FMC to hear Jignesh, others on Nov 12

FTIL-promoted NSEL facing payment crisis of Rs 5,574 cr; its former MD, other employees in Jail

Jignesh Shah, promoter of Financial Technologies (FT), would get a chance to argue his case before the Forward Markets Commission (FMC) on November 12.

Earlier, FMC had issued a show-cause notice to Shah, asking him why he shouldn't be declared unfit to run Multi Commodity Exchange (MCX), following the payment crisis at National Spot Exchange Ltd (NSEL). FT is an anchor investor in MCX, India's largest commodity exchange.

The FT-promoted promoted NSEL is facing a payment crisis of Rs 5,574 crore, and the spot exchange's former managing director and a few other employees are behind bars. FMC had said NSEL's board and promoters should have prevented the crisis, adding a crisis of this magnitude wasn't possible without their support.

Along with Shah, NSEL directors Shreekant Javalgekar and Joseph Massey would also present their arguments on November 12. The commission had issued show-cause notices to them, too. On October 30, they replied to the FMC's notice. In their reply, they were understood to have said a judgment on the NSEL case was pending, as several agencies were tracking the money taken by the 24 borrowers on the NSEL platform. All these directors have already resigned from the MCX board.

After the hearing, as sought by these officials, FMC would decide on the show-cause notices issued by it. FMC sources declined to give any timeline for a final decision on the matter. A source said a decision was likely by the end of this month.

FMC has decided to carry out a forensic audit of MCX; an audit of NSEL e-series contracts is underway. Last week, the high court here asked FMC to oversee NSEL e-series contract settlements, too.

Following the exchange suspending trading in e-series contracts, investors are seeking physical delivery of the metals they purchased through e-series contracts.

These metals are in dematerialised form which will have to be rematerialized.