Jignesh Shah-promoted Financial Technologies (India) said on Saturday it would take two more weeks to complete negotiations and finalise bidders for paring down its stake in Multi-Commodity Exchange (MCX) to 2% from 26%.
“(The board) took note of the progress of the divestment of FTIL’s stake in MCX and noted that all the short-listed bidders continue to be interested in the divestment,” FTIL said in a statement after a board meeting. The board is scheduled to meet again on May 24.
Though FTIL hasn’t named the bidders, sources say they include Reliance Capital, Tata Capital, Kotak Mahindra Bank, Bombay Stock Exchange and Chicago Mercantile Exchange. FTIL will have to finalise at least two bidders— both have to be entities such as commodity or stock exchanges, depositories, banks, insurance firms or public financial institutions—to divest its stake in MCX to comply with the latest guidelines on shareholding for commodity exchanges that have completed five years of operation, issued by the Forward Markets Commission (FMC).
Dilution of its stake in MCX was necessitated after the FMC had declared Shah and FTIL ‘not fit and proper’ after a R5,600-crore settlement crisis at the National Spot Exchange, an FTIL subsidiary.
Pressure on FTIL to pare down its stake in MCX mounted further after the FMC had issued on Tuesday the new guidelines on shareholding, among others, following FTIL’s failure to comply with the regulator’s earlier order to dilute the holding by April 30.
As per the fresh directive, an exchange is empowered to ensure the shareholding of a person declared unfit by the regulatory bodies be reduced to at best 2%, and until it’s done, their voting rights may be ‘extinguished’ and any corporate benefits in lieu of the stake will be withheld. To further pressure MCX to act tough on FTIL, the FMC has asked the exchange to stop all fresh contracts until its order on the stake dilution is complied with.
FTIL said its board also took note of the sharing of an executive summary of a PricewaterhouseCoopers (PwC) report on related-party transactions at MCX, the clarification issued by FTIL on the report, the revised norms for commodity exchanges, the resignation of the MD and the chief executive of MCX, Manoj Vaish, and the updates and clarifications issued by MCX on the PwC report.
An executive summary of the PwC report, released on April 29, said MCX had spent about R649 crore over the years for