Banks and domestic financial institutions (FIs) may soon be asked to take over the management of MCX Stock Exchange (MCX-SX), India’s youngest bourse.
This view, doing the rounds of the Finance Ministry, emanates from the recommendations of the Arvind Mayaram Committee, which looked into the NSEL crisis. In its report, the committee has suggested separation of the bourse’s management from the promoters of Financial Technologies Group entities. After the NSEL crisis, doubts have been raised about the promoter group. MCX-SX is promoted by Financial Technologies and Multi Commodity Exchange (MCX). The Financial Technologies group is also the promoter of the crisis-hit National Spot Exchange Ltd (NSEL).
“Why should MCX and FT take charge of the management when they together hold much less than financial institutions and banks,” said a senior Finance Ministry official, speaking to Business Line.
As on June 30, 2013, MCX and Financial Technologies held 4.99 per cent each in MCX-SX while financial institutions and banks jointly owned a little over 87 per cent. IFCI Ltd is the largest among these institutions, followed by Union Bank of India and Punjab National Bank.
According to the official, once the recommendations of the Mayaram panel are accepted, the Financial Services Department would write to banks and financial institutions to take the management seat.
However, the official clarified that there was no systemic danger because of the NSEL crisis and there would be no spillover on the equity market. These apprehensions had emerged as most of the groups involved in the NSEL fiasco have subsidiaries operating in the equities segment, too.
The Finance Ministry and market regulator Securities and Exchange Board of India have assured investors that there is no such threat.