The Forward Markets Commission (FMC) has sought detailed comments from the Multi Commodity Exchange (MCX) on the findings of PricewaterhouseCoopers (PwC) on alleged violations in its books.
In its interim report, PwC has indicated that MCX has violated several provisions of the Companies Act and Sebi guidelines. While the revelations have triggered a multi-agency probe into the affairs of the exchange, it also implies that MCX may find itself subjected to further legal proceedings.
According to a report furnished to the FMC, several irregularities in the functioning of MCX have been found, which allegedly include huge payments without backing of proper vouchers and related party transactions.
While FMC has asked the MCX to furnish its comments on the findings of the report, it is learnt that Sebi and MCA would investigate alleged violations of the Companies Act and market regulator’s guidelines as pointed out by PwC. FMC is learnt to have written to Sebi, indicating alleged violations of listing agreement provisions and disclosure norms in the run up to the bourse’s initial public offering, in 2012.
MCX’s new management is studying the report and is likely to offer its comments to FMC within a fortnight. PwC’s forensic audit pertains to before the NSEL payment crisis broke out. The bourse was then run by a board which included Financial Technologies India Ltd (FTIL) promoter Jignesh Shah, former MCX Stock Exchange (MCX-SX) chief Joseph Massey and Shreekant Javalgekar. The trio was subsequently declared misfit to run the exchange. FMC has ordered the reduction in FTIL stake to less than 2 per cent in MCX from the current level of 26 per cent.
The FMC is considering introducing modifications in the corporate governance norms and examining the shareholding guidelines to make them transparent and strong. According to FMC chairman Ramesh Abhishek, the forward markets regulator is examining the shareholding pattern of exchanges and the role of anchor investor.
Among other measures being considered by the FMC are capping shareholding of anchor investors in commodity exchanges to 15 per cent or lower and simplifying rules on transfer of shares and relax restrictions on shareholders from trading on the bourse platform. Besides, the regulator is also considering having a single depository for all the commodity exchanges.