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Fit & Proper Case: Sebi wants FTIL to reply in 10 days

Sebi issued the notice in December, questioning its 'fit and proper' status to own and operate MCX-SX.

BS Reporter  |  Mumbai 

Financial Technology

The Securities and Exchange Board of India (Sebi) asked Financial Technologies (India) Ltd (FTIL), founder of the MCX Stock Exchange, to give a written reply before March 16 on the showcause notice issued to it, sources said.

Sebi issued the notice in December, questioning its ‘fit and proper’ status to own and operate MCX-SX.

Sources said the capital regulator has asked the Jignesh Shah-promoted company to explain why it shouldn’t be asked to pare its holding in MCX-SX. And, to state the impact of a ‘restructuring plan’ to be undertaken by the company on MCX-SX.

Last week, FTIL set up a committee to propose a restructuring plan for itself. The aim is to divest its holdings in exchanges, including a 24 per cent stake in the Multi Commodity Exchange of India (MCX). It comprises two non-executive independent directors, Venkat Chary and S Rajendran, along with legal advisor Berjis Desai and FTIL’s wholetime director, Dewang Neralla.

The Sebi showcause followed FTIL’s involvement in the National Spot Exchange payment crisis. After which, the Forward Commission, the commodity regulator, declared FTIL not ‘fit and proper’ to own a substantial stake in MCX. FTIL has appealed against this to the high court here. The matter is pending but the HC has declined to stay the FMC order.

FTIL and MCX own 4.99 per cent stake each and also warrants, amounting to nearly 69 per cent after conversion, in MCX-SX.

The FMC matter is likely to come for a hearing on Wednesday. Meanwhile, FTIL's next hearing before Sebi is scheduled for March 17, a day after the deadline for giving a written reply.

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First Published: Thu, March 06 2014. 22:47 IST
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