MUMBAI: Nearly two years after the Indian Commodity Exchange (ICEX) requested the Securities and Exchange Board (Sebi) to voluntarily surrender its licence and recognition, the regulator has accepted the request.
In a notification issued on Thursday, Sebi stated it had accepted the request made in February 2023, with effect from 26 December, permitting the exchange to cease functioning as a stock exchange. Sebi had passed the order on 10 December 2024, it said in a statement.
Sebi has also directed ICEX to change its name and not retain 'exchange' or any variant thereof if it plans to continue operating as a corporate entity.
ICEX, which was granted recognition as a commodity derivatives exchange in 2009, faced regulatory issues in 2022. That year, Sebi withdrew the recognition granted to it "due to non-compliance with the minimum net worth requirement, circular issued by Sebi, observations of Sebi pursuant to inspection and infrastructural requirements."
Following Sebi’s order, ICEX appealed to the Securities Appellate Tribunal (SAT). In its June 2022 order, the tribunal set aside Sebi’s decision, subject to certain conditions.
The SAT stated that operations at the exchange would remain suspended until ICEX raised the requisite funds and completed all compliances demanded by Sebi within a year. It also ruled that if the exchange raised the required funds and met compliance requirements, it could apply to Sebi for permission to resume operations.
However, in February 2023, ICEX approached Sebi seeking relaxation in norms related to its ownership structure. ICEX explained that while its management had attempted to raise funds, it was unable to do so as the applicable shareholding norms restrict maximum shareholding to 5 percent.
According to ICEX, this clause made the proposition "unattractive for the new investors." ICEX further requested whether new investors could be allowed to invest up to 51 percent in the exchange for five years. It added that if the regulator declined this request, it could consider the same letter as a voluntary surrender of the recognition granted to the exchange.
Since there is no regulatory provision permitting investors, other than certain eligible entities, to hold over 5 percent stake in any stock exchange, Sebi treated the aforementioned letter from ICEX as a voluntary surrender of its recognition.
On 25 May 2023, ICEX submitted, via email, a resolution passed by its shareholders approving the voluntary surrender of its recognition.
In May 2023, its shareholders had approved the voluntary surrender of its recognition.