MCX-SX terminates FTIL warrants

Exchange seeks Sebi nod for name change to New Age Stock Exchange

The MCX Stock Exchange (MCX-SX) said on Monday it had extinguished the warrants on its equity held by its founder, Financial Technologies India (FTIL). Following the termination, Rs 56 crore of 'non-refundable interest free deposit' against such warrants would be transferred to the exchange’s capital reserve, it said.

FTIL held 562 million convertible warrants in MCX-SX. It also has a five per cent stake in the exchange, which it has to divest, following an order in March from the Securities and Exchange Board of India (Sebi). “After perusing legal opinion on the Sebi order dated March 19 and the SAT (Securities Appellate Tribunal) order dated July 9 regarding the warrants held by FTIL, the board (of directors) has decided to treat the same as extinguished,” MCX-SX stated. The exchange said  transfer of the deposit would add to its net worth, to now go up to about Rs 160 crore, much higher than Sebi’s minimum requirement of Rs 100 crore.

Multi Commodity Exchange (MCX) holds an equal number of warrants in MCX-SX, which remains unaffected by the board decision. MCX-SX has also applied to Sebi and the registrar of companies to change its name.  According to sources, among the new names it has suggested are New Age Stock Exchange and International Stock Exchange.

Meanwhile, added MCX-SX, a supplementary audit conducted by the Comptroller and Auditor General of India  on it, following the National Spot Exchange payment crisis, has given the exchange a clean chit.  It said the audit, on its financial statements, had been concluded without any adverse comments or observations. Saurabh Sarkar, managing director of MCX-SX, said: “The recent developments will improve the sentiment of potential investors and restore the faith of market participants on the turnaround of our exchange.”

FTIL said it was “surprised and shocked” at the decision to terminate its warrants, “in spite of FTIL having initiated the divestment process and intimating this to MCX-SX, with a copy to Sebi”. “FTIL will seek all necessary legal recourse in the interest of 60,000-plus shareholders and its stakeholders," the company said.