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The battle between Financial Technologies (FTIL) and the exchange promoted by it, the Multi Commodity Exchange (MCX), took a new turn on Monday. The former told the latter it would take legal action on any attempt by the latter to consider an allotment of preferential shares to reduce its stake.
MCX has convened a meeting of its board of directors on Thursday, to consider doing this and to alter its Memorandum of Association and Articles of the Exchange. It had sent notices in this regard to the BSE exchange.
“(We)...a holder of 26 per cent shares in MCX, have not received such a communication and (our) board will take necessary legal action in the interest of its 65,000-plus shareholders,” announced FTIL.
MCX has been the subject of some action by the regulator in the segment, the Forward Markets Commission (FMC), since the Rs 5,574-crore financial scam erupted last July at National Spot Exchange. This is an FTIL subsidiary and on December 17, 2013, the Commission declared FTIL was unfit to hold more than two per cent stake in any exchange. FMC’s action was followed by a like order from the equity markets regulator, the Securities & Exchange Board of India.
Till the FTIL stake was cut to the level it specified, FMC told MCX, it would not approve launch of any new contracts. FMC’s order was challenged by FTIL in the high court here; a verdict is still awaited. FTIL notes it has itself initiated action to divest stake up to 24 per cent in MCX; it has questioned the timing of the MCX announcement on preferential shares. “Such a move is vindictive in nature, to support certain vested interests and deprive FTIL of a level playing field to sell its shares,” it stated on Monday.
Before the HC gave a verdict on its petition, declared FTIL, it would not tolerate any deprivation of its rights. It said it had already announced a commercial decision to divest its equity in MCX and had got a good response from global and local investors, as initial expression of interests. “It appears the move by the MCX board is an attempt to derail FTIL’s move to divest its equity in a fair and transparent manner. FTIL sees such a move as a clear agenda of depriving FTIL of its propriety rights at any cost,” its statement said.
FTIL’s shares declined marginally by 0.4 per cent on Monday, to close at Rs 373.35 each. MCX shares moved slightly up by 0.9 per cent to end at Rs 490.10.
