SAT orders FTIL to sell stakes in bourses

Gives four weeks to divest its holdings The The Securities Appellate Tribunal (SAT), on Wednesday, dismissed Financial Technologies India Limited s (FTIL) plea against a Securities and Exchange Board of India (SEBI) order, declaring it unfit to hold stakes in bourses, citing a similar directive to Jignesh Shah-promoted company by the commodity markets regulator, holding that orders passed by one regulator would apply to others too. Rejects FTIL plea SAT, by a majority order, gave FTIL four weeks to divest its shares in bourses, including MCX-SX. “An order passed by one regulator would have to be applied de-facto to other regulators, and not following this principle would defeat the spirit of regulation,” Presiding Officer J. P. Devdhar said. He said the moot question was if the orders of one regulator have a bearing on others, and ruled in favour of SEBI, saying the trades regulated by commodity markets regulator Forward Markets Commission (FMC) are similar to those taken care of by SEBI. The SEBI’s order had followed a similar directive by the FMC after a Rs.5,600-crore payment scam in NSEL came to light. FTIL owned 99.99% of NSEL. SAT member A. S. Lamba gave a contrarian view, and termed the SEBI order as ‘unprofessional’. Mr. Devadhar said as the 90-day window granted to FTIL by SEBI for divesting its stakes had already expired, the company could take another four weeks to exit its holdings. FTIL owns 26% in commodities bourse MCX, and has a 70% stake in MCX-SX and MCX-SX Clearing Corporation. Its MCX-SX ownership is at 5% through equity and the balance through convertible warrants. At the time of the SEBI order, FTIL and MCX held just under 5% stake in the stock exchange MCX-SX. — PTI