Tax authorities probing transactions between MCX-SX, FTIL
April, 21st 2014
The income tax (I-T) department is looking into deals between MCX Stock Exchange and its erstwhile promoter, Financial Technologies (India) Limited (FTIL).
A special audit will look into any pricing anomalies in the transactions between the two, according to a source. FTIL had a contract for helping the exchange with its technology needs.
The audit sought to examine if the deals between FTIL and the exchange had been struck on an arm’s length-basis, to find out if they were priced appropriately. Financial Technologies was earlier the promoter of MCX-SX and owned a majority stake in the National Spot Exchange Limited (NSEL), which has been involved in a Rs 5,600-crore payment crisis.
A spokesperson for MCX-SX said that it had received a query. “I-T has sent a query to us. However, there are no transactions between MCX-SX and NSEL. They have appointed an auditor and we have updated them that the exchange is audited by the Comptroller and Auditor General of India and the Securities and Exchange Board of India every year, ensuring transparency and robustness of processes and operations,” said the person.
The exchange had announced earlier that it would be looking into all existing contracts. The board also decided to form a separate team to renegotiate existing agreements.
“FTIL has not received any communication and therefore we cannot comment at this stage. FTIL is in full compliance with all applicable norms in so far your query is concerned. FTIL being one of the minority shareholders is aware that MCX-SX has been audited by CAG appointed auditors and SEBI for many years,” said FTIL in an e-mailed response to a query from Business Standard.