MCX given an April-end limit on FTIL order

FMC has warned it won't approve any new contracts before FTIL divests its holding in the exchange

The Forward Markets Commission (FMC) has given a deadline of April 30 for Multi Commodity Exchnage (MCX) to ensure Financial Technologies India Ltd divest's stake in it as it had directed in December.

The regulator has warned it won't approve any new contracts before FTIL divests its holding in the exchange, sources from the regulator said. In fact, no contracts on the MCX in the past two months have got regulatory approval.

National Spot Exchange (NSEL), an FTIL venture, is embroiled in a Rs 5,600-crore settlement crisis. And, FTIL holds 26 per cent in MCX. After the NSEL scam, FMC ruled FTIL was not fit to run an exchange and asked it to reduce the holding in MCX to below two per cent.

"We will take action on FTIL if they will not divest stake in MCX by the end of April," said a source at FMC. A mail sent by this newspaper to MCX remained unanswered.

The MCX board has already decided to freeze FTIL's shareholding, by transferring shares in excess of two per cent to an escrow account. And, FTIL has already appointed JM Financial Institutional Securities as a financial advisor for divestment of the stake in MCX, as well as for a restructuring of the group.

FMC has also told MCX to implement the interim report by PricewaterhouseCoopers, which was asked to do a special audit after the NSEL crisis erupted. The interim report had highlighted several financial transactions which were not found in the order.

Meanwhile, the Union finance ministry is considering a proposal to divert the shares of an unfit shareholder directly to an escrow account.

------