India's largest commodity exchange, the Multi Commodity Exchange is fast emerging as a global leader in commodities trading, as the government gets ready to raise the limit on overseas investments in commodity bourses.
The exchange has chalked out a series of plans to set its foot in the global commodities platform. As a prelude to the big plans, last week, MCX roped in India's most respected financial leaders as stake holders.
ICICI Venture Funds Management Co. acquired 3.55 per cent, Infrastructure Leasing & Financial Services 5 per cent and Kotak Group 1 per cent in MCX from the holding company Financial Technologies. The transaction values the company at $1.1 billion.
The Indian investors join Citigroup Inc., Merrill Lynch & Co. and Fidelity International Ltd that have already bought stakes in the exchange to benefit from a surge in commodity futures trading in India.
Today, MCX is the second largest exchange in silver in the world, the third largest in gold; the exchange clocked a record turnover of Rs Rs. 22,93,723.7 crore during the financial year 2006-07.
MCX has also entered into various strategic agreements with global exchanges like The Tokyo Commodity Exchange (TOCOM); The Baltic Exchange, London; Chicago Climate Exchange (CCX); New York Mercantile Exchange (NYMEX), London Metal Exchange (LME); Dubai Multi Commodities Centre (DMCC); New York Board of Trade (NYBOT) and Bursa Malaysia Derivatives, Berhad (BMD).
Why are Indian and global investors and financial institutions keen to pick up stakes in MCX?
The best reasoning comes from K V Kamath, Managing Director and CEO, ICICI Bank Limited, said: "I am happy that ICICI Venture is partnering with Financial Technologies in its highly successful MCX venture. FT is creating next generation financial markets within India and globally, where the benefit of technology and price transparency empowers the masses to benefit from globalization. It is our philosophy to partner with growth-oriented companies that seek to leverage technology and the power of markets for economic transformation, and this investment is a great example of such a partnership."
According to Uday Kotak, Executive Vice Chairman and Managing Director of Kotak Mahindra Bank Limited, he values MCX's vision of converting India into global hub in major commodities in the economy.
"Over the last few years, commodities futures market in India has experienced an unprecedented growth in terms of the number of modern exchanges, commodities allowed for derivatives trading and the value of futures traded.