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For the second time in three months, the Securities and Exchange Board of India (Sebi) is looking into the trading pattern of the Financial Technologies India Ltd (FTIL) shares to ascertain whether some entities traded in the shares of the Jignesh Shah-promoted entity on the basis of insider information.
Sources familiar with the development said the capital market regulator is looking at the trading data for Monday (November 18) when shares of FTIL surged nearly 20% even though the company had not disclosed any material information affecting the stock price. Volumes on the stock were also more than 10 times higher on Monday compared with the previous trading session.
However, the next day, the company announced that it had sold 100% stake in Singapore Mercantile Exchange (SMX) for a sum of $150 million and money was to be used for repayment of foreign currency loans and external commercial borrowings.
“The surge in the stock price on Monday when seen in the context of the timing of the announcement on Tuesday gives rise to suspicion,” said a person familiar with the development. “Obviously some people were aware of the negotiations and also the outcome. The surveillance data will be analysed to form a conclusion,” he added wishing not to be named.
On Monday when share rose 20%, the street was abuzz with talks that an “important” announcement from FTIL was likely later in the day. Market players add many were already speculating the announcement could be related to FTIL selling stake in one of its overseas ventures.
Sources say the regulator is also aware of the chain of events and is probing if certain entities were privy to the stake sale information on Monday and traded shares accordingly. On Tuesday, the announcement was made at 8:36 am before the markets opened for trading.
Data is being collected from the stock exchanges as also from Sebi’s internal Integrated Market Surveillance System (IMSS).
Ever since the settlement crisis at the National Spot Exchange (NSEL) has come to light, this is the second time the regulator is probing the trade details of FTIL, which is the parent entity of the spot exchange.
On August 1, a day after NSEL suspended trading in all contracts barring e-series, FTIL share fell 65% while shares of Multi Commodity Exchange (MCX) lost 20%. FTIL holds 26% stake in the commodity futures exchange. The regulator probed the trading data of certain entities to ascertain whether they had any advance information about problems at NSEL. Trading pattern of brokerage firms with significant exposure to NSEL were specifically looked into. The outcome of the enquiry has not been disclosed by the regulator.