NSEL crisis: PwC to conduct special audit of MCX

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Forward Markets Commission has approved the appointment of PricewaterhouseCoopers to conduct a special audit of Multi Commodity Exchange of India. Forward Markets Commission has approved the appointment of PricewaterhouseCoopers to conduct a special audit of Multi Commodity Exchange of India.
SummaryNSEL, a bourse owned by MCX promoter FTIL, is facing payment settlement problems.

Forward Markets Commission (FMC) has approved the appointment of PricewaterhouseCoopers (PwC) to conduct a special audit of the Multi Commodity Exchange of India Ltd (MCX) and check if there were any related-party deals.

After the settlement crisis was unearthed at the National Spot Exchange (NSEL), the commodity futures market regulator had directed in September for a special audit of MCX to examine if there was trade by related parties, especially the Indian Bullion Markets Association (IBMA) and the National Bulk Handling Corporation (NBHC). NSEL, a bourse owned by MCX promoter Financial Technologies (India)(FTIL), is facing payment settlement problems after it suspended trading in July-end following government direction due to violation of norms.

According to FMC’s latest report released on Friday, the regulator approved the appointment of PwC on November 19, as suggested by the audit committee of the exchange’s board. The terms of reference also include checking of expenditure items such as donations and warehousing charges. The auditor will probe if NSEL subsidiary IBMA and FTIL arm NBHC traded on MCX.

The regulator said it has also approved the appointment of an independent director and four shareholder directors on the MCX board. Satyananda Mishra, a retired IAS officer, has been hired as an independent director on the board until March 31, 2016. His appointment as the chairman of the board has also been cleared.

These apart, it has cleared the appointment of G Anantharaman, a retired IRS officer, as chairman of the audit committee and retired IAS officier Ravi Kamal Bhargava as chairman of the remuneration committee of the exchange.

SBI deputy managing director and group executive BV Chaubal, Canara Bank general manager MAK Prabhu, Bank of Baroda general manager Sanjay Agarwal and Union Bank of India general manager KN Reghunathan have been hired as shareholder directors on the MCX Board for 2013-14, or up to the date of the annual general meeting, the regulator said.

Commodity exchanges’ turnover drops Commodity futures exchanges continued to be under pressure as their turnover tumbled by 34% during the April-November period to R76.77 lakh crore from a year before, according to the data released by the regulator. Analysts have blamed a 0.01% transaction tax on primarily non-farm commodity derivatives, proposed in the Budget for 2013-14 and implemented from July, for the drop in volumes this fiscal. With the imposition of the tax on the seller, costs more than tripled from R1.60 on a transaction value of R1,00,000, MCX executives had said earlier.

Farm commodities’ turnover dropped 33% to R10.09 lakh crore until November 30, while that of bullion and metals crashing 36% to R34.18 lakh crore and R13.89 lakh crore, respectively. Energy items, too, saw turnover decline 27% to R18.60 lakh crore in the first eight months of this fiscal.

Govt monitoring NSEL case, says minister

Government is monitoring the progress of follow-up action in the case regarding NSEL payment crisis on the basis of report submitted by a special team, Parliament was informed on Friday.

“The progress of the follow up action is being monitored through their action taken notes and meeting at higher level,” minister of state for finance Namo Narain Meena told Lok Sabha.

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