Impact on Indian Market after FTIL’s exit

LOSS OF IMAGE FOR INDIA

FTIL was the first exchange group from the emerging markets to raise India’s flag and presence in global financial centers. Setting up exchange in international financial centers such as Singapore, Mauritius, Botswana, Dubai and Bahrain are considered as providing Indian trade, industry and investing communities with gateways to these fast growing regions. These exchanges which could have been developed in the hands of Indian entrepreneurs were now forcibly sold to international exchange such as ICE and other investors. Investors and institutions that could have enjoyed investment opportunities in diverse markets of the global finance using Indian trading platforms are now deprived of this opportunity. India lost the top positions it held in trading of commodities and currencies.

SETBACK TO THE INDIAN

ENTERPRISE AND ENTREPRENEURSHIP

SPIRIT

FTIL in a very short span of time, through its imaginative planning and innovative product range, had emerged as a leading financial market infrastructure group in India. However, it’s journey  was obstructed by the vested interests that served no meaningful purpose for either our Nation or its people. The undue pressure and undeserved forceful exit of FTIL could act as a big deterrent for development of enterprise and entrepreneurship in India.

COMPETITION

ELIMINATED

Competition is the key to efficiency. Given that efficiency in the financial markets leads to efficiency in the real economy, it is important to promote and preserve competition. MCX which enjoys market leadership now is vastly reduced in business, MCX SX which had the potential to emerge as a major national stock exchange is now living off drawing from reserves to survive with no business worth the name. International exchanges could have been useful in getting access for Indian businesses and investors a wide range of global investment opportunities. All these are now greatly eroded due to the vengeful action of the nexus.

INNOVATION FOR NEXT-GEN

FINANCIAL MARKETS DELAYED

The forceful exit was an irreparable loss to the country, as it was only him and FTIL that possessed
the deep domain expertise of financial markets ecosystem and an expertise to established multi-asset exchanges in India of international repute. Other exchanges have by far not been successful in either product innovation or creating new markets due to their shallow understating and lack of domain expertise about Indian financial markets ecosystem.

SETBACK TO CAPACITY

BUILDING

When MCX-SX commenced, it built a Charter of Business Agenda that put great thrust and emphasis on aspects such as development of SME capital markets, trading of innovative debt market instruments, strengthening corporate debt market segment, increase market access to all the cities and town in India, guidance and hand holding of rural entrepreneurs, special education and training program for staff of broking firms etc., These measures would have contributed huge capacity building in capital markets in contrast to the current
situation where a large part of market is driven by FIIL flowing into a couple of speculative products for quick profit making. The focus of MCX-SX was to divert the excessive speculative culture that is dominating the Indian capital markets into generating a sustainable investment culture. With
the forced exit, all this has taken a back seat taking India several decades back in terms of capacity building.

SUPPORT OF INTERNATIONAL

FINANCIAL CENTERS

REDUCED

While other exchanges like BSE and NSE could not even comprehend such a possibility of an integrated financial market infrastructure, it was as early as in 2011 that FTIL envisaged and conceptualized an integrated financial market infrastructure. It was even before the dawn of market democratization in India, that FTIL went ahead of time and presented a proposal for developing an internationally bench marked framework. The group had also signed an MOU to create the GIFT city to this effect in the presence of then Honorable Chief Minister, Shri NarendraModi during the Vibrant Gujarat 2011 episode. The compressive proposal is now being emulated by other exchanges like BSE and NSE who do not have the experience of operating a single international exchange, unlike the FT Group,
which successfully established and operated 5 exchanges at international geographies.

REVERSAL OF JOB CREATION

Exchanges and ecosystem institutions created by FTIL were employment intensive with favorable outcomes on creation of self-employment opportunities and sustainable incomes. ‘A Million Jobs &A Million More Opportunities’ - A study by the Tata Institute of Social Sciences in 2012 has established that“…the MCX ecosystem directly and indirectly generates a large number of employment / self - employment / business opportunities that were not in existence before the exchange came into being”.
All these would have buoyed the opportunities for increased income generation for the Government. Also the 360 degree approach that FTIL has designed and developed could have led to comprehensive development of financial markets in India benchmarked to global standards and norms.
All this is now hampered as just a few vested interests chose to pursue their personal agenda jeopardizing national priorities and the institutional framework.

LOSS OF REVENUES TO THE GOVERNMENT

Development of the various exchanges by the FTIL had opened new avenues for revenue generation for the government in the form of direct and indirect taxes in the context of development of new market segments, market intermediaries, ecosystem institutions, and various businesses associated with them. The drastic fall in the business volumes in various market segments following the exit of the FTIL lead to sizeable erosion of revenue from this stream which has high potential.

