ICEX readies for futures trade relaunch in diamonds

With completion of a second rights issue, of Rs 85 crore, the Reliance ADA Group-anchored Indian Commodity Exchange (ICEX) is ready to restart futures trading in polished diamonds by the end of this month.

Final approval is needed from the Securities and Exchange Board of India (Sebi). The exchange suspended futures trading in 2014, four years after launch. It has in-principle approval from Sebi for going live.

To achieve the mandatory minimum net worth criterion of Rs 100 crore, the exchange had floated a second rights issue (it concluded this week), to raise money from its existing investors. In April 2016, the exchange had raised Rs 50 crore from its shareholders; with the second round, its net worth is Rs 125 crore.

However, government-owned commodity trading entity MMTC did not participate. So, after the second round, MMTC's stake is expected to decline to below 10 per cent, from the earlier 13 per cent.

MMTC plans to exit the exchange business. In fact, it had divested five percentage points each each of its stake in January 2016 to Akhil Gupta, vice-chairman of Bharati Enterprises, and Vijay Sharma of BN Enterprises. It is now looking for investors to buy its remaining stake in ICEX.

Sebi's in-principle okay was for commencement of business and trade in diamond, crude and Brent oil contracts. The exchange plans to start in polished diamonds, with contracts in three categories - 30 cents, 50 cents (a carat has 100 cents) and 1 carat.

With this, ICEX will be the first exchange in the world for diamond futures contracts. "We are all geared for the launch. Response for the ongoing mock trading has been very encouraging, particularly from diamond physical market participants," said Sanjit Prasad, managing director.

The bourse has enrolled 64 members, including some leading jewellers; Sebi approval has come for 51 till date.