Commodity market regulator Forward Markets Commission has allowed MCX to launch new contracts up to March next year after signing new technology agreement with its service provider Financial Technologies.

Kotak Mahindra Bank, which signed an agreement to buy 15 per cent from Financial Technologies, has made the renegotiation of technology agreement as a precondition for completing the stake sale deal. It is expected that the disinvestment would be completed by FTIL only after signing of the technology agreement, said FMC.

MCX can launch contracts up to March without any further reference to the Commission after fulfilling the conditions put forth by the regulator. The exchange can launch contracts up to December 2015 once the full divestment by FTIL in MCX is executed, said FMC in its order on Wednesday. Though there are many contentious issues, MCX is hopeful that FTIL will soften its stand to get the Kotak deal sail through. The exchange has already restricted the tenure of contracts for service rendered by FTIL to 10 years from 99 years agreed earlier.

Forensic audit

Earlier, a forensic audit conducted by PricewaterhouseCoopers pointed to various service agreements which were considered one sided with restrictive clauses that were disadvantageous to MCX.

For instance, the agreement provided for automatic renewal — after a period of 33 years for another 33 years — with no exit scope unless MCX paid the fee for the unexpired time of the lease period with some penalty.

The fixed monthly charges paid to FTIL for the technology support has been reduced to ₹1.5 crore from ₹2 crore and will now be paid on a quarterly basis against the practice of paying it yearly in advance. Variable charges were cut to 10.30 per cent from 12 per cent of the transaction value in the exchange.

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