 "FT gets Sebi notice on 'fit & proper' status")
Sebi's notice also asks FTIL to show cause as to why it should not be directed to divest its equity holdings and warrants in MCX-SX. Sebi has given seven days' time for a reply.
A spokesperson for Financial Technologies said the company had not received the Sebi notice.
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The Forward Markets Commission (FMC) had issued a note on Tuesday saying that FTIL, its chairman Jignesh Shah and former managing directors of MCX Joseph Massey and Shreekant Javalgekar did not meet the criteria to be declared 'fit and proper'. FTIL, however, has challenged the FMC order in the Bombay High Court. Shah, Massey and Javalgekar are petitioners in the case, whose hearing is scheduled for Saturday (see box).
The developments follow a probe into their responsibility in the Rs 5,500-crore payment crisis at National Spot Exchange Limited (NSEL). FTIL held 99 per cent stake in NSEL. FTIL also owns 4.99 per cent stake and warrants along with MCX amounting to nearly 69 per cent stake post conversion, in MCX-SX. Interestingly, FTIL's last annual report shows that it also had a stake in the Delhi Stock Exchange, NSE as well as the Vadodara Stock Exchange.
Sebi's order in the matter only relates to FTIL, according to sources and not the other entities mentioned in the FMC order.
The stock market regulator had renewed recognition for MCX-SX subject to review if any other regulator passed an adverse order against it. "…any adverse findings by any other regulator may result in withdrawal of recognition of the exchange," Sebi had said in its September statement.
Sebi had also imposed a number of conditions on the exchange while granting renewal, including ones related to the constitution of its board. It had also asked for a committee of public interest directors and nominees from institutional investors in MCX-SX to look into key functions, including appointments to important posts and major capital expenditure.