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Multi Commodity Exchange (MCX) said on Tuesday that the process of stake sale by Financial Technologies (FTIL), its erstwhile anchor investor, might get over by the end of the month. FTIL, it says, has yet to communicate a clear date.
In a filing on the BSE, it said it also hoped to soon get approval from the market regulator to re-launch contracts in futures.
The exchange’s clarification came in the wake of the Forward Markets Commission (FMC) rejecting the exchange demand to allow approvals for contracts for the March quarter of 2015. As of now, all it contracts expire by December and futures contracts aren't being approved.
After the scam at National Spot Exchange, promoted by FTIL, the regulator decided the latter was not fit for its role in MCX and had asked for sale of the entire 26 per cent stake in it. FTIL had sold 15 per cent stake to Kotak Mahindra Bank and 11 per cent stake in the open market, of which noted investor Rakesh Jhunjhunwala purchased five per cent.
However, the stake sale still needs to get approval from the Competition Commission of India and the high court.
FMC had late last week written to MCX that the “share purchase agreement signed by Kotak Mahindra Bank and FTIL appears (to) depend upon signing of a technology agreement between MCX and FTIL and, hence, it is lacking clarity with regard to exact date of execution and doesn’t (amount to) an assurance regarding the proposed date for acquisition of 15 per cent stake in MCX”.
MCX’s reply now says, “FTIL is yet to give a firm date by which they will be fully divesting their stake in MCX.”
FMC also said MCX had not taken the required action on the findings of the PricewaterhouseCoopers audit report. MCX has now said, “Most of the observations of the PwC report are already addressed...the findings of the earlier oversight committee are already addressed and informed to FMC. As desired by them, the same will be reviewed by the audit committee of the company this week.”
Non-approval of contracts by FMC is resulting in a a loss of volumes for MCX. In the past two months, volumes are down by 10 per cent. Far-month contracts are not available for carrying forward their open positions.
Last week, some leading commodity brokers met officials of the Union finance ministry to seek their intervention in approving contracts on MCX. They hold sizable positions and as most contracts are expiring in the next couple of months, they need contracts of longer maturities. However, the ministry “has not shown any inclination in pushing the brokers’ demand”, said a source.
