Carnage for 2nd day: Financial Tech down 45%, MCX falls 20%
sources say market regulator SEBI has begun a probe into a major crash in the share prices of commodity bourse MCX and its promoter FTIL and has sought information from stock exchanges in this regard.
Financial Technologies (FTIL) shares slaughtered for the second consecutive session Friday after the National Spot Exchange (NSEL), promoted by FTIL, announced suspension of trade on all its one-day forward contracts except for E-series products on Wednesday night and deferred payments on client trades Thursday.
The decision of suspension of contracts follows a Consumer Affairs Ministry directive in July asking the bourse not to launch any new contracts till further order as it found violations of government norms in trading at NSEL.
Jignesh Shah, chairman and managing director of FTIL states that this action of NSEL does not entail any financial liabilityon FTIL and business of FTIL will be as usual. "We are confident that NSEL will resolve the situation within the contours of its and rules," he said in its filing.
It is learnt that SEBI has held meeting with exchanges and large brokers on Thursday on this issue. The market regulator wanted to ensure no payout pain in stock market due to issue and no contagion effect of NSEL, sources say.
The regulator is also looking into the trading pattern of some brokerage firms and many other entities in the two stocks to ascertain whether they had any advance information about problems at NSEL.
The brokerage firms which had significant exposure to NSEL are specially under scanner, sources added.
At 09:59 hours IST, Financial Technologies dropped 20.78 percent to Rs 151.90 after falling as much as 45 percent in early trade today to touch more than 8-year low of Rs 105.50.
Meanwhile, foreign brokerage house UBS recommended a buy rating on the stock.
Multi Commodity Exchange of India is locked at 20 percent lower circuit at Rs 409.65 on the BSE.
Reliance Capital Trustee Company sold 7,80,925 shares at Rs 213.73 on the NSE and sold 4,10,530 shares at Rs 211.89 on the BSE on Thursday.
ICICI Securities has downgraded MCX to a sell rating on the uncertain business scenario led by regulatory overhang coupled with Commodities Transaction Tax (CTT) eating into the company's profits. The brokerage house has a target of Rs 349 on the stock.