In a significant development the country's largest stock exchange, the National Stock Exchange of India Ltd. (NSE), and the National Bank for Agriculture and Rural Development (NABARD), have announced their strategic participation in the equity of MCX.
This partnership of NSE and NABARD with MCX along with its existing share holders such as State Bank of India group (SBI along with its seven subsidiary banks and SBI Life), Union Bank, Corporation Bank, Canara Bank, Bank of Baroda, Bank of India, HDFC Bank and Financial Technologies (India) Ltd. Makes the MCX consortium the largest distribution network across the country.
According to Chitra Ramkrishna, deputy managing director, NSE ,"The commodities market worldwide are large markets attracting participation from a wide spectrum of the populace. The commodities markets in India are now being revolutionised by the use of technology and new techniques and we are confident that the commodities market shall grow leaps and bounds in the time to come. As the leading stock exchange in the country, NSE is happy to take a stake in the equity of MCX so as to leverage its experiences in the capital market and synergize with MCX for the growth of the commodities market."
MCX has three international tie-ups - Tokyo Commodity Exchange (TOCOM), the 250-year old Baltic Freight Exchange, London, Dubai Metals and Commodity Centre (DMCC) and the Dubai Gold and Commodity Exchange (DGCX), the strategic initiative of Government of Dubai. MCX has to set up the National Spot Exchange (NSEAP), which connects all India APMC markets thereby contributing in the implementation of Government of India's vision to create a common Indian market.
Adds Ranjana Kumar, chairperson, NABARD said, "In an increasingly liberalised economic environment, commodity futures market offers a market-based instrument to the farming community for managing risks and uncertainty. Development of futures markets provides powerful tool for efficient price discovery and risk mitigation and directly aids in strengthening the competitiveness of agriculture sector. In line with this and the priority accorded by the government of India, NABARD is keen to participate actively in fostering efficient spot as well as futures agriculture markets."
"Participation of NABARD in the equity of commodity exchanges will facilitate integration of agriculture credit; securitisiation of agricultural produce and futures markets, leading to more efficient price discovery of farm produce. To achieve this NABARD has taken a conscious decision to enter into partnership with leading national level commodity exchanges. Contribution to the equity and participation in management of MCX is a step in this direction. The participation in MCX will enable the two national level institutions, NABARD & MCX to work synergistically to achieve the objective of establishing an efficient and transparent agricultural market in India, in the larger interest of farming community for better price realization of their farm produce," she adds.
Commenting on the development Jignesh Shah, managing director, MCX, said "The equity investment by NSE and NABARD in MCX is a landmark accomplishment by MCX and this makes MCX the 'Exchange of Choice' amongst others in the commodities ecosystem."
"The MCX management is very pleased to have the association of NSE and NABARD, which will surely go a long way in enabling us to achieve our objective of making India the global commodity trading hub between Tokyo and London in a much shorter time frame," he added.
MCX is an ISO 9001:2000 online nationwide de-mutualised multi commodity exchange. It has over 900 members spread across 500 centres across the country, with more than 750 VSATs and leased line connections and 5,000 trading terminals that provides a transparent robust and trustworthy trading platform in more than 50 commodity futures contract with a wide range of commodity baskets which includes metals, energy and agriculture commodities.