MCX-SX board chaired by former home secretary GK Pillai on Friday appointed Ernst & Young (EY) to carry out forensic audit of the stock exchange since its inception in December 2008 when it began trading in currency futures. The board, which has been taken over by government-appointed representatives (four members appointed by the government and one from the promoter group) also decided to review existing contracts and agreements at the exchange.
The move comes on the back of default in settlement amounting in excess of Rs 5,500 crore in July-August 2013 by National Spot Exchange Limited (NSEL) promoted by the Financial Technologies group, owned by Jignesh Shah. MCX and MCX-SX are also promoted by the same group.
The Forward Markets Commission (FMC) recently stated that Jignesh Shah was unfit to run an exchange, raising the possibility that Sebi may also rule him unfit to run MCX-SX and therefore transfer the ownership to some other group.
The five-member board at MCX-SX headed by Pillai started examining the affairs at the exchange ever since its appointment and has been working out to ensure that everything is clean at the stock exchange which is a public institution.
The move is critical as there have been talks of groups interested in taking over the stock exchange in case the government and regulator decide on that.
When Satyam Computer Services scandal broke out in January 2009, the government-appointed board went for a forensic audit in a bid to establish the quantum of fraud and to ensure that the books of accounts were clean before the company was handed over to a prospective buyer.
In another major move, the board took steps to look into all the existing contracts and agreements and has thus authorised the formation of a team from the exchange to review and renegotiate the existing contracts and agreements. As a result of this, all existing contracts and agreements at MCX-SX with the Financial Technologies group will come under review.
The board also approved the name of Saurabh Sarkar, head of United Stock Exchange for the post of MD and CEO at MCX-SX. While the capital market regulator, Sebi, had already approved his name for the post, the board on Friday said that he would join the exchange shortly.
The board has been looking at ways and means to reduce the cost at the exchange, and on Friday authorised more actions