Multi Commodity Exchange (MCX) was found guilty of violating norms by the market watchdog SEBI in awarding a software contract to a little-known London firm PESB. MCX wanted to develop a spot trading platform for gold in 2018, but it attracted controversy by paying huge money in advance.
SEBI has imposed a fine of ₹2 lakh on the exchange.
Also, the software that was delivered after nearly four years was not good. businessline first broke the story about the dubious deal in 2019.
‘SEBI not informed’
SEBI said MCX should not have undertaken such activity without its approval and done it through a separate legal entity since it was not related to its current business. But MCX paid the money without any information to SEBI or its approval in 2018 and 2019. Therefore, the exchange has not complied with the Regulation 38(2) of SECC (Securities Contract) Regulations, 2018, or with Regulation 41(3) of SECC Regulations, 2012 by indirectly engaging in unrelated/non-incidental activities without SEBI’s approval, the regulator said.
While the software was yet to be delivered, PSEB had dragged MCX to arbitration in Singapore. Later after a nudge from SEBI, MCX had constituted a committee to conduct internal inquiries with regard to the selection of the vendor, signing of contract and payments made in London at the instruction of senior board members.