MUMBAI, March 19 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
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
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
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
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,"
The company is already challenging FMC's order in the Bombay
(Reporting by Himank Sharma; Editing by Rafael Nam and David