Jignesh Shah resigns from MCX board Says FMC Can’t Draw Adverse View About Fit & Proper Tag Till Probe Is Completed

Mumbai: Jignesh Shah, founder, vice-chairman and a director of Multi-Commodity Exchange (MCX), resigned from the bourse's board on Thursday even as he replied to a show-cause notice to by Forward Markets Commission (FMC) about why he should not be disqualified from being a 'fit & proper person' to be on the board of an exchange. 

    FMC had slapped the notice on Shah for his alleged role in the Rs 5,600-crore payment crisis at the National Spot Exchange (NSEL), a group company of MCX, the only listed exchange in the country. 
    The 'fit & proper person' test for a person to be on an exchange's board requires that he/she should be honest, with high integrity, a good reputation and solvent. Regulators in India take into account all these factors before allowing a person to be either a shareholder-director or an independent director on an exchange's board. 
    Shah's resignation came exactly three months after the NSEL scam came to light. Shah, along with some others, set up MCX from the scratch over the last decade — it is now one of the largest commodity bourses in the world. Shah was on the board of MCX as a nominee of Financial Technologies (FTIL), the main promoter of the commodities bourse. 
    Shah has already resigned from the MCX Stock Exchange (MCX-SX). He, however, continues to be a director on the boards of FTIL and NSEL. 
    The resignation came at a time when the economic offences wing of the Mumbai Police has taken some of the former top NSEL officials into custody, and also Nilesh Patel, the promoter of N K Proteins, one of the biggest borrowers of the exchange which owes investors about Rs 970 crore. 
    On Wednesday, Mohan India, another large borrower in NSEL, agreed to pay Rs 600 crore to settle its dues that totalled about Rs 770 crore. There are talks that Patel is also on the verge of paying up Rs 600 crore to settle his dues with the commodity bourse. 
    In his reply to FMC's showcause notice, Shah pointed out that proceedings initiated by various agencies into the NSEL fiasco were pending and, hence, it would be premature to draw any adverse inference either against him or FTIL on account of such proceedings, sources said. Shah also defended his position as a qualified board member of the bourse on the basis that neither him, nor FTIL has been found to have played any role in the NSEL scam.

Jignesh Shah