Indian regulator orders Financial Tech to sell stock exchange stake
MUMBAI, March 19
MUMBAI, March 19 (Reuters) - India's market regulator removed its "fit and proper" designation on bourse operator Financial Technologies (India) on Wednesday and ordered it to sell its entire stake in the country's third-largest stock exchange.
The order from the Securities and Exchange Board of India (SEBI) is a further blow to a company being investigated by other regulators and the police over accusations of fraud at National Spot Exchange (NSEL), a commodities exchange owned by Financial Tech.
The company has denied knowledge of any fraudulent activity at NSEL, which regulators have said breached trading rules and did not properly enforce rules regarding collateral for derivative trades.
SEBI's order follows the removal by commodities regulator Forward Markets Commission (FMC) of its "fit and proper" designation on Financial Tech and an order for it to sell most of its stake in the Multi Commodity Exchange of India.
Companies need the "fit and proper" designation to be allowed to operate exchanges in India.
"A person who is not 'fit and proper' to hold shares in a commodity futures exchange cannot be a 'fit a proper person' to hold shares in the recognised stock exchange and the clearing corporation," Wednesday's SEBI order said, referring to the FMC ruling.
SEBI ordered Financial Tech to sell its 4.99 percent stake in MCX-Stock Exchange (MCX-SX) within 90 days.
The regulator also ordered the company to sell its stake in clearing house affiliate MCX-SX Clearing Corporation and minority shareholdings in unaffiliated exchanges, including a stake of about 1 percent in National Stock Exchange of India.
A Financial Technologies spokesman said the company is studying the SEBI order.
"We have 90 days to comply. We are looking at all options," he said.