Financial Technologies, MCX shares crash as NSEL suspends contracts
Shares of FTIL fell as much as 66.4%, and MCX slid 20%
Financial Technologies shares declined after its unlisted unit NSEL suspended trading of all one-day forward contracts, except its so-called e-series contracts
Shares of Financial Technologies (India) Ltd (FTIL) crashed as much as 66.4%, the most since its trading debut, after its unit National Spot Exchange Ltd (NSEL) suspended trading of all one-day forward contracts, except its so-called e-series contracts.
Shares of commodity bourse Multi Commodity Exchange of India Ltd (MCX), controlled by FTIL, plunged as much as 20% to a record low. E–series contracts were designed to allow people to invest in commodities in demat form. E-Gold and E-silver were the first securities to be introduced by NSEL under the e–series.
FTIL shares fell 64.59% to Rs.191.75, while MCX shares slid 19.99% to Rs.512.05 on BSE, while the stock exchange’s benchmark Sensex ended 0.15% lower.
According to a report from Press Trust of India, capital markets regulator Securities and Exchange Board of India has begun a probe into the crash in the share prices MCX and its promoter FTIL and has sought information from stock exchanges in this regard.
Late on Wednesday, NSEL said in a statement that it would merge the delivery and settlement of contracts (other than e-Series) and that settlement would be deferred for 15 days.
The move follows a 12 July directive by the department of consumer affairs, the statement said, without giving details.
The statement said these steps were necessary owing to the “abrupt structural changes in the marketplace leading to disruption. This coupled with loss of trading interest due to underlying uncertainties is disrupting market equilibrium”.
The suspension of trading in one-day forward contracts comes after a series of other steps taken by the exchange, which is promoted by FTIL and the National Agricultural Cooperative Marketing Federation of India Ltd, in order to comply with regulatory requirements.
On 9 July, Moneylife had reported that Forward Markets Commission, the commodities markets regulator, found during a probe that National Spot Exchange allowed trading on its platform without verifying whether the seller had stocks, thus allowing short selling by members.
The report had also cited food and consumer affairs minister K.V. Thomas as saying that the government would soon take action against FTIL-promoted NSEL for violating certain rules while offering commodity contracts.
According to dealers, the suspension triggered concerns on whether there would be a payment default in the commodity bourse.
Meanwhile, the NSEL chief executive assured investors that payments will be made and obligations will be met.
“I don’t think there is any reason to panic. The people who have traded on the exchange, their rights are fully secured,” NSEL managing director and chief executive officer Anjani Sinha said on television channel ET Now
He assured investors that the payouts will be made over a period of time.
“What we have said is that we will be following the process of liquidation of stock which will take a period of 15 days to one month and therefore, we have said that in the months of August and September, we will keep on releasing payouts, he added while speaking on the TV channel
FTlL released a statement on BSE stating that NSEL’s move to suspend one-day forward contracts does not entail any financial liability on FTIL and that the business of FTIL will continue as usual.
“We are confident that NSEL will resolve the situation within the contours of its Bye-laws and Rules,” Jignesh Shah, chairman and managing director of FTIL, said in a statement on the BSE.
NSEL has been under the scanner for a while, and dealers said that with the latest development, sentiment was hit badly. Investors were selling heavily and FTIL was the most-traded stock on the BSE, and third-most traded on the NSE.
“It is clearly a trust issue. Investors are losing trust in the group at large,” said a wealth manager at a leading brokerage, who did not want to be identified owing to the sensitivity of the issue
NSEL is FTIL’s most profitable subsidiary with a net profit of Rs.127.4 crore in fiscal 2013. It was also among its fastest growing operations—its revenue grew by 210% to Rs.266.9 crore last year and profit had risen by 340% from Rs.28.8 crore in fiscal year 2012. FTIL’s stand-alone business had a net profit of Rs.323 crore in FY13.
Quarter Ending:June 2013
Shareholding belonging to the category : "Promoter and Promoter Group"
No.
|
Name of the Shareholder
|
Total Shares held
|
Shares pledged or otherwise encumbered
| |||
Number
|
As a % of
grand total (A) + (B) + (C) |
Number
|
% of Total shares held
|
As a % of
grand total (A) + (B) + (C) | ||
1
|
Jignesh P Shah
|
4,743,870
|
10.3
| |||
2
|
Jignesh P Shah
|
3,585,715
|
7.78
| |||
3
|
Dewang S Neralla
|
60,374
|
0.13
| |||
4
|
Rupal J Shah
|
56,703
|
0.12
| |||
5
|
Manish P Shah
|
71,538
|
0.16
| |||
6
|
Manjay P Shah
|
76,918
|
0.17
| |||
7
|
Pushpa P Shah
|
60,543
|
0.13
| |||
8
|
Prakash B Shah
|
37,351
|
0.08
| |||
9
|
Bina M Shah
|
498
|
0
| |||
10
|
Tejal M Shah
|
1,704
|
0
| |||
11
|
Mandar Neralla
|
1,364
|
0
| |||
12
|
La-Fin Financial Services Pvt Ltd
|
12,329,968
|
26.76
| |||
13
|
Nakshi Manish Shah
|
1,036
|
0
| |||
Total
|
21,027,582
|
45.63
| ||||
Source : Amit Shah; http://www.livemint.com; http://www.moneycontrol.com
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