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Even as the government looks at the possibility of asking Financial Technologies India Ltd (FTIL) to pare down its stake in the Multi Commodity Exchange of India Ltd (MCX) if promoter Jignesh Shah loses the ‘fit and proper’ tag, market and legal sources said such a move may be easier said than done.
This is because Jignesh Shah owns only 45.63% stake in Financial Technologies and it is FTIL, not Jignesh Shah, that holds a 26% stake in the commodity futures exchange, sources said. A senior government official said last week that Financial Technologies might be asked to sell its stake in MCX if the fit-and-proper tag of Jignesh Shah is withdrawn due to the settlement crisis at the National Spot Exchange Ltd, the bourse promoted by him. The government is examining the fit-and-proper status of Jignesh Shah and two other common directors of National Spot Exchange Ltd (NSEL) and MCX, the official had said.
A panel, headed by economic affairs secretary Arvind Mayaram, which is probing the NSEL crisis has suggested a firewall between the management and the board of the commodity exchange to prevent a repeat of an NSEL-like situation.
The move came after a group of secretaries, headed by Mayaram, met for a second time on Friday to discuss the reports submitted by two working groups on the crisis at the NSEL.
Mayaram submitted the report on the NSEL crisis with finance minister P Chidambaram on Monday and also sent it to the Prime Minister’s office on Tuesday, sources said.
Saurabh Kirpal, advocate at Supreme Court, said: “Under the relevant law, there is a distinction between ownership and management of an exchange. While the government may possibly exercise power regarding the management of exchange where it is in the public interest to do so, it certainly can’t direct alteration in the ownership of an exchange (through compulsory share transfer) as ownership of an exchange is governed by the Companies Act and the management aspect, possibly by