SEBI Grants Indian Commodity Exchange Exit As Recognised Bourse
ICEX's management had opted for a voluntary surrender of its recognition.
The Securities and Exchange Board of India on Tuesday approved the exit of the Indian Commodity Exchange or ICEX as a recognised stock exchange.
ICEX, a commodity exchange based in Surat, Gujarat, was originally granted recognition under the Forward Contracts (Regulation) Act, 1952, and later transitioned under the Securities Contracts (Regulation) Act, 1956 after the merger of the Forward Markets Commission (FMC) with SEBI. However, SEBI withdrew ICEX’s recognition in May 2022 due to the exchange's failure to meet net worth requirements and other regulatory conditions.
ICEX appealed this decision, but in June 2022, the Securities Appellate Tribunal allowed ICEX to continue operating, contingent on raising funds and meeting SEBI’s compliance requirements.
Despite efforts to meet these conditions, including a request to allow new investors to hold up to 51% of the exchange’s equity, ICEX was unable to raise the necessary funds. As a result, ICEX's management opted for a voluntary surrender of its recognition. Hence, SEBI initiated the exit process, which was further solidified by a resolution passed by ICEX’s shareholders in May 2023.
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In line with SEBI's guidelines for de-recognition, ICEX complied with several mandatory requirements, including transferring its Investor Protection Fund to SEBI's Investor Protection and Education Fund and addressing outstanding dues. The exchange also contributed to the SEBI fund to cover future liabilities. Furthermore, ICEX undertook to resolve any pending investor complaints and arbitration cases.
The exit process included an independent asset valuation, which was completed in July 2024, ensuring that all known liabilities were accounted for. ICEX has since confirmed that it has settled its statutory dues and taken the necessary steps to ensure no future liabilities remain undisclosed.
As part of the exit conditions, ICEX is required to change its name, and if it continues to operate as a corporate entity, it must not use the term 'exchange' or any variant in its name, to avoid any association with its past recognition as a stock exchange.
With all conditions now satisfied, SEBI has granted ICEX its final exit as a stock exchange, marking the conclusion of its operations in the commodities derivatives market. It is now expected to comply with all relevant laws as a corporate entity, including maintaining transaction data and continuing to meet its legal obligations.
This direction will take effect upon publication in the official gazette, officially marking ICEX’s exit from the commodity derivatives space.