The commodity market regulator Forward Markets Commission has told the Multi Commodity Exchange (MCX) that it will not approve launch of new contracts on the exchange if its promoter, Financial Technologies (FTIL), fails to bring down its stake by end of next month.
The regulator is unhappy that its earlier direction to MCX in this regard (to bring down FTIL’s stake to 2 per cent from 24 per cent) has not yet been complied with.
In the light of the new direction from the regulator, a failure on the part of Financial Technologies to abide by FMC order, would force MCX to shut shop as most contracts on the exchange trade three months ahead. The country’s largest exchange provides futures trading in bullion, energy and agriculture.SEBI directive
In a similar order, capital markets regulator SEBI last week directed Jignesh Shah-led Financial Technologies to sell its shares in MCX Stock Exchange and other exchanges within 90 days on the ground that it did not meet the ‘fit and proper’ criteria required to be a shareholder of an exchange.
An MCX spokesperson denied knowledge of any communication from FMC. “Even if we receive a letter, it will be confirmed to the stock exchanges first,” he said.
Last December, FMC declared Financial Technologies, its promoter Jignesh Shah and two other directors as not ‘fit and proper’ to run commodity exchange and ruled that Financial Technologies has to bring down its stake from 24 per cent to two per cent without specifying a time limit for dilution of the stake.
Subsequently, it instructed the board of MCX to ensure that Financial Technologies abide by its order.
In a letter written to MCX, FMC has also asked the exchange to spell out its plan to ensure that Financial Technologies reduces its stake, said sources.
FMC has already reconstituted the MCX board with independent directors and it does not have any representation of Financial Technologies. The regulator also approved Manoj Vaish, Managing Director and Chief Executive Officer of MCX.
On its part, Financial Technologies earlier this month appointed JM Financial to find a suitor to offload its stake in the exchange. It appointed a committee headed by Venkat Chary, non-executive independent director of FTIL, as Chairman.
Last month, the Bombay High Court rejected Financial Technologies’ interim plea to stay the Forward Markets Commission order declaring it ‘unfit’ to own stake in commodity exchanges.