the members have written to the exchange against the share sale.
About NMCE, Gupta said that a few institutions, including a stock exchange and a few insurance firms had evinced interest in partnering with it. Though he refused to divulge details, he said discussions were on and he was hopeful of a major institution tying up with NMCE soon.
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