MCX board not to share findings of PwC report

To discuss the matter with regulator FMC and seek legal opinion

The Multi-Commodity Exchange (MCX) board on Saturday said it wouldn’t share the details of PricewaterhouseCoopers (PwC)’s special audit report with potential bidders for Financial Technologies India Ltd (FTIL)’s stake in the exchange.

However, the board, which met on Saturday, decided to discuss the audit report with the Forward Markets Commission (FMC). The exchange, sources said, might also seek legal opinion on sharing the report with bidders.

At Saturday’s board meeting, it was said the exchange had entered into a confidentiality clause with PwC that it wouldn’t share the content of the auditor’s report with outsiders; the report would only be for the exchange and the regulators.

FTIL has initiated action for divesting its stake in the bourse, following the FMC’s order declaring FTIL and three other entities not ‘fit and proper’ to run the exchange. FTIL has to cut its stake in MCX from 26 per cent to less than two per cent.

After several bidders placed non-binding bids, Reliance Capital emerged as highest bidder (Rs 750 a share). Subsequently, the company wrote to the FMC, saying MCX wasn’t divulging key information, including the findings of the PwC report.

The imbroglio over the PwC report has delayed FTIL’s stake sale process. Earlier, the FMC had asked MCX to ensure FTIL sold its stake by April 30; else, MCX would have to face action.

MCX’s woes have been aggravated, as the FMC has already sought to know what action the bourse was taking on the PWC findings, as no final report on the matter had been submitted.

Though this was discussed at Saturday’s MCX board meeting, it wasn’t knows what course of action MCX would take in this regard.

PwC is understood to have said several related-party transactions between FTIL and MCX weren’t on an arm’s length basis, as is the norm. It also said the technology supply contract, worth about Rs 1,000 crore, favoured FTIL.

At Saturday’s meeting, the MCX board also decided to do away with the designations of deputy managing director and directors not part of the board. It has re-designated the responsibilities of deputy managing director (P K Singhal) and director (business development) to executive vice-presidents. All executive vice-presidents will report to the managing director.