HC refuses stay on FMC's 'not fit and proper' order

FTIL has appealed to the HC and, pending full hearing, sought a stay on FMC order

The high court here on Friday rejected a plea by Financial Technologies (India) to stay the Forward Markets Commission order declaring it not “fit and proper” to run an exchange.

In the wake of the payments scam at National Spot Exchange (NSEL), an FTIL subsidiary, the Commission had issued the order in the case of Multi Commodity Exchange of India (MCX). The promoter was FTIL and it has a 26 per cent stake; FMC, the commodities market regulator, had directed FTIL to reduce its stake in MCX to below two per cent without delay.

FTIL has appealed to the HC and, pending the full hearing, sought a stay on the FMC order. This was refused on Friday by a bench of judges A S Oka and M S Sonak. The next date for the hearing will be decided later. (EXIT ROUTE)

FTIL counsel Janak Dwarkadas told the court FMC’s order could have far-reaching consequences; hence, it should be stayed. He noted the Central Electricity Regulatory Commission, the Securities and Exchange Board of India (Sebi) and the Bahrain Exchange had issued showcause notices to FTIL after the FMC order. Bahrain Exchange is a 100 per cent subsidiary of FTIL, which also has 26 per cent stake in Indian Energy Exchange, which offers trading in electricity. Sebi has set a hearing on its notice to FTIL on Monday, regarding its five per cent stake in the MCX Stock Exchange.

FTIL has begun taking remedial measures after the NSEL fallout. On Thursday, it appointed a four-member committee to oversee a restructuring plan, including divestment of up to 24 per cent in MCX and in other exchanges and related ventures.