MCX board to decide on FTIL stake today

Latter's remaining five per cent in the exchange might be transferred to escrow account

Multi Commodity Exchange of India Ltd (MCX), under pressure to sell the stake of its promoter, Financial Technologies (India) Ltd or FTIL, has called a board meeting on Monday.

One item on the agenda is to decide whether the remaining stake of FTIL in the exchange be transferred to an escrow account.

MCX was under pressure from the commodity market regulator, the Forward Markets Commission, to ensure FTIL divests its stake from the exchange as it was declared “not fit and proper” to run it.

FTIL has been able to sell 21 per cent of its 26 per cent stake. Since FMC has not approved any of the exchange’s proposals to sell the remaining five per cent stake held by FTIL, the MCX board at its Monday meeting will decide if the remaining stake should be transferred to the escrow account, to be sold later.

One reason why FTIL has not been able to sell is that there is still a lock-in on two per cent of its stake. Earlier, the Securities and Exchange Board of India (Sebi) had removed the lock-in on 18 per cent stake, thanks to which the deal to sell 15 per cent to Kotak Mahindra Bank could be cleared.

Even if MCX transfers FTIL’s remaining share to the escrow account, it can only sell three per cent owing to the lock-in. If the lock-in can be removed, the shares can be sold to an entity eligible to hold five per cent. The buzz is that US-based CME Group , one of the largest futures and options exchanges, is interested in picking up five per cent stake in MCX.

According to sources in the know, both FMC and MCX have already recommended to Sebi to remove the remaining lock-in of FTIL’s stake. After its board meeting last Wednesday, MCX has recommended that FMC approve fit-and-proper status for Kotak Mahindra Bank, which had, as stated earlier, bought 15 per cent stake in the exchange.