India’s Icarus

Today I came across an interesting article posted on India Legal Online by Shantanu Guha Ray, where he has detailed “The systemic targeting of FTIL, leading to its downfall.”


Jignesh Shah blazed like a meteor and burnt out like one. This entrepreneur, who could have been a sterling exponent of Prime Minister Narendra Modi’s “Make in India” program, aimed to take commodities trading online and took on institutional forces such as the National Stock Exchange (NSE). However, in a surprising twist of fate, he was done in by challengers and arrested on May 7, 2014.

It all started in 1988 when Shah started Financial Technologies India Limited (FTIL) and two commodity exchanges — MCX (Asia’s second largest) and National Spot Exchange Limited (NSEL), which was India’s first electronic spot exchange. He began trading in 2008 and did so well that he set up exchanges in Singapore, Bahrain, Dubai, Mauritius and Botswana.

Problems started when MCX decided to take on the NSE-promoted commodity exchange — NCDEX, a competitor — thereby challenging the primacy of NSE. A bureaucrat even expressed concerns at the declining market share of NCDEX in comparison to MCX, suggesting that this raised suspicions that NSE and its subsidiaries were under government protection and patronage.

Meanwhile, NSEL too did very well. But irregularities were found in it and in 2013, a payment crisis hit it, leading to the eventual loss of 5,689.95 crore for investors and Shah’s arrest. However, on August 22, 2014, Shah got bail from the Bombay High Court after three months in custody. There is now a move to merge NSEL with FTIL so that the resources of FTIL can be used for settling the liability. So how did the entrepreneur, who was once in charge of BSE’s online trading, get embroiled in this mess? Has the Economic Offence Wing (EOW) of Mumbai Police been able to find any money trail against FTIL or Shah?

To read the complete article, check the following link.

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