Will ICEX come out unscathed?

2020/09 30 01:09

Buying and selling quantity on the Indian Commodity Trade (ICEX) has plunged to a brand new low with no commerce logged for nearly six days every in August and September. The alternate, which was as soon as acclaimed globally for its diamond futures contract, registered a turnover of simply ₹three,000 on September 21.

Mulling on what went flawed with the alternate, BusinessLine reached out to folks in know of developments and located that buying and selling volumes thinned following the cease of the liquidity enhancement scheme — an association permitted by SEBI whereby an alternate incentivises contributors to commerce and enhance volumes on the platform — in April 2020. Exchanges are allowed to introduce an LES as much as 25 per cent of their audited networth on the final day of the earlier monetary yr to incentivise brokers to supply liquidity by giving a two-way quote. Since a lot of the contracts traded on the ICEX have been distinctive, SEBI had accredited LES in metal, paddy, diamond and rubber futures contracts.


Allegations made

The LES was launched in ICEX in October 2019. This noticed turnover in October shoot to ₹three,362 crore from ₹1,761 crore logged within the earlier month. The turnover elevated additional to ₹four,589 crore in January 2020 and was hovering above ₹three,000 crore in March.

The ICEX needed to cease the LES after SEBI and two public curiosity administrators on the board of the alternate obtained nameless e mail complaints on misappropriation of LES funds. The allegation was that the important thing administration personnel of ICEX have been in collusion with the market makers and siphoned off funds allotted for LES.

In April, thus, the LES was suspended and the board of ICEX in session with SEBI appointed Chokshi & Chokshi LLP to undertake forensic audit on execution of the LES. The audit agency was additionally mandated to look at the buying and selling information of the 4 commodities by which the LES was launched for compliance points and battle of curiosity of key administration private. The audit report has now been submitted earlier than the board, stated sources near the event, with out commenting on the forensic audit findings and the corrective measures taken.

The alternate didn’t reply to an e mail despatched by BusinessLine.

The important thing shareholders of the alternate embrace Anil Dhirubhai Ambani Group-owned Reliance Trade Subsequent, Bajaj Holdings and Investments, Central Warehousing Company, Gujarat Agro Industries Company, Gujarat State Agriculture Advertising and marketing Board, Indiabulls Dwelling Loans, IDFC First Financial institution, MMTC, Indian Potash, Krishak Bharati Cooperative, Nafed and Punjab Nationwide Financial institution.

The five-member board of ICEX contains three public curiosity administrators — together with one from SEBI — one shareholder director and Sanjit Prasad, Managing Director and CEO of the alternate.

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