Archive for September 22nd, 2009

IMCX-India’s Fourth National Commodity Bourse, To Be Launched Soon:)

IMCX-to-be-launched

International Multi Commodity Exchange (IMCX)

Commodity trading in India has a long history & was started much before it started in many other countries.

Today, apart from numerous regional exchanges, India has three national commodity exchanges namely, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX) and National Multi-Commodity Exchange (NMCE).

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THE RISING WAVES

These commodity exchanges have been performing extremely well in these years.

The turnover of commodity exchanges in India surged by 31% in the April-August period, led by a surge in trading of farm goods.

Total value of trading at the Commodity Exchanges during the fortnight from 16th August 2009 to 31st August 2009 was Rs. 3,04,651.88 crore.

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NEED OF THE HOUR

In India, futures’ trading in commodities is zooming.

India’s commodity exchanges have witnessed major action this year and are getting into investing and managing new commodity bourses.

Another commodity exchange may help using the opportunities better ; thereby improving trading volumes of specific contracts & be more efficient is the price discovery, which in turn will attract a wider constituency of participants from the entire commodity value chain i.e. government, producers, marketers, importers, exporters etc.

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THE FIRST STEP

A new commodity exchange, International Multi Commodity Exchange is going to launch very soon under the market regulator Forward Markets Commission (FMC).

IMCX is promoted by Indiabulls Financial Services Ltd (IBFSL) and India’s biggest state-run trading firm, MMTC Ltd, and part-owned by more institutions.

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The exchange is planning to start operations next month as the country’s fourth national commodity bourse & is ready to grab its share of a futures market that is growing 30% a year.

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BUILDING TECH – PLATFORM

The US-based exchange services provider Millennium Information Technology (MIT) has been awarded the contract for implementing the technology platform for the aforesaid exchange.

The US-headquartered MIT provides application solutions to financial and telecom industries.

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THE PILLARS OF FOUNDATION

IMCX will be the first commodity bourse in India to comply with the criteria of revised ownership criteria that makes the participation compulsory of public sector units or cooperatives.

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Currently, Indiabulls Financial Services Ltd. (IBFSL) holds 40% of the exchange, state-run MMTC Ltd. holds 26%.

Forward Markets Commission rejected the United Stock Exchange of India’s (USE’s) 10% stake buy in the bourse, on the grounds that the stock exchange is yet to be fully recognized.

So far, Indiabulls has diluted 24 per cent to HDFC Bank, Yes Bank and Indian Potash Ltd & IDFC + Krishak Bharati Cooperative Limited (KRIBHCO) have purchased a stake of 5% each in Indian Commodity Exchange, which was to be sold to the USE earlier.

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BUSINESS OPERATIONS

The exchange will start operations by launching 10-12 contracts in bullion, metals, energy and agricultural commodities with some uniqueness in contracts to attract more volume.

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Β·The exchange will launch gold mini and gold 1 kilogram contracts in the bullion segment. The gold contracts will have multiple delivery centers in five-six cities.

Β· In base metals, it is planning to offer copper, zinc and lead or nickel futures, and in the energy segment it will launch crude oil and natural gas contracts. Delivery-based contracts will be launched in the base metal segment, where contracts are mostly non-deliverable at other exchanges.

Β·The exchange has also tied up with several logistic providers for warehouse facilities, & in the next phase of expansion, the exchange may create its own warehouses

Β·Guar seed, rapeseed, refined soyoil, soybean and turmeric will be among the agricultural contracts.

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44,000 Crores to be Raised by Indian Firms :)

Indian-corporates-raise-44k crores

Indian corporates raised Rs 21,691 crore through the qualified institutional placement (QIP) route during the first half of this fiscal and the funds raised through this route are expected to double in the second half.

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Mr Jagannadham Thunuguntla, the equity head of SMC Capital, said: “As of now, about 48 companies have received requisite resolutions from either shareholders or their boards to raise the funds through QIP route. The total amount proposed to be raised by these companies is about Rs 44,000 crore.”

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He further said: “As there is no requirement for the approval of the Securities and Exchange Board of India (Sebi) for the QIP issuance. These companies are ready to offer their QIP whenever they are confident about the market conditions.”

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“Some of the prominent names of the corporates that would be raising funds through this route include Tech Mahindra, Essar Oil, Hindalco, RCom, Omaxe, Pantaloon Retail, Jet Airways, Ansal, JSW Steel and L&T,” he said.

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It seems that the Indian promoters have regained their confidence and enthusiasm for fund raising, he added.

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It is turning out that corporates are raising funds through QIP route as a last alternative and not as a preference.

Most of the IPOs launched in the last seven to eight months had put up a flop show.

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The bank funds that are another source of funding are not available for most of the corporates.

Depending upon the sector and profile, banks are asking for premium over interest rates and for smaller companies, banks are not offering loans.

So the corporates that are looking for the expansions would opt for the QIP route to raise the funds, Mr Thunuguntla added.

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