Commodity market regulator FMC has declared Jignesh Shah and his company Financial Technologies (India) Ltd (FTIL) not fit and proper to run any exchange in the country.
With the order,Shah and FTIL will sell their 26 per cent promoter holding in Multi-Commodity Exchange (MCX) as they cant hold more than 2 per cent in the bourse.
However,the FMC order has not indicated how and when Shah and FTIL will dilute their stake in MCX. The board of MCX is likely to take furthers steps on the exit of the promoter,sources said.
Shah and MCX will also be declared unfit to run MCX-SX as a promoter found unfit to run one exchange will not eligible to remain as promoter of another exchange under the Sebi purview.
The FMC also declared Shah,Joseph Massey,former MD of MCX-SX,and Shreekant Javalgekar,former MD of MCX,not fit to hold any management position in any exchange recognised by the government of India and FMC. Preparing for the grounds for the exit of Shah and FTIL,FMC had already professionalised the board of MCX and Sebi in the case of MCX-SX. Shah,chairman of FTIL which owns National Spot Exchange Ltd (NSEL),founded MCX in November 2003 and went on to set up an exchange this year.
The FMC ban came in the wake of a payment crisis at NSEL which is now being probed by multiple agencies.
Keeping in view the foregoing observations and the facts which reveal misconduct,lack of integrity and unfair practices on the part of FTIL in planning,directing and controlling the activities of NSEL,we conclude that FTIL does not carry a good reputation and character,record of fairness,integrity or honesty to continue to be a shareholder of MCX, FMC said.
On the NSEL crisis,FMC said,It misinterpreted the conditions stipulated in the exemption notification in collusion with a handful of members,which ultimately culminated in a massive fraud involving Rs 5,500 crore,which has the potential effect of eroding trust and confidence in exchanges and financial markets.