MCX may postpone IPO
21 May 2008
Reports indicate that the MCX, the country's largest commodity exchange, may postpone its proposed initial public offering because of the ban in futures trading in some commodities and the likely introduction of the commodities transaction tax.
MCX officials said that the recent ''twin adverse effects'' have badly hit commodities trading in India. Therefore, the exchange is now undecided as to when it should go for the IPO. It has already received approval from SEBI for an initial public offering.
However, the suspension of futures in soy oil, rubber, chana and potato has lead to daily turnover loss of over Rs700 crore in major commodity bourses in the country.
In MCX, the loss is around Rs100 to Rs120 crore daily while in National Commodity and Derivatives Exchange (NCDEX) the cumulative effect of the ban on chana, potato and soy oil could be around Rs600 crore daily based on April data.
According to MCX officials, with the suspension of futures in four commodities, the bourse has lost two important contracts-soy oil and potato.
The recent Indian government decision to impose a turnover tax on commodities trading has also dampened futures business in exchanges.
Finance minister P Chidambaram has proposed in the 2008 Budget a tax of 0.017 per cent on the seller of a commodity contract and 0.125 per cent on the buyer. Besides, a service tax of 12 per cent on the exchange levy and an education cess of 3 per cent on the tax are also planned.
