MCX had filed the Draft Red Herring Prospectus (DRHP) for the IPO in February. This was for the first time that a commodity exchange filed application with the market regulator, Securities & Exchange Board of India (SEBI) for an IPO that planned to raise Rs 500 crore to Rs 600 crore.
But top MCX officials said on Sunday that the IPO plans have been shelved for the time being. MCX Managing Director and CEO Joseph Massey said that the exchange has decided to postpone the IPO “taking into consideration the market scenario and the advice of the merchant bankers to defer the issue.”
The main reasons that has compelled MCX defer the IPO are the falling stock market, rising interest rates and the possibility that the government may introduce the commodities turnover tax on commodity exchanges.
Finance Minister P Chidambaram has proposed in the Budget a tax of 0.017% on the seller of a commodity contract and 0.125% on the buyer. Besides, a service tax of 12% on the exchange levy and an education cess on the tax are also planned.
Commodity exchanges, brokers and the apex Forward Markets Commission have opposed the commodities transaction tax (CTT) saying it would adversely affect futures trading in commodities.
MCX, promoted by Financial Technologies India Limited, is India’s biggest commodity exchange for the trading of precious metals, ferrous and non-ferrous metals, energy agriculture and industrial commodities.
Founded in 2003, MCX has exhibited strong leadership in product innovation, trading and clearing functionality, self-regulation, transaction cost efficiency and customer focus, positioning MCX to compete on a global scale.
Once again after crash Nifty has started going up. Now we suggest all rises should be used as an opportunity to exit old long positions.
This bull run will continue for few more days. Overall market is in bearish mood as in medium term its just a small rally due to short covering
and result season.