FMC meeting on Tuesday to discuss MCX action

Non-compliance of its order regarding FTIL stake, PWC report on the agenda

As Wednesday’s deadline given to Multi Commodity Exchange (MCX) to ensure its anchor investor Financial Technologies (India) Limited, or FTIL, pares its stake from 26 per cent to two per cent passed away without result, commodities derivatives regulator Forward Markets Commission (FMC) has decided to meet on Tuesday to decide the course of action.

An official said, "FMC is meeting to take a view and compliance status of MCX on the implementation of its ‘fit and proper’ order against FTIL and actions regarding the special audit report of MCX done by PricewaterhouseCoopers (PwC)."

FMC has stopped approving contracts and proposals from MCX for the last few months. When FMC had written to MCX  a few months back, it warned that non-compliance would mean more regulatory action against the exchange. It had also said the commission would stop approving renewal of contracts.

The regulator could cancel the licence of the exchange, which, as of now, doesn’t  seem a priority. Compliance with the order was looking possible a few weeks ago as FTIL said it had already received non-binding offers from 10 parties that had later asked to do due diligence of the exchange. However, the findings of the PwC report have complicated the bidding process as it has been delayed.

MCX on Wednesday withdrew six contracts of gold and silver for 2015 and also placed three contracts — Gold February 2015, Kapas March 2015 and Kapas April 2015 — in square-off mode. All these contracts will be made available for trading after obtaining FMC approval. The exchange said this approval decision has nothing to do with the fit-and-proper order.