|Pillai (top) and Mishra|
1973 batch Madhya Pradesh cadre retired IAS is the new chairman of the board of MCX and Pillai, a 1972 batch Kerala cadre retired IAS, is the chairman of MCX-SX. Both those entities were firmly controlled by Shah till the massive payment crisis erupted in Financial Technologies group’s another sister concern -- National Spot Exchange Ltd (NSEL) a few months ago. Along with Mishra, a few other former bureaucrats such as RM Premkumar (retired IAS), Ravi Kamal Bhargava (retired IAS) and G Anantharaman (retired IRS) are also independent directors of the MCX. With Pillai, former LIC chairman-in-charge Thomas Mathew is a public interest director and vice-chairman of the board of MCX-SX.
It will, however, be a challenging time for both the IAS officers to ring-fence these two entities from tainted founder of Financial Technologies Jignesh Shah. On Tuesday, Mumbai police’s economic offences wing (EOW) seized assets of Shah including his bungalow in Mumbai’s posh suburb Juhu, and fixed deposit worth Rs 11.75 crore in HDFC Bank among others. Shah’s Financial Technologies owns 26% in MCX, and Shah was the managing director and CEO of MCX-SX till he stepped down recently. Also, MCX-SX still uses the technology platform of Shah’s Financial Technologies.
According to the recent reports, the trading volumes on the country’s largest commodity exchange MCX have fallen by about 70% in the last five months. In fact, the credibility of the companies connected with Shah is all-time low and many brokers and investors are shying away from MCX or MCX-SX. Also, MCX-SX is bleeding financially and that will erode its net worth, which is also a growing concern. After all, according to the regulatory requirement, its net-worth has to be above Rs 100 crore to keep itself floated.
Pillai, who was known for his forthright comments even as Union home secretary earlier, has recently interacted with media to spell out some of his plans as MCX-SX chief. In fact, his mission was to woo investors’ confidence when he said MCX-SX has nothing to do with the scam-tainted National Spot Exchange or Shah of Financial Technologies. He said MCX-SX is now owned and controlled by institutional investors and not Financial Technologies of Shah. Because of the SEBI regulations, the shareholding of MCX and Financial Technologies has now come down to less than 5 percent each, Pillai told a business news channel recently. A board meeting, to be chaired by Pillai, is expected to be held in the second week of this month.
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