Crisis-hit Multi Commodity Exchange of India Ltd has been given 10 days to submit a time-bound action plan to comply with regulator FMC’s order that directed the bourse to ensure its promoter Financial Technologies cuts stake to two per cent or below from 26 per cent.
On December 17 last year, the FMC had issued an order, declaring Financial Technologies India Ltd (FTIL) and its chief Jignesh Shah unfit to run any exchange, including the MCX, following a Rs 5,600-crore payment crisis erupting at group company National Spot Exchange Ltd (NSEL).
In an 80-page order, FMC held that FTIL is not ‘fit and proper’ to hold anything more than 2 per cent shareholding in the MCX, the country’s leading commodity bourse.
In a BSE Sensex filing, MCX informed that it has received a letter from the Forward Markets Commission (FMC) directing the bourse to “take immediate and effective steps to implement the Order of the Commission dated December 17, 2013.”
“The company has been asked to submit to FMC a time bound program for implementation of the aforesaid order within 10 days of receipt of FMC letter,” the filing added.
On December 26, the MCX Board had asked FTIL to reduce its stake to 2 per cent, in accordance with the FMC order.
Meanwhile, FTIL and Shah have already moved the Bombay High Court, challenging the FMC order. The case is scheduled for hearing next week.
The NSEL, which is promoted by FTIL, has been defaulting on payments to 13,000 investors. It plunged into the payment crisis after halting trading in commodities from late July last year on a government directive.
Meanwhile, in a separate statement, MCX said Vaish has been appointed for a period of three years.
The exchange will focus on being a compliance-driven organisation with best corporate governance practices and augment development of the commodity ecosystem, said Vaish.