SEBI revokes ICEX recognition and approves voluntary exit from stock exchange operations

Markets regulator Sebi has informed that the recognition granted to the Indian Commodity Exchange Ltd (ICEX) has been withdrawn, which formally means the company is withdrawing from exchange operations.

This came after the regulator on December 11 allowed ICEX to leave the exchange after its recognition was withdrawn more than two years ago. This followed after the exchange met regulatory requirements.

“The Securities and Exchange Board of India (Sebi) hereby informs that the recognition granted to the Indian Commodity Exchange Ltd stands withdrawn with effect from the date of publication of this notification in the Official Gazette,” Sebi said in its notification dated 24 December. .

In its exit order, Sebi said it had reviewed ICEX’s valuation report, compliance submissions and commitments.

Moreover, the regulator directed ICEX to comply with its tax obligations under the Income Tax Act of 1961; to change its name and not use the expression “stock exchange” and to maintain a database of all transactions on its platform from, among other things, previous years.

The exchanges declared all known liabilities and assured Sebi that there were no undisclosed third-party liabilities. The exchange also took full responsibility for any future financial claims that might arise.

Accordingly, Sebi “allowed the exit of the ICEX as a stock exchange and thereby the consequent withdrawal of the recognition granted to ICEX”.

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

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

In May 2022, Sebi de-listed ICEX due to non-compliance with minimum net asset requirement, infrastructure deficiencies and inspection findings.

ICEX appealed to the Securities Appellate Tribunal (SAT), allowing ICEX to temporarily retain its recognition, provided it raised funds within a year and complied with Sebi regulations.

ICEX explored options to raise money but found it difficult due to Sebi’s 5 percent equity ceiling for investors on stock exchanges.

It requested the regulator to allow investors to hold up to 51 percent of equity for five years. If refused, ICEX offered to voluntarily renounce its recognition.

Sebi turned down ICEX’s request to relax shareholding norms and considered ICEX’s letter as a voluntary surrender.

Thereafter, ICEX shareholders passed a resolution in May 2023 approving the surrender of recognition, following which Sebi initiated the exit process.