MCX files DRHP with Sebi for IPO

Under sectoral regulator FMC norms, the anchor investor, Financial Technologies is required to reduce its stake to 26% from the present 31.18%, which it has declared to achieve through the IPO. MCX also announced that it will be appointing a former High Court Judge as an Exchange Ombudsman and declared that it favours bringing exchanges under the purview of the Right to Information Act

Leading commodity exchange Multi Commodity Exchange (MCX) has announced its intention to go public through an initial public offering (IPO) which will see its existing shareholders diluting
12.60% of equity.

The offer for sale from the existing shareholders, including promoter Financial Technologies (FT) led by Jignesh Shah, is through a 100% book-building process.

MCX filed its draft red herring prospectus (DRHP) with capital markets regulator SEBI (the Securities and Exchange Board of India) on Thursday (31st March).

Under sectoral regulator FMC (Forward Markets Commission) norms, the anchor investor-FT-is required to reduce its stake to 26% from the present 31.18%, which it has declared to achieve through the IPO.

On 14th May, Moneylife had reported on how FMC had given a nod to the MCX IPO. (

Lamon Rutten, managing director and CEO of the Exchange, said that he hopes to complete the process by the deadline (30th September), failing which FT will have to find "other ways" of diluting the equity to meet the deadline. He, however, did not reveal the quantum of money to be raised through the IPO.

Interestingly, the National Stock Exchange (NSE), one of the stakeholders in MCX, will not be diluting its stake.

"SEBI generally takes 45 days to clear DRHPs and then we have a year's window to list which we will choose as per market conditions," Mr Rutten said.
NSE is not among the institutions diluting stake through the IPO either, he said, adding the issue will see SBI, Corporation Bank, GLG Financials Fund, Bank of Baroda, Alexandra Mauritius and ICICI Lombard General Insurance bringing down their stakes to 1.04%, 3%, 0.38%, 0.82%, 0.19% and 0.07%, respectively.

When asked if the financial institutions holding stakes are looking at the IPO as a good platform to exit and make money on their long-held investments, Mr Rutten parried the question, reports PTI.

He said the IPO is for bringing in the highest levels of transparency by ensuring shareholder and public scrutiny and corporate governance practises.

Edelweiss Capital, Citigroup Global Markets and Morgan Stanley will be acting as book running lead managers to the IPO which has caps of 50% for qualified institutional buyers and minimum limits of 15% for non-institutional bidders and 35% for retail buyers.

MCX also announced that it will be appointing a former High Court Judge as an Exchange Ombudsman and declared that it favours bringing exchanges under the purview of the Right to Information Act.


Fiscal deficit in 2010-11 shows improvement

In the 11 months from April 2010 to February 2011 the fiscal deficit was at 68.6% compared to 92% in the corresponding period of the previous year.

New Delhi: The Centre's fiscal deficit during April 2010-February 2011 worked out to 68.6% of the estimates, compared to 92% in the corresponding period last year, an indication of an improvement in the fiscal position.

In absolute terms, the fiscal deficit stood at Rs2.75 lakh crore in the 11-month period of 2010-11, against Rs3.80 lakh crore in the period in the previous financial year, PTI reports.

In the April 2010-February 2011 period, net tax receipts of the government stood at Rs4.60 lakh crore and total expenditure at Rs9.78 lakh crore, according to an official statement.

Non-tax revenue in the April-February period was at Rs2.09 lakh crore, primarily on account of higher realisation from the auction of spectrum, which raked in about Rs1.08 lakh crore.

Finance minister Pranab Mukherjee had in his 2011-12 Budget speech pegged the fiscal deficit for the current year at 5.1%, on the back of higher-than-expected realisation from auctioning of 3G and BWA spectrum, which is lower from the 5.5%, or Rs3.81 lakh crore, projected in the Budget last year.


Indian stocks likely to open sideways: Friday Market Preview

Wall Street ended mixed overnight while markets in Asia were trading with marginal gains in early trade today on cautious outlook from the corporate sector

The domestic market is likely to open sideways as its Asian counterparts are trading with marginal gains in early trade on Friday, paring some of the gains accrued in the previous session, mainly on concerns over the economic situation in Japan. The US markets ended mixed on Thursday on inflation worries. The SGX Nifty was at 5,864, down five points from its previous close of 5,689.

The market continued its gaining spree for yet another day on Thursday. Volatility on account of the futures and options expiry was evident since the start of trade. The market touched the day’s high just after mid-day, however, intense profit-booking pushed the indices to their intra-day lows at around 2.50pm. The indices fell below its opening levels and even dipped into the red (Sensex to 19,284 and the Nifty to 5,779).

The market picked up some momentum amid fluctuations in the last half an hour and closed in the positive for an eighth day, an indication of a strong bull-run. The Sensex closed at 19,445, a gain of 155 points over its previous close, and the Nifty was up 46 points at 5,834. In the fiscal-end rally which started on 22nd March the Sensex has gained 1,606 points and the Nifty has risen by 469 points.

The market has rallied for eight days in a row and it would be a surprise if it does not correct today.

The US markets closed in the mixed as inflationary pressures is likely to prompt policymakers to hike interest rates. Economic woes in Europe also weighed down on investors. Early setbacks in the market were seen as Irish regulators directed four banks to raise 24 billion euros ($34 billion) in additional capital following a stress test on the nation’s lenders. Portugal reported a budget deficit of 8.6% of gross domestic product last year, higher than a government target of about 7%.

In US economic news, initial jobless claims fell by 6,000 to 388,000 in the week ended 26th March, more than analysts’ expectations for a decline to 380,000 claims. Other reports showed US factory orders unexpectedly fell 0.1% in February after a 3.3% gain in January. Besides, the Institute for Supply Management-Chicago Inc’s business barometer fell in March.

The Dow fell 30.88 points (0.25%) to 12,319.73. The S&P 500 shed 2.43 points (0.18%) to 1,325.83, whereas the Nasdaq added 4.28 points (0.15%) to 2,781.07.

Markets in Asia were trading with marginal gains on concerns over corporate earnings in the wake of the devastating earthquake in Japan early last month. China's official Purchasing Managers Index rose to 53.4 in March from 52.2 in February. The rise in the PMI indicates a rebound in manufacturing activity in March after three consecutive months of slowdown.  The Bank of Japan’s quarterly tankan survey showed the headline index for big manufacturers’ sentiment improved to plus 6 in March from plus 5 in December, compared to economists’ forecast of plus 7.

The Shanghai Composite gained 0.36%, the Hang Seng was up 0.06%, the Jakarta Composite rose 0.34%, the KLSE Composite advanced 0.25%, the Straits Times and the Seoul Composite added 0.08% each and Taiwan Weighted rose 0.01%. On the other hand, the Nikkei 225 lost 0.11%.

Meanwhile, with rapid increase in demand from India and China, the prices of oil in the global market would continue to increase, the US president Barack Obama noted. He said if one looks at the long-term trends, there are going to be more ups in gas prices than downs in gas prices.

Back home, amid corporate honchos being questioned in connection with the 2G scam case by investigating agencies, prime minister Manmohan Singh on Thursday assured a “nervous industry” that the government is committed to creating a corruption-free environment to ensure the industry moved ahead without fear.

The government is mulling all measures, administrative and legislative, to tackle corruption and better transparency, he said at a meeting of the Council on Industry and Trade, which was attended by Ratan Tata, Rahul Bajaj, Azim Premji, Sunil Bharti Mittal, Deepak Parekh, Swati Piramal and Kumarmangalam Birla, among others.


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