Kotak Mahindra Bank, which acquired a majority stake in MCX from Financial Technologies recently, has withdrawn the nomination of Paul Parambi, Head of Group Strategy at the bank, on the MCX board.
Without giving any reasons, the bank in a one-line statement said it was withdrawing the nomination “for the time being”.
The MCX board had scheduled a meeting Friday to consider Kotak Bank’s nomination among various other issues.
Earlier, the commodity market regulator Forward Markets Commission had questioned Kotak Bank’s claim on a MCX board seat and expressed concern over the change in its earlier stance. In July, while signing a deal to buy an MCX stake – at a discount – from Financial Technologies, Kotak Bank had said the deal was just an investment and that it would not seek any “special rights or a board seat”.
However, last month, the bank recommended Parambi as a nominee. The FMC feels that having a Kotak nominee on the MCX board can lead to a “conflict of interest” as the bank owns a 40 per cent stake in ACE Derivatives and Commodities Exchange.
It has also asked ACE Derivatives to explain how it allowed Kotak Commodities to trade on its platform. In a December 26 letter, the FMC has sought a clarification from Kotak Bank on terming Kotak Commodities as an associate entity in its latest balance sheet. Kotak Commodities is a trading member on the MCX exchange.
In a similar case in 2013, Jaypee Capital Services, which was generating huge volumes on the NCDEX, was forced to surrender its trading membership after it bought 22 per cent stake in the exchange. Jaypee currently owns 2.38 per cent stake in NCDEX.