CRISIL ranks MCX IPO highest

Posted By: Religare
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CRISIL ranks MCX IPO highest
According to Credit Rating and Information Services of India Ltd. (CRISIL), India's leading Ratings, Research, Risk and Policy Advisory Company based in Mumbai, the proposed initial share sale of Multi Commodity Exchange of India (MCX) has strong fundamentals, especially reflecting its leadership position in the Indian commodity futures market. Also, with a strong technology-backed trading platform and infrastructure, MCX is able to provide high liquidity and low impact cost of transactions, key criteria for the success of any exchange.

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.

Read more about: mcx, crisil, ipo, commodities, futures
Story first published: Monday, June 20, 2011, 9:31 [IST]
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