Sebi initiates probe into MCX, FTIL stock crash

Sebi initiates probe into MCX, FTIL stock crash

SEBI has begun a probe into a major crash in the shares of commodity bourse MCX (Multi Commodity Exchange) and its promoter Financial Technologies triggered by issues at group entity National Spot Exchange Ltd (NSEL), and has sought details from stock exchanges and other agencies in this regard.

Financial Technologies India Ltd (FTIL) scrip on Thursday fell by nearly 65 per cent, while that of MCX plunged by 20 per cent over concerns about NSEL.

While the shares have been on a downward path for quite some time, there was a major fall on Thursday morning after NSEL suspended trading of contracts, other than e-Series.

The issues being looked into by SEBI include the concerns of potential defaults to pay-outs to brokers and clients, fraudulent trade practices and possible violation of insider trading norms in the two listed group companies of NSEL.

A number of brokers are present in both commodity and equity segments and there is a potential systemic risk from issues of potential defaults spilling over to the stock market as well, sources said.

SEBI, which is also in touch with the Finance Ministry, commodity regulator FMC and Consumer Affairs Ministry in this regard, is looking into the trading pattern of some brokerage firms as well as many other entities to check whether they had any advance information about problems at NSEL.

The brokerage firms which had significant exposure to NSEL are specially under scanner, sources added.

While the shares have been on a downward path for quite some time there was a major fall this morning after the  the National Spot Exchange suspended trading of contracts, other than e-Series contracts till further notice.

The National Spot Exchange is being promoted by FTIL.

In a statement yesterday NSEL said it has suspended trading of contracts, other than e-Series contracts till further notice. The statement further noted that the exchange has also decided to merge the delivery and settlement of all pending contracts and deferred the same for a period of 15 days. Accordingly, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days.

The exchange would announce a revised settlement calendar and contracts due for settlement after this 15 days period.

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