FMC likely to stop MCX to float new contracts

Forward Markets Commission will take action against the commodity exchange if it fails to comply with the shareholding order by April 30

Country's largest commodity exchange MCX, part of crisis-hit Jignesh Shah-led FTIL group, may be barred from launching fresh contracts if it fails to bring down promoter's stake to 2%.

Sectoral regulator Forward Markets Commission (FMC) might crack the whip on MCX in case the bourse fails to comply with its directive on reducing promoter shareholding which came in the wake of Rs 5,600 crore payment crisis at NSEL.

"FMC will take action against MCX if they do not comply with the shareholding order by April 30. FMC is likely to stop MCX from floating new contracts," an official said.

The commodity market regulator's order has been challenged by the group in Bombay High Court.

In its order of December 17, 2013, the FMC had declared FTIL and its chief Jignesh Shah unfit to run any exchange following the turmoil at group firm National Spot Exchange Ltd (NSEL).

The regulator said FTIL was not 'fit and proper' to hold more than 2% stake in Multi Commodity Exchange (MCX). Financial Technologies India Ltd (FTIL) currently owns 26% in MCX.

Following this the board of MCX also asked its promoter FTIL to divest shares in excess of 2%.

The NSEL, which is promoted by FTIL, has been defaulting on payments to 13,000 investors. In July, FMC had halted trading at the exchange.

Multiple investigative agencies like Enforcement Directorate and the CBI are already probing the NSEL payment crisis, while Revenue department, Reserve Bank, Sebi, FMC and Corporate Affairs Ministry are also looking into it.