NCDEX hires MM Chitale for forensic audit to look into castor seed trading
1 min read . Updated: 23 May 2016, 10:20 PM IST
PremiumThe forensic audit had followed a directive from the capital markets regulator Sebi
Mumbai: The National Commodity & Derivatives Exchange Ltd (NCDEX) has initiated a forensic examination into the castor seed trading segment where contracts had to be suspended earlier this year because of default fears, said two people familiar with the development.
The forensic audit will be conducted by chartered accountants Mukund M Chitale and Co. (MM Chitale), said the people adding that the forensic audit had followed a directive from the capital markets regulator Securities and Exchange Board of India (Sebi).
In January, the exchange was forced to suspend castor seed contracts fearing default by certain clients after the castor seed prices crashed.
“Post the castor seed crisis, the exchange has submitted a timely report to the regulator. However, for further examination and an independent forensic audit of the matter the exchange has assigned investigations to M.M. Chitale. They are expected to submit their report in the coming week," said the first person cited above requesting anonymity.
A second person confirmed the developments. Based on the report, the commodity exchange will take necessary action and submit its report to Sebi, the second person said. The report would also look into whether there was any negligence on part of the senior management, the person said.
A spokesperson for NCDEX declined to comment saying that the matter is confidential in nature. An email to MM Chitale did not immediately elicit a response.
A Sebi spokesperson did not respond to an email seeking comments.
On 23 May, the Economic Times reported that Sebi has asked the board of NCDEX to examine the senior management’s involvement in the issue. According to the Economic Times report, the matter will be taken up in the exchange’s board when it meets on 26 May to discuss the quarterly results of the company.
“Sebi had sent a letter to the exchange in March this year for examining the role of the management in the matter of suspension of castor seed contracts. The Board has been asked to examine the issue and fix responsibility for failure in assessing the situation," said the second person cited above.
National Stock Exchange of India Ltd (NSE) holds a 15% stake in NCDEX. Life Insurance Corp. of India (LIC) and National Bank for Rural and Agricultural Development (NABARD) hold 11.1% each in NCDEX, a leader in the agricultural commodities segment. Rival MCX is stronger in the metals and oil segments.
