 "FTIL gets 'fit & proper' show-cause notice from regulator FMC")
In a filing to the BSE, FTIL said that "the company has received a show cause notice on October 05, 2013, from Forward Markets Commission (FMC) on the status of the company as "Fit and Proper Person" as a shareholder in MCX."
The company would reply to the show cause notice suitably in due course of time, it added.
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Sources had earlier said that FMC has issued show cause notices to Jignesh Shah, founder of FTIL, and three other officials following the NSEL payment crisis, asking why they should be considered 'fit and proper' to operate group company Multi Commodity Exchange of India (MCX).
FMC issued the notices to four officials, including Shah, Shreekant Javalgekar, MCX Managing Director and CEO, and Joseph Massey, MCX Stock Exchange Managing Director and CEO.
The officials have been asked to reply within two weeks, the sources had said.
The notices were issued following the Rs 5,600 crore payment crisis at the NSEL after the exchange halted trading in commodities from July 31 on a government directive.
FMC guidelines require exchange board directors to satisfy fit and proper criteria such as a general reputation and record of fairness and financial integrity.
FMC has seven conditions for disqualification, including involvement in acts of fraud or dishonesty and conviction by a court for moral turpitude or economic offences.
A person who is financially unsound and has been declared insolvent or barred from dealing in commodities or from accessing the market by any regulatory authority would be considered for disqualification.
Last week, the Mumbai police had registered an FIR against Shah and others in connection with the NSEL payment crisis and raided their offices, residences and warehouses across the country.