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Financial Technologies ruled not 'fit and proper' by Sebi, ordered to divest stake in MCX-SX

Mar 20 2014, 09:42 IST
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Financial Technologies is the flagship firm of Jignesh Shah-led group and one of the promoters of MCX-SX. Reuters Financial Technologies is the flagship firm of Jignesh Shah-led group and one of the promoters of MCX-SX. Reuters
SummaryFinancial Technologies, promoted by Jignesh Shah, is one of the original promoters of crisis-hit MCX-SX.

In a major setback to crisis-hit Jignesh Shah-led Financial Technologies group, Sebi today ruled it is not "fit and proper" to own stakes in any stock exchange and directed it to divest existing holdings in MCX-SX and four other entities.

Besides Multi Commodity Exchange of India Ltd Stock Exchange, the group holds equity in its rival NSE, Delhi Stock Exchange (DSE), Vadodara Stock Exchange (VSE) and MCX-SX Clearing Corporation (MCX-SX CCL) and all these holdings would need to be disposed off within 90 days.

The Securities and Exchange Board of India (Sebi) order comes at a time when the MCX-SX is under the scanner of CBI for alleged irregularities in granting of licence to it in 2008 as well as subsequent renewals.

Financial Technologies (India) Ltd is the flagship firm of the Jignesh Shah-led group and one of the original promoters of MCX-SX.

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In a late evening order, Sebi has said that Financial Technologies is not a "fit and proper person to acquire or hold any equity share or any instrument that provides for entitlement for equity shares or rights over equity shares at any future date, in a recognised stock exchange or clearing corporation".

This would be applicable for both direct and indirect holdings of Financial Technologies in stock exchanges and clearing corporations.

Cracking the whip, the Securities and Exchange Board of India (Sebi) has directed FTIL to offload direct and indirect holdings in in MCX-SX, MCX-SX CCL, DSE, VSE and NSEIL within 90 days.

Besides, Financial Technologies and the entities through whom it indirectly holds equity shares or any instrument entitling voting rights in MCX-SX, MCX-SX CCL, DSE, VSE and NSEIL shall cease to be entitled to exercise voting rights in respect of those shares or instruments, with immediate effect, according to Sebi.

Sebi had issued a show cause notice on "fit and proper" status of FTIL and the latter submitted its response earlier this week.

The show cause notice followed commodity market regulator FMC, in December last, asking how Shah and FTIL were 'fit and proper' to run any exchange in the wake of Rs 5,600 crore NSEL payment crisis.

FTIL and MCX were among the original promoters of MCX-SX, the country's youngest exchange, and following a restructuring they were shifted to public shareholder category.

The

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