Comexes comply with new FMC rules, rejig board composition

Commodity exchanges are all restructuring their boards of directors, after the recently issued guidelines of the FMC

The regulator asked all exchanges to have half the board comprise independent directors. Anchor investors were to have board seats to the extent of equity held and the chairman must be an independent director

Commodity exchanges are all restructuring their boards of directors, after the recently issued guidelines of the Forward Markets Commission (FMC).

The regulator asked all the exchanges to have half the board comprise independent directors (IDs). Anchor investors were to have board representation only to the extent of the equity held and the chairman must be an ID.

The Multi Commodity Exchange announced a restructure of its board on Tuesday. The Kotak Group-anchored ACE Commodity Exchange has replaced its chairman; Dharmishta N Raval is the replacement. Earlier Narayan S A, a Kotak group nominee, was  chairman. A spokesperson of the exchange said, “The restructuring is still on. In the next two to three weeks, the whole process will be completed.”

The Ahmedabad-based National Multi Commodity Exchange has already complied. Since its original promoter, Kailash Gupta, was declared ineligible two years earlier, on criminal charges, there is no representative from the anchor investors’ side on the board. A few months earlier, Krishna Mohan Sahni, a  retired IAS officer, was made chairman. Its board also has two former chief secretaries, P K Lahiri and Sudhir Mankad; five of the nine members are IDs.

National Commodities and Derivatives Exchange has complied with the new norms, barring the induction of one ID, for which it appears the FMC’s approval is awaited. Universal Commodity Exchange will have to appoint a new chairman and its promoter-director, Ketan Sheth, will have to become a normal director, as FMC has said none can be a permanent director as he was. It is understood to have told the FMC it is in the process of making the board changes.

ICEX, an exchange floated by MMTC and anchored by the Reliance ADA Group, has 13 directors, of which four are independent. Hence, it will have to make many changes. Sources said the exchange is in the process of complying with the norms.