FMC issues 'not fit & proper' notice to UCX promoter, MD

After FTIL, regulator Forward Markets Commission has issued a show notice to a promoter of Universal Commodity Exchange as well as its Managing Director, asking why they should be considered 'fit and proper' to hold stakes in or run a commodity exchange.
With UCX defunct for a year, the FMC has issued another show cause notice to the bourse asking it to explain why its registration and recognition as a commodity bourse should not be cancelled.
"We have issued 'not fit and proper' notices to UCX promoter Ketan Seth and Managing Director Praveen Pillai a few days back. They have been given 15 days time to reply to the notice," a senior FMC official told PTI.

The notices have been issued after the auditing firm KPMG, which conducted forensic audit of the UCX, found several irregularities including diversion of the Settlement Guarantee Funds (SDF), the official said.
A forensic audit of UCX was ordered last year after taking into account preliminary findings on gross financial irregularities and diversion of funds from SDF and on the basis on feedback from the Board of Directors of the exchange.
UCX, which was launched in April 2013, discontinued trading in all commodities in July last year after a sharp fall in volumes and probe by the regulator. It offered futures trading in oil seeds, pulses, crude oil and natural gas.

UCX is promoted by Commex Technologies chief Ketan Sheth, who owns 40 per cent stake in the exchange. He was not available for comment when contacted.

In 2013, FMC had issued 'not fit and proper' notices to Jignesh Shah, founder of FTIL, and three other officials to operate group company MCX, following the NSEL payment crisis. But the notice has been challenged in the court.
FMC guidelines require exchange board directors to satisfy fit and proper criteria such as a general reputation and record of fairness and financial integrity.
FMC has seven conditions for disqualification, including involvement in acts of fraud or dishonesty and conviction by a court for moral turpitude or economic offences.