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Owing to the directives issued by the Forward Markets Commission (FMC) on Wednesday, exchanges will have to implement various changes, including setting up committees of directors and appointing key management personnel. Technology could also be an important issue, as FMC has mandated commodity exchanges to have a standing committee of directors for technology.
National Commodity & Derivatives Exchange (NCDEX) has one such committee, comprising its officials. The technology used by NCDEX is provided by NSE.IT and Tata Consultancy Services. For United Commodity Exchange, technology is provided by Comex Technologies, a company owned by the exchange’s promoter, Ketan Sheth. The FMC has already written to Multi Commodity Exchange (MCX) to negotiate a technology agreement with its promoter, Financial Technologies India Ltd (FTIL), by June 30. FTIL’s technology pact also provides for turnover-linked fees. As MCX volumes have fallen in the past three quarters, the fees payable to FTIL have declined.
In a special audit report on the exchange, Pricewa-terhouseCoopers (PwC) had said the technology contract was one-sided and favoured FTIL. The regulator wants MCX to address the concerns raised by PwC.
FMC’s new norms have done away with the age guideline of 60 years for appointment of managing directors. In the event of a resignation, an exchange has to appoint a new MD within 60 days.
MCX has to appoint a new MD, as Manoj Vaish had resigned from that post on April 30. Acting MD P K Singhal had twice declined to take charge as MD. As the regulator has done away with the 70-year age limit for independent directors, G Anantharaman, set to turn 70 soon, can continue to be independent director on the MCX board.
FMC has also spelt out norms for key management personnel and said they should be appointed for fixed tenures. The Companies Act defines key personnel as company secretaries, chief financial officers and managing directors. While the term for a managing director is three years, those for company secretaries and chief financial officers haven’t been defined. These terms can be renewed.
Sources said most exchanges would seek to implement these changes at their next board meetings.
