FTIL defends itself, raps MCX over PwC audit report

Tech fees charged from MCX is lowest compared to peers; Fees also down 56 per cent with fall in volumes

Financial Technologies (FTIL), anchor investor in the Multi Commodity Exchange (MCX), has defended itself against the strictures made against it in the forensic audit report of the latter by PricewaterhouseCoopers (PwC).

It has argued, for instance, that its technology agreement with MCX was most competitive for the exchange, with fees down significantly with any reduction in volumes, citing data in support.

PwC’s report, given to the MCX board on April 21, had said the technology supply contracts between FTIL and MCX had heavily favoured FTIL, MCX had disclosed an ‘edited shortened summary’ of the PwC report. Last week, it sent a summary to the BSE exchange for dissemination. FTIL says, “MCX has deliberately chosen not to take our clarifications and comments on the record”.

In a strongly worded, point by point reply to the PwC observations on the technology agreement, it said investors should not rely upon this and alleged MCX did this with “an ulterior motive”.

Since BSE has been one of the bidders for FTIL’s stake in MCX, which has been put for sale,  “Your action to selectively disclose (the report to BSE) raises doubt on the integrity of the corporate governance practices followed by you,” said FTIL in its letter to MCX.

The major contention of FTIL’s reply has been that it was not given a chance to respond to PwC’s findings, despite a prior written request. The MCX action,  it has said, “appears to aimed at derailing the divestment process initiated by FTIL”.

After the PwC report was given, the MCX and FTIL stocks fell nine and 16 per cent, respectively.