Amendments to the Forward Contracts (Regulation) Act that would allow trading of options and indices as well as participation by institutional investors, would in turn increase the traded turnover on commodity exchanges. The IPO draft paper by MCX with regulator SEBI is expected to raise an estimated Rs 800 crore.
MCX is India's No. 1 commodity exchange with 83% market share in 2009, with gold being the highest traded item. Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil and gold in futures trading. On the previous two occasions, however, the exchange's promoter, Financial Technologies (FTIL) postponed plan to enter into the capital market due to poor investors' sentiment.
According to Forward Contracts (Regulation) Act, no investor should hold more than 26 per cent of equity in commodity exchange. But, FTIL currently holds 31 per cent in MCX which it will have to bring down to 26 per cent by September 30.