SEBI okays Indian Commodity Exchange's exit, a year after exchange applied for a voluntary surrender

ICEX Exits After SEBI Denial of Ownership Norm Relaxation.

Expert Analysis:

• SEBI Grants Exit Approval: SEBI permitted the exit of ICEX over a year after its shareholders approved the voluntary surrender of recognition.

• SEBI's Exit Order Requirements: SEBI's December 10 order mandates ICEX to change its name and avoid using 'exchange' or its variants if continuing as a corporate entity under the Companies Act 2013.

• ICEX Recognition and Withdrawal: Granted recognition as a commodity derivatives exchange in 2009, ICEX had its recognition withdrawn in 2022 due to non-compliance with minimum net-worth requirements, SEBI's circulars, inspection observations, and infrastructural deficiencies.

• Appeal to SAT: ICEX appealed SEBI's order at the Securities Appellate Tribunal (SAT), which set aside the order in June 2022 with specific conditions.

• Tribunal’s Condition for Suspension: The tribunal ruled that ICEX’s operations would remain suspended until it raises requisite funds and completes compliance within a year.

• Future of ICEX Operations: If ICEX meets compliance, it can apply to SEBI to resume operations; failure to comply may result in recognition withdrawal after a hearing.

• ICEX Requests Ownership Norm Relaxation: In February 2023, ICEX requested SEBI to relax ownership structure norms, citing that the SECC Regulations’ 5% shareholding limit made it unattractive for new investor

• ICEX Requests Relaxed Investment Norms: ICEX requested SEBI to allow new investors to hold up to 51% stake in the exchange for five years.

• Contingency on SEBI's Decision: ICEX stated that if SEBI denied the request, it could consider the letter as a voluntary surrender of recognition.

• Voluntary Surrender of Recognition: SEBI accepted ICEX's letter as a voluntary surrender, with ICEX submitting a shareholder resolution on May 25, 2023, to approve the surrender.