Financial Tech gets time from SEBI to cut stake in MCX

Market regulator SEBI has granted time to Financial Technologies India Ltd (FTIL) to reduce its stake in MCX. In a late filing with the BSE, MCX said SEBI has relaxed norms to allow FTIL to bring down its stake to 1.99 per cent in the commodity bourse.

On Thursday, the Securities Appellate Tribunal allowed the software vendor FTIL to approach the Securities and Exchange Board of India for more time to divest its stakes in five stock exchanges. In an order dated August 21, SAT said SEBI can consider the application on merit and pass appropriate orders on its own. The tribunal said that since FTIL is seeking further time, “it would be just and proper for (the) applicant to move SEBI in that behalf. “Accordingly, we permit (the) applicant to move SEBI seeking extension of time,” SAT noted.

On March 19 this year, the regulator had directed Jignesh Shah-promoted FTIL to offload direct and indirect holdings in MCX Stock Exchange (MCX-SX), MCX-SX Clearing Corporation (MCX-SX CCL), Delhi Stock Exchange, Vadodara Stock Exchange and the NSE within 90 days after declaring the company “fit and proper” to run exchanges.

SEBI’s order was in line with a similar order by the Forward Markets Commission following the ₹5,600-crore scam at NSEL, in which FTIL owns 99.99 per cent, came to light. FTIL had then moved SAT challenging the SEBI order and got four weeks of extension, which has also expired.

Meanwhile, the board of directors of the MCX has decided to ask its promoter, FTIL to divest 5 per cent stake in the exchange, to meet the directions of FMC.

Currently, FTIL holds 20 per cent in MCX after it sold 6 per cent stake in two deals. MCX then entered into an agreement with Kotak Bank to offload 15 per cent stake at ₹459 crore. However, the deal needs to be approved by various Government agencies, such as the Competition Commission of India and FMC, besides MCX shareholders.

Once FTIL sells 5 per cent stake in the market, MCX can request the FMC to remove the ban on launching new contracts for the next calendar year, as Kotak Bank has already agreed to buy the remaining 15 per cent.