Financial Technologies, the group that controls India's top commodities exchange, is considering opening a commodity bourse in Singapore as the country's biggest gold, silver and base metals trader diversifies.
Financial Tech, owner of India's Multi Commodity Exchange, was in talks with the Monetary Authority of Singapore about setting up the Singapore Mercantile Exchange, a person familiar with the plan said.
"Financial Technologies is the only company out of India to have set up exchanges in Dubai in the Middle-East and in Mauritius to serve Africa and to have plans for Europe and now Singapore," the person said.
Started by entrepreneur Jignesh Shah in 2003, MCX turns over $4bn a day, or about 75 per cent of the daily volume by value of India's 24 commodities markets.
While India's commodity business has boomed, analysts warn that the country remains a minefield for traders. India's leftist parties and security hawks have distrusted commodities futures trading amid concerns about abuses by unscrupulous traders or enemy agents.
Driven by political concerns over high inflation early last year, the government without warning banned the trading of futures for wheat and pulses, another important Indian crop.
"There are policy risks involved in the functioning of these exchanges, particularly regarding agricultural commodities," said Seema Desai, analyst at Eurasia Group in London.
Some analysts believe that diversifying this risk has been one reason for Financial Technologies' rapid overseas expansion.
The person familiar with Financial Technologies' proposed Singapore exchange said he expected the project to be ready for launch in "about a month".
MCX, whose shareholders include Fidelity, Merrill Lynch and Citigroup, also specializes in energy and some agriculture in addition to metals.
Singapore's two commodity exchanges - the Joint Asian Derivatives Exchange, run by the Singapore Exchange, and the Singapore Commodity Exchange - mainly trade futures in rubber and crude palm oil.
Financial Technologies declined to comment on the proposal. The Monetary Authority of Singapore also declined to comment.
The plan follows a series of recent regulatory changes in India including new rules allowing 49 per cent foreign ownership of domestic exchanges with no single investor permitted to own more than 5 per cent.
This means Fidelity might have to liquidate part of its 9 per cent stake in MCX and Goldman Sachs might have to sell a portion of its 7 per cent stake in a rival bourse, the National Commodity and Derivatives Exchange.
The government has also amended the law to make the regulator, the Forwards Market Commission, independent in a move the industry hopes will give it the teeth to make important reforms to the market.
Have something to add?! Have an opinion?
Leave a comment:...
No comments:
Post a Comment