Comments
The expression of interest by the Bombay Bullion Association to buy a 5 per cent stake in the Multi Commodity Exchange has raised many pertinent questions. Members of the Association are already trading on the exchange and contributing a substantial trading volume in bullion segment of MCX.
If the Association succeeds in buying the targeted 5 per cent stake, it may be logical for it to seek a directorship on the MCX board. The move may lead to ‘conflict of interest’ as it will not only have trading interest but also be privy to information on the functioning of the exchange.
On Wednesday, the Association said it plans to buy a 5 per cent stake in the bourse along with a consortium that plans to bid for a controlling stake in the exchange and it had sent an expression of interest to the commodity market regulator, Forward Markets Commission.
IBMA connection The regulator may also need to consider the fact that the Association has members who were part of the Indian Bullion Market Association (IBMA), promoted by the embattled National Spot Exchange Ltd (NSEL), which defaulted on trade settlement worth Rs 5,600 crore. NSEL, which suspended trading on August 1, 2013, was pulled up by the regulator for allowing IBMA members to trade without meeting the daily margin requirements.
Many aspirants, including rival commodity exchange Universal Commodity Exchange, have expressed interest in acquiring a stake in the country’s largest commodity bourse MCX after the FMC declared the promoters Jignesh Shah and Financial Technologies (India) Ltd (FTIL) not fit to operate commodity exchange.
Following this, the MCX board instructed the management of MCX to communicate to the exchange’s promoter FTIL to reduce its stake to 2 per cent from 26 per cent last month.
However, responding to stock exchanges’ queries, FTIL has clarified that “as a policy of the company, we do not wish to comment on rumours or any speculative news items.” Moreover, FTIL has challenged FMC’s order declaring it not fit to run commodity exchange in the Bombay High Court.
On Thursday, the stocks of MCX and FTIL were down one per cent each at Rs 488 and Rs 185.90 on the BSE, respectively.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.