The commodity market regulator, the Forward Markets Commission (FMC), has issued a showcause notice to Kailash Gupta, vice chairman and founder of the Ahmedabad-based National Multi Commodity Exchange (NMCE), for siphoning of funds.
When contacted, Kailash Gupta said the charges alleged against him were baseless. While details are not known, sources say the issue of notice is a follow-up of the investigation by the regulator earlier, where several expenses by the exchange towards consultants’ fees could not be explained.
The exchange management in the past had appointed several consultants for market development and technology upgradation. While the expenses incurred are said to have generated no notable result, it caught the eyes of the regulator.
While FMC officials only said the showcause notice was issued to Gupta, sources close to the development said several unexplained entries led to the conclusion that funds of the exchange were siphoned off. There were also reports that some family members of the promoters were intervening in the operations of the exchange, which was hurting its growth.
An NMCE spokesperson did not comment on the issue. NMCE has three-four per cent share in commodity futures and is the third-largest exchange in the space. The exchange’s average daily turnover was Rs 3,700 crore in March but due to controversies in recent months, turnover fell to Rs 700 crore in June.
This is not the first time a notice has been issued to the senior functionary of a national level commodity futures exchange. Nearly five years ago, such actions were taken by FMC against a senior official of NCDEX.
