Jan. 2 (Bloomberg) -- The Bombay Bullion Association, a traders’ group, plans to buy a stake in the Multi Commodity Exchange of India Ltd. after the regulator declared its founder unfit to run the nation’s biggest commodity bourse.
The association plans to buy 5 percent of MCX via a consortium led by the Universal Commodity Exchange Ltd., another Mumbai-based bourse, from Financial Technologies (India) Ltd., Mohit Kamboj, president of the group that represents about 1,000 jewelers and traders, said yesterday. The 5 percent MCX stake may be valued at 1.25 billion rupees ($20 million), he said.
Bombay Bullion has written about its interest in MCX to regulator Forward Markets Commission that last month declared Financial Technologies Chairman Jignesh Shah ineligible to hold any post in the bourse. MCX’s board on Dec. 26 advised Financial Technologies to within a month comply with the regulator’s order that the founder cut its holding to 2 percent.
The regulator ordered a review of Shah and his company’s ability to run MCX in October after a payment default at the National Spot Exchange Ltd., a spot bourse for commodities founded by him, prompted the government to suspend trading.
The turmoil at NSEL began with the government seeking details on the exchange’s settlement cycle on July 14, and deepened with the suspension of most contracts on July 31. The exchange failed to meet most of the payment targets set under the supervision of the FMC. While MCX held no stake in NSEL, it was controlled by Financial Technologies, which also owns exchanges in Bahrain, Botswana and Dubai.
Financial Technologies won’t like to comment on reports of Universal Commodity Exchange planning to buy its stake in MCX, the company said in a statement to the stock exchange today.
Shares of MCX, which slumped 67 percent last year, lost 1.1 percent to close at 486.70 rupees in Mumbai today. Financial Technologies, which plunged 84 percent in 2013, retreated 1.1 percent to end at 185.85 rupees.
To contact the reporter on this story: Swansy Afonso in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com