Indiabulls, MMTC plan carbon credit futures

If cleared by FMC, the new comex may start operations in April-June.

The country's fourth national commodity exchange, to be floated by leading brokerage firm Indiabulls and public sector trading major MMTC Ltd plans to be the first exchange to start futures in non-tangible commodities such as carbon credit and weather derivatives.

MMTC, which plans to pick up 26 per cent stake in a special purpose vehicle where Indiabulls will hold the balance, applied to the Forward Markets Commission today.

The equity capital of the SPV will be Rs 100 crore MMTC, which is the largest trading and warehousing company, is likely to control the back-end of delivering goods to traders while Indiabulls will control risk management and transaction costs etc. MMTC, sources said, has already received the concerned ministry's approval.

An Indiabulls executive said if approved by FMC, the exchange is likely to commence trading in the first quarter of the next fiscal year with all precious metals and agri commodities at one spot.

MMTC is India's largest international trading house with an annual trading turnover of Rs 16,000 crore while Indiabulls is a leading financial services conglomerate with Rs 16,000 crore market capitalisation and a net worth of Rs 4,000 crore.

However, the commodity exchange may take awhile in coming. When contacted, Kewal Ram, member of the FMC, denied having received any application from any entity including MMTC to set up a commodity exchange.

"We need to take a look whether we require any more commodity exchanges as the three-year moratorium on new commodity exchange is expiring. We are in the process of suggesting to the government to extend the moratorium for another year," Ram said.

The FMC may invite applications from all interested parties through advertisements everywhere and it would consider all applications after evaluating the entity's competitiveness separately.

But, every entity interested in setting up an exchange will not be entertained, Ram said.