The Multi Commodity Exchange of India today said the voting rights of promoter Financial Technologies (India) Ltd (FTIL) will be capped at 2 percent with immediate effect. The decision was taken yesterday at a board meeting that considered an action plan to comply with the order of the Forward Markets Commission (FMC) directing the MCX to ensure that FTIL reduces its stake in the exchange to 2 per cent from 26 percent, according to a BSE filing.
The FMC on December 17 declared FTIL and its chief Jignesh Shah unfit to run any exchange, including the MCX, following a Rs 5,600-crore payment crisis at the National Spot Exchange Ltd (NSEL), a group company. The regulator said FTIL is not 'fit and proper' to hold more than a 2 percent stake in the MCX. FTIL, which had been given a month's time until January 26 by the MCX board to divest its stake, did not comply on the grounds that it had challenged the FMC's order in the Bombay High Court.
Also Read: After MCX, will FTIL have to let go of MCX-SX?
In the BSE filing, MCX said the board decided that the exchange would "call upon FTIL to immediately divest shares in excess of the said 2 percent. "Besides, the FTIL is being informed that in view of the FMC order, with immediate effect, any voting in excess of the said percentage by them would not be taken into consideration."
The board decided that it would write to the FTIL clarifying that with effect from the date of the FMC's order, it "could no longer hold 2 per cent or more of the equity share capital of the MCX." "As the order of the FMC is an order of a civil court under the provisions of Section 4 of the FCR Act, both FTIL and the exchange are duty bound to comply with that order," MCX said in the filing.
The board said the exchange would approach "appropriate authorities" to implement the FMC order. The NSEL, which is promoted by FTIL, has been defaulting on payments to 13,000 investors. It plunged into the payment crisis after halting trading in commodities from late July last year on a government directive.
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