Mumbai, March 31: Financial Technologies Ltd (FTIL) today threatened to take legal action against Multi Commodity Exchange of India (MCX) if the latter goes ahead with its plan to come out with an issue of preferential shares.
FTIL, which is the promoter of MCX, currently has a stake of 26 per cent in the commodity bourse. It has been directed by the Forward Markets Commission (FMC) to bring its holding down to 2 per cent following the payment crisis at the National Spot Exchange Ltd (NSEL).
Even as FTIL has begun the process of divesting its stake in MCX, the latter today announced that its board would meet on April 3 to consider preferential allotment of shares.
“Such a move is vindictive in nature to support certain vested interest and deprive FTIL of its level-playing field to sell its shares…It appears that the move by the MCX board is an attempt to derail Financial Technologies’ move to divest its equity in a fair and transparent manner. FTIL sees such a move with a clear agenda of depriving FTIL of its propriety rights at any cost,” FTIL said while questioning the timing of the preferential allotment.
The company said that despite holding 26 per cent in MCX, it has not received any communication from MCX to this effect. It said it would take necessary legal action in the interest of its shareholders.
FTIL said it had already challenged the FMC’s order that declared it unfit to run any commodity exchanges.
“Before the final decision by the high court is taken as to whether FMC is right in declaring FTIL is not fit and proper, FTIL cannot be legally deprived of its rights. Without prejudicing our rights, FTIL has already announced its commercial decision to divest its equity holding in MCX and received a good response from various global and local investors as initial expression of interests,” it said.
After the payment crisis at the NSEL, the regulator FMC has directed national level bourses, including MCX, to reconstitute their boards in line with the revised guidelines. The MCX board meeting to be held on April 3 will also consider the alteration of main objects clause of the memorandum of association and articles of the exchange.
MCX is the country’s largest commodity exchange and has an 86 per cent market share in terms of the value of commodities traded in the futures market. The average daily turnover in the first nine months of this fiscal stood at Rs 30,600 crore.