The Forward Markets Commission (FMC) is likely to issue a showcause notice to Financial Technologies and three MCX directors in the case related to the National Spot Exchange Limited (NSEL) crisis, reports CNBC-TV18's Varinder Bansal.
The showcause notice is likely to be issued against MCX directors- Jignesh Shah, Joseph Massey and Shreekant Javalgekar. Shah is the head of Financial Technologies. The notice pertains to the ‘fit and proper’ status of the exchange and all the accused are likely to be given 1-2 weeks to respond.
Also read: NSEL appoints Saji Cherian as new MD & CEO
Financial Technologies is the promoter of NSEL that finds itself in deep trouble after the trading on the exchange was stopped on July 31 following payment crisis. The exhange is facing a problem of settling Rs 5600 crore due to 148 members/brokers, representing 13,000 investor clients.
What the FMC is trying to do is to see each and every trail in terms of whether there was any connection between MCX directors and NSEL issues and whether they knew what kind of developments, transactions were going on.
Right now, the FMC is conducting a lot of survey in terms of annual reports, board minutes and each and everything. But the show-cause notice is likely to be sent next week.
This is happening in-line with the legal format in which actually things should happen. There could be more noise on the ‘fit and proper’ clause which has been with MCX and these three directors. So, this remains a very important issue if at all this raises into improper and not fit promoters for MCX. MCX will be one important entity to track.
In terms of board representation guidelines which have come from FMC which was headed by finance ministry, the representation of FT on MCX board will fall down from current level of 4 which is a good sign for MCX as a company.