Home / Companies / People /  Manoj Vaish quits as MD and CEO of MCX

Mumbai: Manoj Vaish has resigned as the managing director and chief executive officer of Multi Commodity Exchange of India Ltd (MCX) after just three months on the job—the latest departure in an executive exodus that comes at a time when parent Financial Technologies (India) Ltd (FTIL) is under mounting regulatory pressure to pare its stake in the exchange from 26% to 2%.

Vaish has resigned on health grounds, MCX said in a statement on Thursday. He will work with the board to ensure a smooth transition, the company said. Vaish did not respond to a text message sent on his mobile phone.

His exit follows a string of departures by senior executives since the start of 2014 , after the commodities market regulator Forward Markets Commission (FMC) in December found FTIL not “fit and proper" to run an exchange and ordered it to reduce its stake. FMC also ordered a forensic audit on MCX by PricewaterhouseCoopers (PwC); the regulator acted after a 5,574.34 crore payments crisis at National Spot Exchange Ltd, in which FTIL holds a 99.9% stake.

Chief financial officer (CFO) Hemant Vastani, company secretary P. Ramanathan, senior vice-president Sameer Patil and executive vice-president (business development) Sumesh Parasrampuria have all resigned since January. The company has appointed a new CFO and a company secretary and is in the process of finding a replacement for Parasrampuria.

Vaish’s departure was announced a day after FMC said it would meet on 6 May to review the progress made by MCX in complying with the order to reduce its parent’s stake to at least 2% and the action taken by it on PwC’s findings, increasing the urgency for the completion of the divestment.

The appointment of a new CEO is likely to take time given that FTIL is in the midst of selling a 24% stake, said a person familiar with the development, requesting anonymity because of the sensitive nature of the matter. Deputy managing director Parveen Kumar Singhal is likely to act as chief executive until a managing director is named, said the person. Singhal is currently on leave until July.

Industry experts said finding a person to head the crisis-hit exchange would be difficult.

“There is an acute scarcity of people who can take leadership roles in market infrastructure intermediaries like stock and commodity exchanges," says M.S. Sahoo, a former whole-time member of the Securities and Exchange Board of India and now secretary at the Institute of Company Secretaries of India.

“The role involves too many complexities wherein the person needs to take care of members, regulators and at the same time manage surveillance, market development, risk mechanisms," said Sahoo.

On Tuesday, MCX made public the summary of PwC’s special audit, which raised questions about so-called related-party transactions and asked if dealings between the exchange and its parent had been conducted at “arm’s length".

Relations between MCX and FTIL have soured following the payments crisis on NSEL that resulted in regulatory strictures forbidding the group’s founder Jignesh Shah from running any exchange while leaving MCX with a new board.

PwC found that the operations of MCX, which listed in 2012, remained significantly dependent on FTIL and its group companies.

The report disclosed that MCX and Financial Technologies group had about 235 related parties and around 676 additional entities either directly or indirectly related to MCX or the Financial Technologies Group, FTIL’s key management personnel or their immediate family members by virtue of being common directors or shareholders.

The report said that of the 676 related parties, five were recipients of funds worth at least 18.34 crore from MCX.

According to the PwC report, the terms and conditions and the price discovery mechanism for related-party transactions were either limited or not robust, creating doubts whether such transactions were at all done on an arm’s-length basis.

MCX shares fell 7.1% to 533.55 on the BSE on Wednesday while the benchmark Sensex fell 0.22% to 22,417.80. The markets were closed on Thursday because of a public holiday.

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