BSE in Commodity Exchange

In this article we have analyzed the status of BSE in Commodity Exchanges of India. The decision of Bombay Stock Exchange of buying 26% equity shares of National Multi-Commodity Exchange of India (NMCE) has been discussed in the article.
BSE or Bombay Stock Exchange has decided to purchase 26% equity shares of a commodity exchange of India. Bombay Stock Exchange has taken this decision in order to diversify its’ portfolio and in order to enter the booming commodity trading market of India.

The commodity exchange, whose equity shares would be purchased by Bombay Stock Exchange is no other than National Multi-Commodity Exchange of India(NMCE). The Ahmadabad based National Multi-Commodity Exchange has taken the decision of issuing fresh equity shares for BSE.

According to Kailash Gupta, Managing Director, National Multi-Commodity Exchange of India, Bombay Stock Exchange would buy the equity shares of NMCE in a deal worth $25 million.
National Multi-Commodity Exchange(NMCE) is a small commodity exchange but it operates at national level. There are total 24 commodity exchanges in India. National Multi-Commodity Exchange generates less than 5% of the total turnover generated by these 24 commodity exchanges of India.

National Multi-Commodity Exchange carries out commodity trading of different agricultural commodities. But, the commodities that are highly traded in NMCE are cardamom, pepper and rubber.

It can be mentioned here, that National Stock Exchange, the biggest competitor of Bombay Stock Exchange holds almost 75% share of total futures commodity trade of India. National Stock Exchange or NSE holds almost 2.56% equity shares of Multi Commodity Exchange of India(MCX). NSE also owns 15% equity stakes of NCDEX or National Commodity and Derivatives Exchange.

At present, Neptune Overseas Limited, one founder of NCME holds almost 25% equity stake of NCME or National Multi-Commodity Exchange. But, after issuance of fresh shares for BSE, Neptune Overseas Limited’s shareholding is supposed to fall. After completion of the deal of NMCE with BSE, Neptune Overseas Limited’ s shareholding will fall to the level of 18% (approx).

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Last Updated on : 27th June 2013

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