SEBI Revokes ICEX Recognition, Marking Its Exit From Exchange Business

The Securities and Exchange Board of India has officially revoked the recognition of the Indian Commodity Exchange Ltd., marking its exit from the exchange business.

Following the suspension of its recognition more than two years ago, SEBI approved ICEX's exit from the exchange sector on Dec. 11. Once the exchange met all necessary regulatory conditions, SEBI allowed the exit.

"The Securities and Exchange Board of India hereby notifies that the recognition granted to the Indian Commodity Exchange Ltd. stands withdrawn with effect from the date of publication of this notification in the official gazette," SEBI said in its notification dated Dec. 24.

In its exit order, SEBI mentioned that it had assessed ICEX’s valuation report, compliance filings, and undertakings.

The regulator also instructed ICEX to fulfill its tax obligations under the Income Tax Act, 1961; change its name to remove any reference to a stock exchange; and maintain a record of all transactions on its platform from previous years, among other requirements.

The exchange confirmed it had disclosed all known liabilities and assured SEBI there were no undisclosed third-party liabilities. Additionally, ICEX took full responsibility for any future financial claims that may arise.

Consequently, SEBI approved 'the withdrawal of ICEX's recognition as a stock exchange, leading to its exit.'

ICEX, a commodity exchange based in Surat, Gujarat, was granted permanent recognition in 2009 under the Forward Contracts (Regulation) Act, 1952.

With the merger of the Forward Markets Commission and SEBI in 2015, ICEX became a recognized stock exchange under the Securities Contracts (Regulation) Act, 1956 (SCRA).

In May 2022, SEBI derecognised ICEX due to noncompliance with the minimum net worth requirement, infrastructural deficiencies, and inspection findings.

ICEX appealed to the Securities Appellate Tribunal, 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.

ICEX requested SEBI to allow investors to hold up to 51% equity for a period of five years. However, ICEX offered to voluntarily surrender its recognition if this request did not receive approval.

SEBI rejected ICEX's appeal to ease the shareholding rules and treated the exchange's letter as a formal voluntary surrender.

Subsequently, in May 2023, ICEX's shareholders passed a resolution approving the surrender of recognition, prompting SEBI to begin the exit process.

(WIth Inputs PTI.)