MCX-SX: Sebi may soon pass order on FTIL's fit and proper criteria, says report

Sebi may soon pass an order on the 'fit and proper' status of erstwhile promoters of MCX-SX, which is already under CBI scanner for alleged irregularities in grant of licence to the bourse in 2008.

Jignesh Shah-led Financial Technologies (India) Ltd (FTIL) submitted its reply earlier this week to the show cause notice issued by Sebi on the 'fit and proper' status. The regulator would take the response into consideration before passing the final order, sources said.

Sebi issued the show cause notice after commodity market regulator FMC in December asked how Shah and FTIL were 'fit and proper' to run any exchange in the wake of Rs 5,600 crore NSEL payment crisis.

FTIL and MCX were among the original promoters of MCX-SX, the country's youngest exchange, and following a restructuring they were shifted to public shareholder category.

The rejig was ordered by Sebi in the wake of the crisis at National Spot Exchange Ltd (NSEL), part of Shah-led group. In its response to Securities and Exchange Board of India (Sebi), FTIL has submitted that FMC order is sub judice and has been challenged in the Bombay High Court, sources said.

Besides, FTIL has informed Sebi that it wants to participate in the rights issue of MCX-SX mainly since its stake would come down to about 1.8 per cent post issue, sources added.

Last week, CBI registered a Preliminary Enquiry against former Sebi chief CB Bhave and former member K M Abraham with regard to alleged irregularities in granting licence to MCX-SX and subsequent renewals.

Following the development, former Home Secretary G K Pillai, who was appointed as public interest director and Chairman of MCX-SX, stepped down.

Former LIC Chairman Thomas Mathew T took over as new Chairman of MCX-SX and Ashima Goyal as new vice chairperson. The stake of those belonging to public category and holding more than 1 per cent interest stood at over 27 per cent at the end of December quarter.

Pillai, while quitting the bourse on March 15, had cited personal reasons for the decision.

"I took charge of the exchange at a time when it had several challenges. However, in the last few months we have managed to appoint a new board and MD & CEO to take charge of the exchange.

"The ongoing rights issue is on track and we have received confirmation from several shareholders for participation," he had said.