FMC presses MCX to act

Says complete tech deal with FT and address stake sale issue

The Forward Markets Commission, regulator for the commodity futures market, told the Multi Commodity Exchange (MCX) on Monday to ensure a satisfactory contract for technology and software engine services with Financial Technologies (FT) was signed by the end of this month, said an FMC official.

It says these negotiations have gone on too long. In December last year, FMC had directed that FT was not “fit and proper” to be an anchor investor in any commodity exchange; it was one for MCX. This was in the wake of the big payment default at National Spot Exchange, an FT subsidiary.

FT holds 26 per cent in MCX. FMC wants this reduced to below two per cent; until this is done, FT’s voting rights and other corporate benefits like dividends have been frozen.

FMC had a meeting on Monday with MCX to review the progress on ensuring that FT sold its excess stake. And, to review the action taken after the special audit report of Price Waterhouse last year; the report had rapped the technology pact with FT.

On the FT stake sale and attendant changes, an MCX spokesperson said, “The exchange has undertaken an exercise to amend its Articles of Association by obtaining the approval of shareholders through a postal ballot process. The process will be completed on June 18, upon declaration of the ballot result.”

The purpose of amending the Articles  is to incorporate the revised norms regarding shareholding, ownership, net worth, etc, consequent to the FMC instructions on FT and on the PwC report. The latter had raised issues and irregularities in surveillance and other systems, apart from saying that the technology contract was one-sided.

The MCX board of directors had appointed two sub-committees on systems improvement and renegotiate the technology deal, on which no clear progress had happened, noted FMC on Monday.