The Forward Markets Commission
has been on its toes in the recent past with the ongoing NSEL crisis. The
Commodity market watch dog has been working overtime to resolve the crisis along
with the investigation agencies, Courts, current management and Board of NSEL
as well as the Board and management of FTIL.
But given the current scenario
and the way FMC has reacted it leaves no doubt of the intentions of the
Regulator resorting to some kind of score settling or vendetta in its
endeavors.
FMC had deemed FTIL as not ‘fit
and proper’ to hold stakes in any exchange post the NSEL crisis. The Regulator
had also laid down a precondition to MCX that FTIL was required to dilute its
complete equity in the Exchange before it launched any new contracts.
MCX and FTIL had both filed
replies assuring that the minority stake of the latter would be diluted before
September 30th, 2014.
Ironically, FMC was still left
unhappy and unsatisfied and has now laid down yet another condition which
requires MCX to initiate actions based on the PwC Audit report commissioned by
the regulator. Only after this new condition is met, the FMC will then allow
new contracts to be launched on the Exchange.
The PwC report was tabled more
than a year ago and contains a disclaimer from the auditor that no
views/clarifications were taken from concerned parties, in this case MCX and
FTIL which therefore make the findings and the report itself a one-sided story.
So even if the FMC does require
action to be initiated by the MCX management on the basis of the report, this
would be highly inappropriate and one-sided again.
The FMC seems to be working
ad-hoc and on whims and fancies that are insatiable. This not only puts MCX,
the largest commodity Exchange in the country, but also all stakeholders
associated with it in a distressed situation, since the Exchange won’t be able
to launch any new contracts for the year ahead.
The repercussions of this will be
felt throughout the commodity value-chain. It will not only disturb market
equilibrium but also has the dangerous ability of throwing the entire commodity
market in commotion and disarray.
