Commodity exchange in India plays an important role to
organize the prices of any commodity that are fluctuating.
Recently Government of India introduced the Online Commodity
Exchanges to ensure better risk coverage and delivery of
commodities. In India there are number of recognized future
exchanges amongst which the prominent ones are the three
national level multi-commodity exchanges. These exchanges are
under the supervision of Forward Market Commission (FMC) of
Government of India. They are:
National Commodity & Derivatives Exchange
Limited (NCDEX)- it is a public limited company,
located in Mumbai.
Multi Commodity Exchange of India Limited
(MCX)- it is an independent and de-mutualized
exchange with a permanent recognition from Government of
National Multi-Commodity Exchange of India
Limited (NMCEIL)- is the first de-mutualized,
Electronic Multi-Commodity Exchange in India and it has been
granted approval by the Government to organize trading in the
edible oil complex.
The Ministry of Commerce & Industry, Department of
Industrial Policy & Promotion (DIPP) has issued the policy
of foreign investment in commodity exchanges in the Press Note
No. 2 (2008) wherein the overall foreign investment in
commodity exchanges would be capped at 49%.
The Government of India has proposed that Foreign
Institutional Investors (FII) can pick up 23% stake in
commodity exchanges but will have no representation on the
board of directors, of commodity exchange.
The Foreign Direct Investment (FDI) for commodity exchanges
would be limited to 26% therefore, allowing the composite
ceiling of foreign investment in commodity exchanges up to
These guidelines for foreign holdings have been drawn
conditional to the norms of the equities markets.
Another layer of safeguard as per the policy is that foreign
investors, including persons acting in concert, cannot hold
more than 10% of the equity in these companies and no single
investor can hold more than 5% equity in domestic commodity
In addition, clearance by the Foreign Investment Promotion
Board (FIPB) is mandatory for foreign investment in these
Lastly the FII purchases are restricted to secondary markets
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general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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The MDO Guidelines further state that the intent of the MCA was for the purpose of achieving a standard contractual arrangement that may be entered into across the country for procurement of such services.
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