Electricity watchdog CERC has granted one more month's time till October 31 for Financial Technologies (FTIL) to completely divest its stake in Indian Energy Exchange (IEX). The Central Electricity Regulatory Commission's (CERC) decision came on a plea filed by Financial Technologies seeking more time to complete the divestment process.
Against the backdrop of payment crisis at FTIL group firm National Spot Exchange (NSEL), the regulator in May had directed the company to sell stake in the power exchange by September 30.
"Considering the present stage of the divestment process, we deem it appropriate to grant one month's time, that is till October 31, 2014, for completing the process of divestment of entire share of FTIL in IEX," the regulator said in its order dated October 1. In this regard, CERC has also directed the exchange to submit a compliance report by November 5.
FTIL has more than 24% shareholding in IEX. Even as it gave more time for compliance, the electricity regulator said IEX should pursue the divestment process in right earnest.
Referring to its ruling on the matter in May this year, the watchdog said, "We note that though the order was passed by the Commission on May 13, 2014... FTIL has initiated action only on July 7, 2014". Axis Bank Capital has been appointed by FTIL as the investment banker for IEX stake sale.
FTIL has also filed an appeal before the Appellate Tribunal for Electricity against CERC's May order while simultaneously initiating steps to divest its entire stake in IEX. In the wake of NSEL fiasco, which came to light last year, various regulators had initiated action against FTIL.
Last December, the Forward Markets Commission had ruled that FTIL is not a 'fit and proper person' to hold anything more than 2% shareholding in commodity exchange MCX.
In March this year, the Securities and Exchange Board of India (Sebi) had said FTIL is not "fit and proper" to own stakes in any stock exchange and directed it to divest existing holdings in MCX-SX and four other entities. According to CERC's May order, decisions of Sebi and FMC have a direct bearing on the power market.
In that ruling, CERC had mentioned that "regulatory objectives of the power exchanges are similar to that of the commodity and stock exchanges in so far as the investor/consumer protection, market integrity, transparency, fairness and governance are concerned".
Source- Financial Express