On a day when the FMC came out with an order deeming Jignesh Shah, Joseph Massey, Shreekant Javalgekar and Financial Technologies (FT) not fit to be on the board of any recognised exchanges under the Forward Contract Regulation Act, the scrips of Multi Commodity Exchange of India and FT reacted in a contrary manner.

While MCX surged 8.29 per cent to Rs 421.35 on the BSE, the stock of FTIL closed at Rs 188.80, down a marginal 0.89 per cent. The MCX stock jumped as FMC has allowed Blackstone to enhance its shareholding in the exchange to 4.99 per cent. Currently, Blackstone holds 2 per cent stake in the exchange.

Stock market reaction aside, the stage is now set for the Rs 5,600-crore NSEL payment fiasco scam to play out into the next level.

While the promoters are expected to approach the courts against the FMC order, there is expectation of the stock market regulator SEBI possibly stepping in to ask FT to dilute its stake in group entity MCX-SX.

MCX and FT group hold 4.99 per cent stake each in the stock exchange, which was granted a license renewal in September by SEBI on condition that the exchange would fulfil certain norms to strengthen its corporate governance. The regulator had also cautioned the exchange that any non-compliance with the directions of SEBI or any adverse findings by any other regulator may result in withdrawal of recognition of the exchange.

“The order of FMC does not make anybody unfit for SEBI’s purpose. If SEBI wishes to consider anybody unfit, it would need to serve a show cause notice and decide the matter quasi-judicially,” said M.S. Sahoo, former whole-time member of SEBI.

However, the option to make the promoter group dilute stake, though likely, has to follow due process of law and adequate time for dilution need to be provided, he added.

J.N. Gupta, former SEBI ED and MD of proxy advisory firm SES, too believes the matter is far from over. He feels that with the issue most likely proceeding towards appeal, the regulator would take note of the order and decide on the future course of action. “This clean-up action from SEBI could make both MCX and MCX-SX more professional and transparent, which will be good for investors in the long run,” he added.

According to Motilal Oswal of Motilal Oswal Financial Services: “The order seemed more severe than expected in terms of being more hard hitting on Jignesh Shah. For the first time he has been named a direct beneficiary of the NSEL issue by a Government body though he has been claiming innocence on his part till now. From the market perspective, this was a positive sign that the overhang on this issue is at an end and now the clean-up act will begin. But as far the re-payment is concerned there will be no impact as all those issues are already known.”

>manisha.jha@thehindu.co.in

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