MCX drops preferential issue plan amid brewing storm

The Multi Commodity Exchange (MCX) has dropped its plans for a preferential allotment issue to reduce the promoters' stake to 2 per cent from 26 per cent, the commodity bourse announced in Mumbai on Wednesday.

Without assigning any reasons, MCX said in a press release that the board of directors had decidednot to go ahead with the preferential allotment of shares for the time being.

Reports say that MCX's institutional shareholders, who hold more than a 20-per cent stake in the exchange, had earlier rejected the proposal for preferential allotment in a meeting held by chairman Satyananda Mishra and managing director Manoj Vaish.

Last week MCX's parent company, the Jignesh Shah-promoted Financial Technologies India Ltd (FTIL), which holds a 26-per cent stake in the exchange, threatened to take legal action against MCX over the preferential allotment, saying it had not received any communication on this.

FTIL had said it will take necessary legal action to protect the interests of its 65,000 plus shareholders.

At a meeting in February, the MCX board had approved a 24 per cent stake sale by FTIL in the exchange, which according to a Forward Markets Commission (FMC) order had to come down to 2 per cent.

On 17 December last year, FMC had declared FTIL and its chief Jignesh Shah unfit to run any exchange, including MCX, following the Rs5,600-crore payment crisis at Group company NSEL (See: Jignesh Shah, FTIL not fit and proper to run a bourse: FMC).