FTIL's stake sale: Forward Markets Commission to meet on May 6

Commodity markets regulator FMC will meet on May 6 to decide the next course of action against MCX as the deadline for complying with its order to ensure that erstwhile promoter FTIL reduces its stake in the bourse expires on Wednesday.

"The Commission will meet on May 6 to take a view and decision on the compliance status of MCX on implementation of the 'fit and proper' order against FTIL and actions taken on the (PwC) audit report of MCX," Forward Markets Commission Chairman Ramesh Abhishek told PTI.

The FMC had warned MCX that it would not renew contracts, allow new contracts and eventually take away the licence to run the bourse if the commodity exchange does not comply with regulatory norms.

The FMC, which went into the running of group company National Spot Exchange Ltd following a Rs 5,500-crore (Rs 55-billion) payment crisis, had issued an order in December declaring Financial Technologies India Ltd 'not fit and proper' to hold more than a 2 per cent stake in Multi Commodity Exchange.

The FMC also asked MCX to take concrete steps towards this direction and gave it a deadline till today to ensure FTIL pares its stake to 2 per cent from the current 26

per cent in the commodity bourse.

Although FTIL set up commodity exchange MCX, it no longer controls MCX after the FMC's order.

FTIL started the divestment process but it could not finalise the bidders on April 25 as potential buyers sought more time to submit binding offers on grounds that the MCX is not providing key information to them.

Abhishek said the FMC will also deliberate on the actions initiated by MCX on the audit report prepared by PricewaterhouseCoopers', which examined if NSEL arm Indian Bullion Markets Association and FTIL subsidiary National Bulk Handling Corporation traded on the MCX.

As per the extract of the PwC audit report released yesterday, MCX entered into agreements with related trading parties and paid about Rs 709 crore (Rs 7.09 billion) to FTIL and group firms without following proper documentation process.

MCX had released parts of the PwC report on the BSE with disclaimers that ‘contents are yet to be independently verified by the company’ and ‘the contents should not be construed to be allegations on the parties named.’

However, FTIL rejected the PwC audit report and said it would take legal action against the bourse and PwC for painting a wrong picture in the report.