The government had last year permitted corporates to hedge their commodity-related risks on the international exchanges. With increased global competition and uncertainty on the price and forex fronts, the need for risk management for corporates has become all the more important. The actual number of firms offering international risk management advisory services in India is very few.

Refco (Singapore) is the south-east Asian arm of the Canada-based Refco Inc, one of the world's largest registered FCM and highly capitalised brokerage firms. Refco Singapore pulled out of China in 1995. Since then, it has been on the lookout for a presence in countries that offered opportunities in risk management activities.

Refco Singapore is likely to buy out Mumbai-based Ford Tenrich Financial ServicesP Ltd, its Indian representative, to establish its base in the country. Ford Tenrich, set up in 1995, offers risk management services in the forex, international commodity and treasury markets to corporates in association with Refco.

As a precursor to buying out Ford Tenrich, Refco Singapore has already put in place its representatives at Ford Tenrich to study the market more closely. Executives of Refco Singapore and Ford Tenrich are currently busy getting requisite clearances from the concerned authorities.

Ford Tenrich president Vineet Bhatnagar refused to comment on the ongoing developments between the two firms on the issue, but said: "We are currently in the process of getting various clearances from the concerned authorities, the result of which will be announced soon."

Since early this year, Refco Singapore has shared the commission with Ford Tenrich for the risk management business the latter brought. In April this year, Refco (Singapore) managing director Tan Hup Thye had announced that thecompany was "engaged" with Ford Tenrich, indicating that a joint venture between the two firms was on the way and being formalised to be announced later.

"The Indian association is doing very well and Ford Tenrich is helping us get good business," said a Refco executive in Singapore. "Our principals in Canada are currently studying our proposals for setting up operations in India in offering risk management services to corporates here."

Refco Inc manages over $1.5 trilion in client's equity. Refco Inc, set up in the mid-60s, is a clearing member on around 55 international exchanges including Chicago Board of Trade (CBoT), London Metal Exchange (LME), London International Financial Futures Exchange (LIFFE), Singapore International Monetary Exchange (Simex), Singapore International Commodity Exchange (SICOM), Kuala Lumpur Commodity Exchange and others.

Following the engagement with Ford Tenrich, Refco was keen to "strengthen" its relations with Ford Tenrich to offer international market advisory servicesto Indian corporates. Thye, along with a couple of top Refco representatives, was in India last April to apprise corporates on risk management techniques to Indian corporates at a 2-day seminar organised by Ford Tenrich.

The association between these two firms, which was expected to culminate in a joint venture, is now likely to be "completely different", in that Refco (Singapore) may buy out Ford Tenrich and set up its own operations in India.