Financial Technologies Shares Stumble

MUMBAI, INDIA (Gaea Times.com) - The shares of Financial Technologies had their worst decline in two years and their biggest one day drop after SEBI (Securities & Exchange Board Of India) rejected the application of MCX-SX (Multi Commodity Exchange- Stock Exchange) to operate an equity exchange. SEBI alleged that the two promoters MCX (Multi Commodity Exchange) and Financial technologies were holding an excessively large stake in the bourse. Moreover SEBI alleged that the two promoters have not compiled with the regulations and accused them of dishonesty.”The concentration of economic interest in a recognized stock exchange in the hands of two promoters is not in the interest of a well regulated security market” a member of the regulator said in the order.

Financial Technologies and Multi Commodity Exchange of India should be jointly holding 5% of stake in the bourse while currently each of them is holding 5% thereby not compiling with the regulations of Manner of Increasing and Maintaining Public Share holding (MIMPS). MCX Stock Exchange is planning to take legal action against the order but no details are available yet. The stakeholders of the MCX (Multi Commodity Exchange) have been accused of dishonesty by SEBI and have also been alleged for entering into contracts with buy back arrangements which happens to be illegal as they are in the nature of forward contracts.

Meanwhile the order of the SEBI rejecting the applicant seems to have made investors nervous as is evident from the decline in the shares of Financial technologies. The rejection of application though should not have made any impact on the shares. Those investors who are selling off are only providing other investors with an opportunity to buy stocks at a decreased price.