MCX drops preferential issue proposal

Shareholders felt that this would dilute value of their investments

The board of directors of the Multi Commodity Exchange of India (MCX) decided on Wednesday to drop the proposal of issuing preferential shares, as shareholders felt this would dilute the value of their investments.  The exchange informed the BSE that, “for the time being, a decision has been taken not to go ahead with the preferential allotment of shares”.

Sources said the shareholders had conveyed the feeling that if the intention of issuing such shares was to ensure that the Financial Technologies (FTIL)’s shareholding comes down, this will also result in a reduction in holding of other shareholders. MCX is a cash-rich exchange and, hence, there was no immediate need to raise funds. Also, fresh capital raising reduces earnings per share for existing investors.

FTIL has been declared not fit to run the exchange following a massive default by FTIL subsidiary NSEL.