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Home / Companies / FTIL board to take decision regarding MCX stake divestment on 24 May

Mumbai: The board of Financial Technologies (India) Ltd (FTIL) said on Saturday that it will reconvene on 24 May to finalize the decision regarding divestment of its stake in Multi Commodity Exchange of India Ltd (MCX).

The board of directors met on Saturday to take note of the progress of the divestment process and noted that “all the shortlisted bidders continue to be interested in the divestment". The board, however, said that further time needs to be given to the divestment process after the release of the summary of the special audit report of MCX by PricewaterhouseCoopers (PwC).

“The board deliberated on the divestment process and decided that further time need to be given in the light of the developments that have come on May 9, 2014. The board decided to give two weeks time to complete the discussions and negotiations with the bidders and attain the final bid," said a stock exchange announcement made by FTIL.

On Friday, MCX, in a statement to the stock exchanges, said that it has “already provided the material information forming part of the special audit report prepared by the audit firm". Investors who evinced interest in buying the stake in MCX had asked that the findings of the PwC special audit be made public on grounds that it contained potentially price-sensitive information.

The board of FTIL also took note of the resignation of Manoj Vaish, managing director and chief executive officer of MCX and the revised shareholding and ownership norms for commodity exchanges announced by the Forward Markets Commission (FMC).

FTIL has a 26% stake in MCX, but needs to divest the stake in order to comply with a 17 December order by FMC that declared FTIL unfit to run an exchange. The order came following investigations in the wake of a 5,574.34 crore payment crisis at National Spot Exchange Ltd (NSEL), in which FTIL holds a 99.9% stake.

Meanwhile, the commodities market regulator has already barred the exchange from launching any new contract till the divestment process is completed. In an exchange notification on 8 May, MCX said that FMC has communicated to it that “no new contract will be approved by the commission (FMC) for trading in MCX" and that the “contract launch calendar for 2015 will be kept in abeyance".

On 19 April, The Economic Times had reported that Reliance Capital Ltd had emerged as the highest bidder for the 24% stake in MCX. Other bidders in the fray include Kotak Mahindra Bank Ltd, Tata Capital Ltd, the Chicago Mercantile Exchange and Warburg Pincus, the report said.

The special audit of MCX conducted by PwC has raised questions around so-called related party transactions and questioned whether dealings between the exchange and its parent FTIL had been conducted at “arm’s length".

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