Financial Technologies is mulling appealing against electricity regulator CERC’s order that directs the company to completely divest its stake in the Indian Energy Exchange (IEX).
IEX is the country’s leading power exchange with a market share of more than 95 per cent.
Citing “public interest and the interest of the power market participants”, the Central Electricity Regulatory Commission (CERC) last month directed FTIL to sell its entire stake in IEX. The timeframe given for disinvestment is till September 30 this year.
When contacted, an FTIL spokesperson told PTI that the company “is contemplating to file an appeal” against the electricity regulator’s order.
In its order dated May 13, CERC also said that “pending divestment of shares, the voting rights of FTIL shall stand extinguished and any corporate benefit in lieu of such shareholding shall be kept in abeyance or withheld by the exchange“.
Besides, the watchdog asked the exchange to ensure that its board does not have any FTIL nominee.
Financial Technologies (India) Ltd, founded by Jignesh Shah, is facing tough times in the wake of the Rs 5,500 crore payment crisis at its group entity National Spot Exchange Ltd (NSEL). As per FTIL website, Shah is the company’s managing director as well as founder chairman and group CEO.
The electricity watchdog’s order is the latest in the series of regulatory action against the embattled FTIL.
Last December, the Forward Markets Commission had ruled that FTIL is not a ‘fit and proper person’ to hold anything more than 2 per cent shareholding in commodity exchange MCX.
In March this year, the Securities and Exchange Board of India (Sebi) had said FTIL is not “fit and proper” to own stakes in any stock exchange and directed it to divest existing holdings in MCX—SX and four other entities.
According to CERC, the decisions of SEBI and FMC have a direct bearing on the power market.
The Indian Energy Exchange is an important market infrastructure institution playing a major and pivotal role in promoting the power market in the country with more than 95 per cent of the market share, CERC said in its order last month.
“There is a need to ensure transparent and professional management of the IEX in order to inspire public trust and confidence in the exchange,” it had said.
In the ruling, CERC had also mentioned that “regulatory objectives of the power exchanges are similar to that of the commodity and stock exchanges in so far as the investor/consumer protection, market integrity, transparency, fairness and governance are concerned”.