Multi Commodity Exchange Vice Chairman Jignesh Shah Resigns

November 1, 2013 Leave a comment

Multi Commodity Exchange Vice Chairman Jignesh Shah Resigns

DEBIPRASAD NAYAK and BIMAN MUKHERJI

Oct. 31, 2013 11:18 a.m. ET

MUMBAI—Multi Commodity Exchange of India Ltd. 500790.BY +0.39% ‘s executive vice chairman, Jignesh Shah, Thursday resigned from the bourse that he founded, in the wake of a snowballing payment crisis at another commodity exchange he helped build. Mr. Shah has steered the Multi Commodity Exchange from scratch to one of the world’s largest commodity futures exchange in about a decade. His company, Financial Technologies (India) Ltd. 526881.BY +0.76% , also co-founded the National Spot Exchange and the MCX Stock Exchange.He came under pressure to resign after the government asked the National Spot Exchange in August to stop all trading activities for alleged violations of trading rules. The exchange said later it would settle, in installments, more than 55 billion rupees ($894 million) of contracts outstanding, but has missed its initial targets.

According to commodity market regulator Forward Markets Commission, some of the deals on the spot exchange were likely struck by speculators, without actually selling or buying goods. Because of this, the exchange may not have enough goods in its warehouses to settle the contracts, it had said.

Earlier this month, the commission issued a notice to Mr. Shah and some board members of the National Spot Exchange, questioning their ability to continue on the boards of other exchanges after the developments at the spot exchange. Mr. Shah later resigned from the board of MCX Stock Exchange.

“The NSEL [National Spot Exchange Ltd.] crisis has destroyed everything that I have worked hard to build over the past two decades,” Mr. Shah said in a news release Thursday.

“I don’t want any event or anything to undermine their [Multi Commodity Exchange’s] reputation and want to ensure that shareholder and investor interests are not harmed,” the news release quoted him as saying.

The economic offenses wing of Mumbai’s police has arrested the spot exchange’s former chief executive, Anjani Sinha, two other executives and a member of the exchange in the past two weeks in connection with its probe into the alleged irregularities.

They are still in police custody. No formal charges have been filed against them.

Police had also questioned Mr. Shah, Himanshu Roy, a joint commissioner of Mumbai’s police, said earlier in October. Mr. Shah isn’t accused of wrongdoing by the police.

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