Mayaram Panel recommendations: Govt mulls replacing managements of Jignesh Shah-led FTIL entities

NEW DELHI: The government could consider replacing the managements of all the three entities promoted by the Jignesh Shah-led Financial Technologies group to protect investors and insulate rest of the financial market from any spillover of problems at the National Spot Exchange Ltd ( NSEL).


NSEL, a part of the Jignesh Shah-led Financial Technologies ( FTIL) group, is grappling with a Rs 5,600-crore payment crisis. Financial Technologies is also the promoter of commodity exchange MCX and stock exchange MCX-SX.

The action could follow from the recommendations of a panel headed by economic affairs secretary Arvind Mayaram.

“The panel has said distinction needs to be made between wrongdoing by a promoter and the entity itself to protect investor interest and also in the interest of market stability,” said a senior official privy to the contents of a report by the Mayaram panel.

According to the official, the commodity markets regulator, Forward Markets Commission (FMC), is expected to come out with its assessment of NSEL and Multi Commodity Exchange over next two days and action would be taken after that. FMC’s assessment will take into account preliminary investigations by probe agencies and the response of the promoter group to its notice on ‘fit and proper’ criterion.

The ‘fit and proper’ norm ensures that those found indulging in malpractice are not involved with market infrastructure entities, since they are the first level of regulation having powers to even levy fines. Capital markets regulator Sebi, too, is examining MCX-SX from a similar point of view.

“Concerned regulators are assessing the entities on the basis of ‘fit and proper norms and will give their reports soon,” the official said.

The government had constituted a panel headed by economic affairs secretary Arvind Mayaram to look into allegations of irregularities in the functioning of NSEL. The panel submitted its report to the finance minister P Chidambaram last week. The CBI, the FMC and the ministry of corporate affairs are separately probing various allegations of irregularities at NSEL. The income tax department, which carried out nationwide searches on NSEL and related entities, is believed to have found irregularities such as round-tripping.