Applicants will need minimum paid-up capital of Rs 100 crore and shareholders will have no trading interest in the exchanges either as a member or client, the Forward Markets Commission said in guidelines posted on its web site on Friday.
Indiabulls Financial Services Ltd, the Indian lender backed by billionaire Lakshmi Mittal, and state-owned trader MMTC Ltd are among several companies keen to start commodity exchanges after trading in futures rose 9% to $922 billion in the year to March in Asias third-biggest economy.
A single investor will not be allowed to own more than 1% of the exchange and institutional shareholders must own at least 20%, the regulator said. Founders, who may be allowed to own as much as 40% initially, need to pare their stakes to 26% within six years.
Investments in new exchanges will be subject to a lock-in period of three years from the date of recognition of the exchange, the Forward Markets Commission said.
Any new exchanges will compete with multi commodity exchange, which has Fidelity International Ltd, Merrill Lynch & Co and Citigroup Inc as investors, and with national commodity & derivatives exchange, part-owned by Goldman Sachs Group Inc, Intercontinental Exchange Inc. and the local unit of Standard & Poors.
Overseas funds are barred from trading in commodities futures on Indian exchanges, although the South Asian country is the worlds largest consumer of gold and the second-biggest producer of wheat, sugar and rice. Foreign investors can own as much as 5% of equity in Indian exchanges.
India, early this month, banned futures trading in rubber, soybean oil, potatoes and chick peas to curb speculation and cool inflation thats at the highest in more than three years.