Promoter Spat Hits National Commodities Bourse Plan

The proposed national commodities exchange, the first of its kind in the country, has run into trouble following serious differences between its promoters.

The consortium of National Stock Exchange (NSE), Mahindra & Mahindra, ICICI Ltd and Punjab Warehousing Corporation, which had received the approval from the Forward Markets Commission to set up the exchange, is divided on the location of the proposed bourse.

The internal squabble has brought the project to a standstill and it may not even take off, said a source.

According to sources, while Punjab Warehousing Corporation and Mahindra want the exchange to be located at Mohali in Punjab, the NSE and ICICI want it in Mumbai.

Several rounds of meeting were held between these companies. Even the Punjab chief minister had earlier held a meeting with senior officials of NSE and ICICI and tried to convince them to set up the exchange at Mohali and offer to provide the land for setting up the exchange free of cost, sources pointed out.

The plan was to launch the exchange within six months from receiving government approval. The partners had earlier sorted out various other issues like the equity partnership with all four partners agreeing to take equal stake.

It was also agreed that the promoters will offload their stakes to financial institutions two or three years after the exchange become operational and no institution will hold a majority stake.

The exchange was conceived on the NSE model with screen-based trading with terminals across the country dealing in multiple commodities.

The groundwork was also done for setting up the exchange with setting up task groups to sort out various issues such as modalities for trading, tying up the brokers and companies as well as regulatory issues like by-laws for the trading.

However, with serious difference among promoters cropping up, the project may not take off, sources said.