Commodity regulator Forward Markets Commission (FMC) has sought details from National Multi Commodity Exchange (NMCE) on Reliance Money’s proposal to acquire 26 per cent stake. The regulator has also asked for information on the action taken to avoid a potential conflict of interest with Reliance Anil Dhirubhai Ambani Group’s other commodity ventures.
The regulator has also turned down the move to appoint Reliance Money director & CEO Sudip Bandyopadhyay as an independent director on the exchange’s board.
Sources close to the development said FMC has sought details from NMCE as it did not find the documents in order and has asked the exchange to furnish details of the deal size and other issues.
While FMC Chairman BC Khatua said that the proposal was under process, a senior NMCE executive said, “FMC has asked for specific information regarding the conflict of business interest as R-ADAG also has a separate commodities business. Further, they are seeking clarifications on the contract with BSE (Bombay Stock Exchange).” he said.
BSE, which had earlier announced its intent to acquire 26 per cent stake in NMCE, has now abandoned its plans. Reliance Money recently announced its decision to buy a 26 per cent stake, subject to regulatory approval. There has been no official statement from the BSE even after there were reports that their plan to purchase a 26 percent stake in NMCE was called-off a couple of weeks ago.
ADAG group had recently launched the over-the-counter bullion trading platform and also has a commodity brokerage business. “There is no conflict of interest with ADAG as its commodity business is carried out by a completely separate entity,” NMCE Managing Director Kailash Gupta said. Regarding the BSE deal, he added, NMCE has informed FMC that the contract has been terminated.
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When contacted Bandyopadhyay said, “We are willing to give all the information to FMC regarding the deal. We are even revealing the stake purchase amount to them and it is no big secret.”
Reliance Money has valued the NMCE at around Rs 100 crore and it will be buying a 26 percent stake for Rs 26-30 crore.
A top FMC official told Business Standard that the proposal to appoint Bandyopadhyay has been turned down since there is no vacancy to appoint another independent director on the NMCE board. He pointed out that there is no provision in the Forward Contracts Regulation Act (FCRA) to appoint an additional independent director.
A senior NMCE functionary said the exchange has now decided to appoint Bandyopadhyay as a non-government professional independent director. Earlier, the exchange wanted to appoint him as an independent director under FCRA and he was to be treated as a government nominee.
“There was a technical error when we made the request earlier. We have addressed this issue now,” said the NMCE source.
If the fresh move goes through, Bandyopadhyay will be the sixth independent director on the NMCE board.