Commodity bourses told to cap foreign holdings by June '09

20 August 2008

Mumbai: The commerce ministry has asked commodity exchanges in the country having individual foreign equity holding in excess of the 5 per cent cap set by the government to trim their holdings by 30 June 2009.

The overall overseas holding in any single exchange should also not exceed the prescribed 49 per cent ceiling by that time, the commerce ministry said in a press note.

The government allows foreign firms to jointly invest up to 49 per cent in the country's commodity exchanges - 26 per cent through direct investment and 23 per cent in the form of portfolio investment – and has limited individual holdings to five per cent.

''It has been brought to the notice of the government that some of the existing commodity exchanges had foreign investment above the permitted level," the circular stated.

The Intercontinental Exchange Holdings Inc had, in May, said it would have to sell part of its eight per cent stake in the National Commodity Derivatives Exchange (NCDEX) to comply with the rules.

Investment bank Goldman Sachs also holds a 7 per cent stake in NCDEX.