Commexes told to make the cap fit on foreign stakes

In March, India allowed foreign firms to jointly invest up to 49 percent in its commodity exchanges, of which 26 percent could be through foreign direct investment and 23 percent in the form of portfolio investment. An individual foreign entity can hold a maximum of 5 percent in an exchange. 8220;It has been brought to the notice of the government that some of the existing commodity exchanges had foreign investment above the permitted level,8221; the statement said.

In May, the chief executive of Intercontinental Exchange Holdings Inc said the firm may have to sell part of its 8 percent stake in India8217;s National Commodity Derivatives Exchange NCDEX to other financial institutions to comply with the rules.

Investment bank Goldman Sachs also holds a 7 percent stake in the commodity exchange.

India8217;s booming commodity exchanges have attracted foreign investors looking to diversify their product portfolio and geographical reach.

NYSE Euronext bought a 5 per cent stake in India8217;s largest commodity bourse, the Multi Commodity Exchange, for 55 million early this year.