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The Indian Commodities Exchange (ICEX)has been derecognized by the Securities Exchange Board of India (SEBI) and will cease to be a recognised bourse in India.
The ICEX is the third-largest commodities exchange in India and was opened in 2009. It was shut down in 2014 but reopened after merging with another exchange in 2017. The exchange is credited with launching the world's first-ever diamond derivative contracts. It provides contracts for a variety of products, both agro & non-agro, such as black pepper, cardamom, rubber, jute, steel, diamonds, etc.
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In February this year, the exchange had run short of funds and the derecognition was a possibility at the time. A month later, the bourse has officially been derecognized by our market regulator after it was found to be non-compliant on several grounds.
According to rules, all exchanges are required to have and maintain a net worth of Rs 100 crores at all times. In January 2022, the net worth of ICEX was 86.45 crores. Moreover, the contracts introduced by the troubled bourse was also lacking volume.
Furthermore, the MD & CEO of the exchange and three public interest directors from the Board have resigned. The exchange, in a filing to SEBI, said that it does not have the financial capacity, manpower, or infrastructure to meet the relevant requirements. It also added that experienced personnel is unwilling to join the company.
However, the exchange said that it would raise funds and restart trading in one year, but no action plan was submitted. It should be noted that it was shut down in 2014 due to erosion in net worth and it took the company 3 years and a merger to get back. So, resuming operations within a year seems unlikely, according to SEBI.
Since the recognition has been withdrawn, the exchange has been prohibited from using the phrase 'stock exchange' or anything similar in its own name or its subsidiaries. Further, the money available in the Investor Protection Fund and Investor Services Fund of ICEX lying unutilized will be transferred to Sebi's Investor Protection and Education Fund within 15 days from notification, Sebi said.
Article by Aman
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