- Jignesh Shah's MCX Q2 net profit declines over three-fold to Rs 27 cr over NSEL crisisMCX shares tank over 10 pct on sharp fall in Q2 net profitNSEL promoter Jignesh Shah submits bona fides to FMCFinancial Technologies Group sells Singapore arm SMX for $150 mn, Jignesh Shah gets cash to fight NSEL crisis
Jignesh Shah-owned Financial Technologies-India (FTIL) on Tuesday announced that it has sold its 100% stake in Singapore Mercantile Exchange (SMX) for $150 million to Intercontinental Exchange Group, which owns leading bourses like NYSE Euronext and New York Board of Trade. This is the first instance of FTIL selling stake in any of its overseas exchange holdings after the settlement crisis at the National Spot Exchange (NSEL) came to light in August.
According to persons familiar with the development, the sudden exit of FTIL from SMX could be at the behest of the Monetary Authority of Singapore (MAS), which is the financial services regulator of the country. The regulator has independent directors on the board of SMX and its views are always communicated in a tacit manner, they say.
The announcement comes less than four months after SMX issued a release in the island country that it was “business as usual” for the Singapore-based bourse and that it has “sufficient capital and guarantee funds as well as a robust risk-management mechanism”. While FTIL has established exchanges in various countries like the UAE, Bahrain, Mauritius, South Africa, Kenya and Botswana, SMX was among the few entities that reported significant amount of turnover.
“Singapore is a tightly regulated market with MAS actively monitoring entities under its purview. It will not like any scandal to hit institutions that are directly under its jurisdiction. MAS, in a very tacit manner, would have told the owners that either they sell off or stand the risk of losing their licence,” said a person who has interacted with MAS officials on a number of occasions.
While this could not be independently confirmed, an FTIL spokesperson said that “there was no pressure from MAS”. An email query sent to MAS remained unanswered till the time of going to press.
FTIL is the parent entity of NSEL, which is struggling to meet its settlement obligations amounting to Rs 5,600 crore. The Forward Markets Commission (FMC) has also challenged FTIL's 'fit & proper' tag.
Meanwhile, sources say that it made a lot of sense for FTIL to sell its stake in SMX at a time when the exchange was operational. Any adverse action from MAS on its licence would have led to lower valuations for the venture. The SMX stake was held through Financial Technologies Singapore Pte, a wholly-owned subsidiary of FTIL. SMX Clearing Corporation (SMXCC) was a step-down