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Mumbai: Forward Markets Commission (FMC) on Tuesday said it will not approve new contracts for trading on Multi Commodity Exchange of India Ltd. (MCX) and the contract launch calendar for 2015 will be kept in abeyance.

The commodity market regulator also sought more clarity from MCX on the stake sale deal between Financial Technologies (India) Ltd. (FTIL), its promoter, and Kotak Mahindra Bank Ltd.

FMC, in a circular to the exchange, said new contracts will not be approved till it meets certain conditions and the contract launch calendar for 2015 will be kept in abeyance. The watchdog had previously directed the bourse to implement the findings of a report by professional services firm PricewaterhouseCoopers (PwC) and the closure report of oversight committee in a time-bound manner.

In a response to MCX letter seeking permission to launch new contracts, the FMC had said the share purchase agreement (SPA) signed between FTIL and Kotak Mahindra Bank appears to be conditional pact, the execution of which depends upon revision of the technology agreement between the two entities. The SPA lacks in clarity with regard to the exact date of its execution and consequently does not inspire adequate confidence and assurance with regard to the proposed acquisition of 15% stake in MCX by the bank, FMC said.

The regulator asked the exchange to clarify as to exactly by what date the divestment shall be completed. Meanwhile, MCX on Tuesday clarified that it is hopeful of receiving approval for launch of calendar contracts shortly and addressing the issues raised by FMC by 30 September.

“We are hopeful that the issues raised by FMC will be addressed by 30 September and the FMC approval (for contracts) will be received shortly," MCX said in a statement here.

MCX said it had requested FTIL on 5 September to indicate the exact date by which they will be divesting 15% stake in the exchange. They are yet to give a firm date. MCX also said the findings of earlier oversight committee have been already addressed and informed to FMC. As desired by them, the same will be reviewed by the company’s audit committee this week.

Commenting on PwC report, MCX said most of its observations have already been addressed and informed to FMC from time to time.

The commodity futures trading on MCX has been hit severely due to the Rs5,600 crore payment crisis in the group firm National Spot Exchange Ltd. (NSEL) last year. PTI

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