MCX limits its promoter FTIL’s voting rights to 2%

The Multi Commodity Exchange of India (MCX) said on Saturday that the voting rights of promoter Financial Technologies (India) Ltd (FTIL) will be capped at 2 per cent with immediate effect. The decision was taken at a board meeting that considered an action plan to comply with the order of the Forward Markets Commission (FMC) directing MCX to ensure that FTIL reduces its stake in the exchange to 2 per cent from 26 per cent, according to a BSE filing.

FMC on December 17 declared FTIL and its chief Jignesh Shah unfit to run any exchange, including the MCX, following a Rs 5,600-crore payment crisis at group company National Spot Exchange Ltd (NSEL). The regulator said FTIL is not ‘fit and proper’ to hold more than a 2 per cent stake in the MCX.

FTIL, which had been given a month’s time until January 26 by the MCX board to divest its stake, did not comply on grounds that it had challenged the FMC order in the Bombay High Court. In the BSE filing, MCX said the board decided that the exchange would ‘call upon FTIL to immediately divest shares in excess of 2 per cent’.

‘Besides, FTIL is being informed that in view of the FMC order, with immediate effect, any voting in excess of the said percentage by them would not be taken into consideration.’ The board will write to FTIL that with effect from the date of the FMC’s order, it ‘could no longer hold 2 per cent or more of the equity share capital of the MCX’.

‘As the order of the FMC is an order of a civil court under the provisions of Section 4 of the FCR Act, both FTIL and the exchange are duty bound to comply with that order,’ MCX said in the filing. The board said the exchange would approach ‘appropriate authorities’ to implement the FMC order.