Comments
In a major shift from its earlier stand, Kotak Mahindra Bank has sought representation on the board of Multi-Commodity Exchange (MCX).
MCX is considering having Paul Parambi, Head of Group Strategy at Kotak Mahindra Bank, as a nominee on its board, according to sources close to the development.
The exchange is awaiting commodity market regulator Forward Markets Commission’s approval to accept the bank’s nomination.
In July, while making an investment of ₹459 crore to acquire a 15 per cent stake in MCX, the bank said it was only looking for an investment opportunity and was not looking at any special rights or board seat.
The stated stand of the bank had put to rest concerns over a ‘conflict of interest’ as the Kotak Group owns another commodity exchange, ACE Derivatives & Commodity Exchange.
While this exchange focuses primarily on agriculture commodity futures, MCX specialises in the metal and energy sectors.
In response to a query from BusinessLine , a Kotak Mahindra spokesperson said that according to regulations, shareholders are permitted to have 50 per cent representation on the board of exchanges. “The MCX board already has representations from other shareholders,” he added. In September, the Competition Commission of India cleared the Kotak Bank-Financial Technologies deal and said the proposed deal “is not likely to have an appreciable adverse effect on competition in India”. In its order the CCI said Kotak’s 40 per cent equity interest in the Ace Derivatives & Commodity Exchangeshould be brought down to 15 per cent by 2019 in accordance with the FMC norms.
Board compositionAt present, there are 11 directors on the MCX board, including the FMC nominee, former Chief Information Commissioner Satyananda Mishra, as Chairman, and Parveen Kumar Singhal as Joint Managing Director. There are four shareholder directors.
According to FMC guidelines, the board of a commodity exchange should be equally divided between shareholder directors and independent directors.
The exchange does not have a promoter after the exit of the embattled Financial Technologies.
Kotak Bank is the largest shareholder in the exchange, with a 15 per cent stake, followed by Blackstone GPV Capital Partners Mauritius, Aginyx Enterprises and IFCI, holding 4.79 per cent each.
With six FMC-nominated independent directors, there is still place for two shareholder directors on the commodity exchange’s board.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.