The board of the Multi Commodity Exchange of India Ltd (MCX) asked promoter Financial Technologies India Ltd (FTIL) to reduce its stake to 2 per cent, in accordance with the regulator's order.
Last week, the Forward Markets Commission (FMC) had issued an order declaring FTIL and its chief Jignesh Shah unfit to run any exchange, including the Multi Commodity Exchange of India Ltd (MCX), following a Rs 5,500 crore payment crisis at group company National Spot Exchange Ltd (NSEL).
The regulator also charged Shah with being the "highest beneficiary of the fraud perpetrated" at NSEL. The NSEL, which is promoted by Financial Technologies, has been defaulting on payments to 13,000 investors. It was plunged into the payment crisis after halting trading in commodities from August 1 on a government directive.
The MCX board of directors at a meeting today decided to advise Financial Technologies to implement the FMC order by reducing its stake in the company to 2 per cent or below from 26 per cent within a period of one month, the company said in a BSE filing. The country's largest commodity exchange also decided to withdraw the representation of Financial Technologies official Miten Mehta on its board, as per the regulator's directions. FTIL and Shah have already moved the Bombay High Court challenging the FMC order. Their petition seeks to quash the FMC order declaring FTIL not a 'fit and proper person' to hold anything more than 2 per cent of the equity in MCX.
Shah founded MCX in November 2003 and then went on to set up a stock exchange this year. He is currently the Chairman of Financial Technologies, which owns and runs NSEL. Shah quit as Vice-Chairman and Shareholder Director of MCX Stock Exchange on October 9. A few weeks later, he resigned as MCX Vice Chairman.
MCX shares rose 0.03 per cent to close at Rs 472.60 on the BSE. Its current market capitalisation is Rs 2,410 crore.