The Securities and Exchange Board of India (Sebi) has told Financial Technologies (India) (FTIL) to submit response to its show-cause notice by March 17.
Sebi had issued a show-cause notice to the Jignesh Shah-promoted entity on December 20 asking it to explain why it should not be directed to divest its 5% stake in MCX Stock Exchange (MCX-SX). FTIL also holds minority stake in the Delhi Stock Exchange and the Vadodara Stock Exchange — bourses that fall under Sebi’s purview.
The Sebi notice was in wake of an order issued by the Forward Markets Commission (FMC) which said the listed company is unfit to hold a stake in any exchange in the country. FTIL is the promoter of the National Spot Exchange (NSEL), which is struggling to meet its settlement obligations amounting to R5,600 crore.
Sources say Sebi wants FTIL to file a formal response to the notice before a final order is passed. It is believed that Sebi wants to expedite the proceedings after FTIL failed to get any interim relief from the Bombay HC last week.
FMC, in its order, also said FTIL cannot continue as an anchor shareholder in an exchange. Currently, FTIL holds 26% in Multi Commodity Exchange of India (MCX). “In the public interest and in the interest of the commodities derivatives market, the commission (FMC) holds that FTIL is not a ‘fit-and-proper person’ to continue to be a shareholder of 2% or more of the paid-up equity capital of MCX,” said the 80-page order issued in December.