FMC issues ‘not fit & proper’ notice to UCX promoter, MD
12 July 2015 5:05 AM IST
After FTIL, regulator Forward Markets Commission has issued a show notice to a promoter of Universal Commodity Exchange as well as its Managing Director, asking why they should be considered ‘fit and proper’ to hold stakes in or run a commodity exchange.
With UCX defunct for a year, the FMC has issued another show cause notice to the bourse asking it to explain why its registration and recognition as a commodity bourse should not be cancelled.
“We have issued ‘not fit and proper’ notices to UCX promoter Ketan Seth and Managing Director Praveen Pillai a few days back. They have been given 15 days time to reply to the notice,” a senior FMC official said. The notices have been issued after the auditing firm KPMG, which conducted <g data-gr-id="31">forensic</g> audit of the UCX, found several irregularities including diversion of the Settlement Guarantee Funds (SDF), the official said.
A forensic audit of UCX was ordered last year after taking into account preliminary findings on gross
financial irregularities and diversion of funds from SDF and on the basis on feedback from the Board of Directors of the exchange. UCX, which was launched in April 2013, discontinued trading in all commodities in July last year after a sharp fall in volumes and probe by the regulator. It offered futures trading in oil seeds, pulses, crude oil and natural gas. UCX is promoted by Commex Technologies chief Ketan Sheth, who owns 40 per cent stake in the exchange. He was not available for comment when contacted.
In 2013, FMC had issued ‘not fit and proper’ notices to Jignesh Shah, founder of FTIL, and three other officials to operate group company MCX, following the NSEL payment crisis. But the notice has been challenged in the court. FMC guidelines require exchange board directors to satisfy fit and proper criteria such as a general reputation and record of fairness and financial integrity.
FMC has seven conditions for disqualification, including involvement in acts of fraud or dishonesty and conviction by a court for moral turpitude or economic offences.
ETFs’ daily average trading value on NSE rises 70-fold in 10 years
In a sign of growing retail interest in exchange-traded funds (ETFs), daily average trading value in such securities on NSE has surged to about Rs 70 crore from less than Rs 1 crore over the past 10 years. An ETF is a marketable security that tracks an index, a commodity, bond or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. “From less than a crore a day, the daily average value in ETF has surged to around Rs 70 crore in 10 years (since 2005) on the exchange,” the National Stock Exchange (NSE) said in a statement.
According to the exchange, equity-based ETFs have seen a sharp jump in volumes in the past decade, which is indicative of “an ever-growing investor interest in capital markets, especially among retail investors”. Besides, CPSE ETFs’ average trading value has doubled in less than a year, it added. ETFs can be bought with a minuscule investment of less than Rs 100 and are a highly retail investor-friendly instrument, NSE said. ETFs experience price changes throughout the day as they are bought and sold. They typically have a higher daily liquidity and lower fees than mutual fund units, making them an attractive alternative for individual investors.
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