 "No directive to FTIL to cut stake in MCX: Regulator")
The battle between the commodities market regulator, Forward Markets Commission (FMC), and the Financial Technologies (India) Limited, or FTIL, which promotes the Multi Commodity Exchange (MCX) and National Spot Exchange Limited (NSEL), crisis-ridden and facing defaults, saw a new twist. The FMC said it had not issued directives to the FTIL to cut stake in the MCX below two per cent as it was understood that the former being not ‘fit and proper’, it could not hold stake in MCX over two per cent. The regulator, however, said it was within its jurisdiction to declare the FTIL not ‘fit and proper.’
It is learnt the FMC could ask the MCX board to ensure any investor declared not ‘fit and proper’ doesn’t hold more than two per cent in the exchange’s equity. The new chief executive officer (CEO) and managing director, Manoj Vaish, joining the MCX by the middle of February may have to handle this. On Monday, the MCX stock closed 10.8 per cent higher to Rs 524 on the BSE. The FMC doesn’t regulate FTIL as a corporate entity.
An affidavit filed in the high court by the FMC said it had “not issued any directions” to FTIL for divestment of its stake in the MCX. This was in response to a petition by the FTIL challenging the order of the regulator declaring the company not ‘fit and proper’ to run the exchange. The FMC, in the affidavit, said “it had ample powers to pass the order under “the provisions of the Forward Contracts (Regulation) Act, 1952 (FCRA), as well as the Forward Contracts (Regulation) Rules, 1954 (FCRR).”
The FMC had issued an order on December 17, in which it had asked the FTIL to sell stake above two per cent as it had not been found 'fit and proper’. This was challenged by the FTIL in response to which FMC had filed an affidavit which came up for hearing on January 15. The high court has, however, not granted a stay on the FMC’s order.
However, following the FMC order, the MCX board on December 26 had asked FTIL to reduce its stake to two per cent, in line with the order in a month.
The FMC has also ensured that new MD & CEO Manoj Vaish, appointed by the MCX takes charge early and till it got the conformation that he will join latest by 15 February, the regulator had not approved the appointment. By the time he takes charge, the court hearing the FTIL petition may have made its mind known but new MD CEO will have to handle the battle from the beginning of his stint with MCX.
Interestingly one month time given by the MCX board to the FTIL is ending in a week’s time while the court hearing the petition challenging the FTIL’s petition challenging the FMC’s fit and proper order has given next hearing date after that.
The official sources in the know said that in case if FTIL doesn’t divest stake, the MCX board could consider other avenues like allotting preference share to new investors which will result in bringing down the FTIL’s stake.
It is learnt the FMC could ask the MCX board to ensure any investor declared not ‘fit and proper’ doesn’t hold more than two per cent in the exchange’s equity. The new chief executive officer (CEO) and managing director, Manoj Vaish, joining the MCX by the middle of February may have to handle this. On Monday, the MCX stock closed 10.8 per cent higher to Rs 524 on the BSE. The FMC doesn’t regulate FTIL as a corporate entity.
An affidavit filed in the high court by the FMC said it had “not issued any directions” to FTIL for divestment of its stake in the MCX. This was in response to a petition by the FTIL challenging the order of the regulator declaring the company not ‘fit and proper’ to run the exchange. The FMC, in the affidavit, said “it had ample powers to pass the order under “the provisions of the Forward Contracts (Regulation) Act, 1952 (FCRA), as well as the Forward Contracts (Regulation) Rules, 1954 (FCRR).”
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The FMC said, “The respondent (FMC) has not directed the petitioner (FTIL) to divest its shareholding in the MCX. The respondent has merely held the petitioner was not ‘fit and proper’ to continue to hold more than two per cent stake in MCX.”
The FMC had issued an order on December 17, in which it had asked the FTIL to sell stake above two per cent as it had not been found 'fit and proper’. This was challenged by the FTIL in response to which FMC had filed an affidavit which came up for hearing on January 15. The high court has, however, not granted a stay on the FMC’s order.
However, following the FMC order, the MCX board on December 26 had asked FTIL to reduce its stake to two per cent, in line with the order in a month.
The FMC has also ensured that new MD & CEO Manoj Vaish, appointed by the MCX takes charge early and till it got the conformation that he will join latest by 15 February, the regulator had not approved the appointment. By the time he takes charge, the court hearing the FTIL petition may have made its mind known but new MD CEO will have to handle the battle from the beginning of his stint with MCX.
Interestingly one month time given by the MCX board to the FTIL is ending in a week’s time while the court hearing the petition challenging the FTIL’s petition challenging the FMC’s fit and proper order has given next hearing date after that.
The official sources in the know said that in case if FTIL doesn’t divest stake, the MCX board could consider other avenues like allotting preference share to new investors which will result in bringing down the FTIL’s stake.