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The Forward Markets Commission (FMC) has given Jignesh Shah, Joseph Massey and Shreekant Javalgekar time till October 31 to respond to the show cause notice issued to them.
The Commission, which regulates the commodity futures market, had issued the notice on October 4 to ascertain the three meet the criteria to remain as directors on the MCX board. The earlier deadline of two weeks to respond to the notice ended today. The notice followed the Rs 5,600-crore settlement crisis at MCX group company National Spot Exchange, which shut operations on August 1.
Strict condition
FMC Chairman Ramesh Abhishek said the deadline for response was extended under the strict condition that no more time will be given after October 31. “They had sought four weeks to respond. We had already alerted them in August on the impending notice; to top it we gave two weeks time after issuing the notice,” he said.
If they fail to respond before October 31 the Commission will take a call on eligibility with whatever information is already available, said Abhishek.
If declared ‘not fit and proper’ to run an exchange, Shah-owned Financial Technologies has to divest its stake and find a new suitor to run it. FMC has already appointed eight directors on the MCX board and may insist on a replacement for Javalgekar, the current Managing Director. FMC regulations require the board of directors on commodity exchanges to satisfy fit-and-proper criteria, which include maintaining a good reputation and a record of fairness and financial integrity.
The regulator has seven conditions for disqualification, including involvement in acts of fraud or dishonesty and conviction by a court for moral turpitude or economic offences.
The Economic Offence Wing of Mumbai police has filed a first information report against the entire board of NSEL including Shah and the defaulters who refused to settle trade worth Rs 5,600 crore. Three people including former NSEL Managing Director Anjani Sinha have been arrested in the case.
>suresh.iyengar@thehindu.co.in
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