The Forward Markets Commission (FMC) issued a show cause notice on October 4 to Financial Technologies (FTIL) and Jignesh Shah, chairman & group CEO of FTIL, among others, questioning their “fit & proper” status. If the status is withdrawn, FTIL would need to divest it's 26% holding in commodity futures exchange MCX. In an interview with Ira Dugal and Ashish Rukhaiyar, FMC chairman Ramesh Abhishek explains the decision to issue the notice and the likely fallout of the R5,600 crore settlement crisis at the National Spot Exchange Limited.
FMC has issued a show-cause notice to the National Spot Exchange and its promoters questioning its fit & proper status. Is this FMC’s final step in some ways?
Actually, we had already given an indication in August when we wrote to the board of NSEL that if it did not meet its settlement obligations then the “fit and proper” status will be at serious risk. So, we waited and saw the developments that happened in the last one and a half months. Now, we think, is the right time to issue a show-cause notice to them.
The former head of NSEL has stated that he is the one responsible for the settlement crisis and the board of directors and the promoters do not have any role in it. But FMC chose to issue the notice to FTIL along with three individuals—Jignesh Shah, Joseph Massey and Shreekant Javalgekar. Why?
We have received a lot of reports and information. We have the report of the forensic auditor. We also got a report from SGS. We have also reviewed the minutes of the meeting of the board of directors of NSEL, FTIL and IBMA (Indian Bullion Markets Association). Based on all this information, we thought that we must ask them to show cause whether they continue to be fit and proper to be a shareholder in our regulated exchange, MCX, and whether the three directors also continue to be fit and proper. They will have to reply. We will review the reply and then decide.
So, this would impact FTIL as a company and the three
Correct. FTIL as a legal entity is the shareholder in MCX. They are the anchor investors. The notice has been issued to them in that capacity and the three directors have been issued notice in their personal capacity. To be a shareholder in any regulated exchange or to be a director on the