This Article is From Jul 22, 2014

Sebi Relaxes Norms for Financial Tech to Divest Stake in MCX

New Delhi: To facilitate divestment by erstwhile promoters of MCX, capital market regulator Securities and Exchange Board of India (Sebi) has relaxed lock-in period for such stake sale in the commodity bourse.

Sebi has allowed Financial Technologies India Ltd (FTIL) to bring down its stake to 1.99 per cent in MCX.

The relaxation has been given in order to allow FTIL to comply with directions from the Forward Markets Commission (FMC), the commodity market regulator, issued in December 2013.

In a communication to MCX on Monday, Sebi said the relaxation has been granted considering the peculiar nature of the case and cannot be construed as a precedent to obtain similar exemptions in future.

It would be applicable "only for the limited purpose" to enable FTIL comply with the FMC order.

"Post divestment, MCX shall ensure that FTIL continues to lock-in at least 1.99 per cent of the paid up capital of MCX for the unexpired period of lock-in," Sebi said.

Under the Sebi (ICDR) Regulations, FTIL is to have at least 20 per cent of the post-offer equity share capital of MCX as promoters' contribution till March 2015.

MCX had sought relaxation from this rule.

In the wake of the Rs 5,600-crore payment crisis at group firm National Spot Exchange Ltd (NSEL), FMC had ruled that FTIL was 'unfit' to run any bourse.

Commodity market regulator FMC had also asked FTIL to reduce its stake in MCX to 2 per cent from 26 per cent.

On Sunday, FTIL announced sale of a 15 per cent stake in MCX to Kotak Mahindra Bank for Rs 459 crore. FTIL originally held a 26 per cent stake in MCX.

Earlier this month, it had sold a 6 per cent stake in MCX in two rounds for about Rs 220 crore, bringing down its shareholding to 20 per cent.

After an agreement with Kotak Mahindra bank to sell the 15 per cent stake, FTIL is left with a 5 per cent stake in MCX.