There could be more trouble in store for Jignesh Shah, the promoter and head of Financial Technologies India Ltd (FTIL), if the recommendations of a panel headed by economic affairs secretary Arvind Mayaram are accepted.
The Arvind Mayaram panel, which was formed to look into the alleged violation of laws by the National Spot Exchange (NSEL) and to recommend measures to stem any possible systemic impact, has suggested that ownership and management of Financial Technologies needs to be “segregated” as the listed entity enjoys a “dominant position” in the exchange space.
“...there is a need to segregate ownership and management of Financial Technologies and the exchanges promoted by it and to apply more stringent ‘fit and proper’ criteria to the entire senior management of the revamped structure,” states the report.
Shah, who is currently the chairman and group CEO of Financial Technologies, is also part of the “promoter group” of FTIL that holds a little more than 45% stake in the company. Shah directly holds 18% according to the shareholding pattern available on the BSE as on September 30, 2013. However, certain other entities classified within the “promoter group” are also believed to be held by Shah.
If the recommendations were to be accepted, Shah would need to forgo his management position at Financial Technologies. “This much desired transformation of the governance structure, including the Board and senior management of Financial Technologies and other connected companies, will need to be non-disruptive but swift to ensure the stability and integrity of the capital and commodity markets,” the report adds.
“We are not privy to the committee report you are referring and hence it would not be appropriate to comment on the same. However, all the products and services are subject to and in compliance with respective regulatory framework,” said an Financial Technologies spokesperson.
Shah and Financial Technologies have been named as accused in the first information report (FIR) registered with the Mumbai Police, which is looking into the Rs 5,600-crore settlement crisis at NSEL.
According to the Special Team of Secretaries (STS) headed by Mayaram, the last couple of years saw Financial Technologies achieving a “dominant position in the exchange space” by promoting and running multi-asset class exchanges – Multi Commodity Exchange of India Ltd (MCX), MCX Stock Exchange (MCX-SX), Indian Energy Exchange (IEX).
Further, Financial Technologies also enjoys a