Markets

MCX to initiate audit of payments made to London-based firm PSEB

PALAK SHAH | | | Updated on: Oct 31, 2021

Hand holding five hundred rupees notes in one hand and calculator in other hand. Calculating his profits White background. | Photo Credit: CHAUNDTHAR V

In 2018, MCX had paid ₹19 crore to develop a software for the spot exchange trading platform

After a nudge by the Securities and Exchange Board of India (SEBI), the Multi Commodity Exchange (MCX) has decided to initiate an audit of the software contract and payments to a London-based firm.

In 2018, MCX had paid nearly ₹19 crore in advance to PSEB to develop a software for the spot exchange trading platform. The software is yet to be delivered and PSEB has dragged MCX to arbitration in Singapore. BusinessLine was the first to report on the dubious software deal in 2019.

Now, the audit is mainly being conducted to understand how MCX paid the full amount in advance to PSEB, said sources. 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, but nothing has been made public.

The current audit is likely to be conducted by ANB Systems, which also does other work for MCX. Usually, only part payments are made to software developers until the job is complete. But the MCX board was in favour of full advance payments, which lacked proper due diligence.

Illegal data sharing

Earlier, too, MCX had undergone forensic audit in relation to illegal data sharing with tainted researchers and private software developers. The audit report by TR Chadha & Co had then revealed many gaps in MCX data sharing pact with Indira Gandhi Institute of Developmental Research (IGIDR), and said that the data was being used for making algo trading software.

It is learned that MCX has now compounded the three-year bonus of its former MD and CEO Mrguank Paranjape for various controversial decisions taken by the exchange during his tenure. Both SEBI and MCX have not initiated any further action so far on TR Chadha's report.

MCX did not respond to an e-mail query regarding the recent audit or withholding of Paranjape’s bonus. Paranjape refused to comment.

Published on October 31, 2021
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