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Markets regulator Sebi on Tuesday allowed the Indian Commodity Exchange (ICEX) to exit the exchange space after its recognition was withdrawn over two years ago. The move comes after the exchange fulfilled regulatory requirements.
Additionally, the regulator has directed ICEX to comply with its tax obligations under the Income Tax Act, 1961; change its name and not to use the expression "stock exchange" and maintain database of all transactions on its platform for the previous years among others.
In an exit order, Sebi said it has reviewed ICEX's valuation report, compliance submissions and undertakings. The bourses declared all known liabilities and assured Sebi it had no undisclosed third-party liabilities.
The exchange also undertook full responsibility for any future financial claims that may arise.
Accordingly, the Securities and Exchange Board of India (Sebi) has permitted "the exit of the ICEX as a stock exchange and thus the consequent withdrawal of recognition granted to ICEX".
ICEX, a commodity exchange based in Surat, Gujarat, was granted permanent recognition in 2009 under the Forward Contracts (Regulation) Act, 1952 (FCRA).
With the merger of the Forward Markets Commission (FMC) into Sebi in 2015, ICEX became a recognised stock exchange under the Securities Contracts (Regulation) Act, 1956 (SCRA).
In May 2022, Sebi derecognised ICEX due to non-compliance with the minimum net-worth requirement, infrastructural deficiencies and inspection findings.
ICEX appealed to the Securities Appellate Tribunal (SAT), which allowed ICEX to temporarily retain its recognition, provided it raised funds and complied with Sebi regulations within a year.
ICEX explored options to raise funds but found it difficult due to Sebi's shareholding cap of 5% for investors in stock exchanges.
It requested the regulator to permit investors to hold up to 51% equity for five years. If denied, ICEX offered to voluntarily surrender its recognition.
Sebi declined ICEX's request to relax shareholding norms, treating ICEX's letter as a voluntary surrender.
Thereafter, ICEX shareholders passed a resolution in May 2023, approving the surrender of recognition, following which Sebi initiated the exit process.
This directive will come into force upon its publication in the official gazette, formally signifying ICEX's exit from the commodity derivatives market.
