The Multi Commodity Exchange has called a board meeting on December 26 to discuss the implication and future course of action to be taken following the commodity market regulator Forward Markets Commission declaring the promoters of MCX ‘not fit’ to operate a commodity exchange.
The 80-page order ruled that Financial Technologies, the promoter of MCX, should reduce its stake in the commodity exchange to 2 per cent from 26 per cent now. FTIL informed the stock exchanges on Thursday that the company was examining the FMC order and would take “appropriate steps” in due course of time.
Interestingly, the regulator has not prescribed a time frame for the dilution of stake.
The recently formed selection committee is to meet on December 27 and 28 to appoint a Managing Director and CEO for the exchange from the short-listed candidates, according to people in the know.
“The board will also consider measures to bring down the MCX holding in the MCX Stock Exchange to 2.5 per cent from 5 per cent according to the capital market regulator SEBI’s direction,” they added.
Renewing the licence for MCX-SX in September, SEBI had ordered Financial Technologies and MCX to bring down their holding in the stock exchange collectively to 5 per cent by January 11 from 10 per cent now.
FMC, on Wednesday, said Jignesh Shah and his company Financial Technologies were not ‘fit and proper’ to run the commodity exchange. Shah is currently the Chairman of FTIL, which owns the National Spot Exchange. The exchange shut operations on August 1 and is now struggling to pay for trades worth Rs 5,600 crore entered into on its platform.
SEBI’s stand unclearIn this scenario, it is not clear whether SEBI will insist on FTIL offloading its entire stake in the stock exchange.
Moreover, even if MCX and FTIL bring down their stakes collectively to 5 per cent in the stock exchange according to the SEBI’s order, FTIL will have higher financial interest indirectly in the stock exchange as it holds 26 per cent in MCX. All these issues will be discussed threadbare at the board meeting, sources informed.
Meanwhile, NYSE Euronext has sold 5.65 lakh shares of MCX for about Rs 24 crore in the secondary market on Thursday. The shares were sold at an average price of Rs 427.02 apiece, valuing the transaction at Rs 24.12 crore.
NYSE Euronext, which runs leading bourses in the US and Europe, had bought 5 per cent stake in MCX for about Rs 240 crore in June 2008. As of the September quarter, Euronext held 4.73 per cent stake in MCX.
MCX shares fell 1 per cent to Rs 415 on the BSE on Thursday.
suresh.i@thehindu.co.in