R-Cap may quit race for MCX stake

New FMC norms will not allow it to bid for more than 5% stake

Reliance Capital (R-Cap), earlier the highest bidder for a majority stake in Multi Commodity Exchange (MCX), might not be interested under the new regulations for commodity exchanges.

According to the new rules notified by the Forward Markets Commission on Tuesday, no person shall, individually or together with persons acting in concert, hold more than five per cent of the paid-up equity in a recognised commodity exchange except six types of entities which are banks, exchanges, etc. This means RCap, being a company, can’t bid for more than five per cent stake in MCX.

The only other way it can buy is through its insurance arm, Reliance Insurance, as the FMC guidelines allow commodity exchanges, a stock exchange, a depository, a banking company, an insurance company and a public financial institution.  “We will not be interested in bidding for only five per cent stake and doing it via Reliance Insurance also does not seem feasible,” said a source in the know, on condition of anonymity.

R-Cap was the highest bidder for the 24 per cent stake in MCX of Financial Technologies (FTIL), the anchor investor, at Rs 750 a share. It was the most vocal of all the bidders and had raised issues of corporate governance at MCX.

Kotak Mahindra Bank had initially bid for 24 per cent stake, which the bank has to now cut to 15 per cent. The bidding process had taken a hit after the adverse PwC audit report on MCX. FTIL was declared in December to be ‘not fit and proper’ to own more than a limited stake in any commodity exchange. since it had 99.9 per cent stake in crisis-hit National Spot Exchange.