The proposed merger will create India’s third largest commodity exchange which will offer a wide range of contracts, including rubber, bullion, oil, and other agri-commodities. Country’s largest exchange by volume is the Multi Commodity Exchange followed by the National Commodity and Derivatives Exchange.
Post the imposition of the commodity transaction tax from July 2013, ICEX had suspended trading in 2014 as its volumes dipped to a level that made it unviable to continue business. It got permission to relaunch its operations after it raised its networth again.
The exchange will also offer the world’s first diamond futures contract, which has already received in-principle approval from the regulator.
The merger has been approved by the boards of both exchanges.
Under the agreed swap ratio, ICEX shareholders will hold a 62.8% stake and NMCE shareholders will hold a 37.2% stake in ICEX after the merger.
The merged entity will have prominent shareholders from both exchanges, including Indiabulls Housing Finance, MMTC, Indian Potash, Punjab National Bank, Krishak Bharti Cooperative (Kribhco), IDFC Bank, Reliance Capital, Bajaj Holdings, CWC and Gujarat Agro Industries.
The merger is expected to be completed by December 2017, subject to regulatory approvals.