          A BLOW TO INVESTOR’S

INTEREST

The Financial Technologies group always focused on investor’s interest, which could only benefit by broader and deeper market segments. While the growth of stock markets is dependent on a few hundreds of investors, the commodity exchange creates an extensive physical market in the form of warehouse infrastructure, processors, intermediaries, traders as also a wide range of jobs related to the real economy. The setting up of MCX-SX raised hopes of many that it could bring in more benefits brought out by innovations in the product development. MCX has seen rapid decline in business and MCX-SX has no business that merits a mention.

Highlights on topics related to FTIL’s Leadership-Chairman Emeritus during forums, seminars and group discussions

Points:

• Mr. Jignesh Shah, the founder of Financial Technologies group. He is the man behind creating these global technology-driven financial exchanges. He is often praised for his work in creating an amazing financial institute following Public-Private Partnership Model. For this, he is called the ‘Innovator of Modern Financial Markets’ as well. His enthusiasm for the financial market has given us IP-centric markets, which have changed the viewpoint of trading via exchanges in India and abroad.
• The tale of India's commodity futures market cannot be written without the mention of FTIL founder. The 46 year-old Managing Director and Chief Executive Officer of India's largest commodity exchange, Multi Commodity Exchange (MCX), reigns over a kingdom that he shaped in a decade.
• Since his young days, innovation has been his single objective. This trait led Shah to set up Financial Technologies India Limited (FTIL) at merely 24 years of age, with a capital of just Rs 5 lakh, leaving behind his family-established business. Today, FTIL is one of India's leading financial solutions providers.

• Shah, right from his childhood, had his eye on electronic engineering. In the late 1980s, around the time Shah obtained a degree in engineering, the Bombay Stock Exchange was looking to set up its automation project. The project, which was budgeted to cost Rs 100 crore, interested Shah and he joined as an electronic engineer to set up the network.
• While on his job, FTIL founder.  developed a deep interest in the working of the stock exchange. Shah spent hours in the BSE library and stocked up his knowledge on the business around stock exchanges. He discovered that apart from the United States, India is the only country that has a great tradition and culture of option and futures.
• Shah and his friends from engineering days decided to create technology for markets; they did not restrict themselves to equity. Shah started FTIL in 1998 from a 250-square feet office on a humble mezzanine floor. By 1995, electronic trading was gaining ground, and FTIL helped brokers who needed consultancy to set up the electronic dealing rooms. A technocrat was born.

• Shah and his friends funded their business by making orders fly on e-mail and on a modem. Things went on like this for three more years before FTIL got its first break. By 2001, FTIL could boast of providing services to every big name in the market. Since then, there has been no looking back for Shah and his company.
• He is the founder of Multi Commodity Exchange (MCX)- one of the largest commodity exchanges across the world along with other exchanges like Bahrain Financial Exchange, BFX; Bourse Africa, Dubai Gold & Commodities Exchange, DGCX; Indian Energy Exchange, IEX; and Singapore Mercantile Exchange, SMX.

• In 2008, he was ranked amongst the top 30 global innovators by Institution investors. He is very passionate about taking steps for Corporate Social Responsibility (CSR) and has taken initiative for Gram Suvidha Kendra and Pragati like communities of underprivileged people.

• He is often called the “Architect of modern financial markets” for his role in creating a successful public private partnership (PPP) model for building world class financial institutions. He always carried a vision of bringing inclusive and equitable growth through technology in India.


• He successfully launched MCX in 2003, India’s pioneering electronic exchange for commodities, which grew in leaps and bounds to be the second-largest commodities exchange within a decade and is recognized for multiple innovations in the world.
• IEX, India’s first and topmost energy exchange at 95% market share was conceived and founded by him, and is among the leading exchanges globally
• Exchanges like MCX and IEX among others, set-up by FTIL combined with its ecosystem partners, such as Brokers, Banks, Depositories, Warehouse providers, Information service providers etc., helped create new jobs / employment of over 1 million as per one study done by TISS (Tata Institute of Social Science)
• The success of MCX has inspired several countries and government organizations to partner with FTIL and promote many different global exchanges





Awards & Recognitions
• These achievements have led him to being featured among the “Top 30 Global Innovators in e-finance” by Institutional Investor in 2008. He was also noted in the FIA’s Futures Industry Magazine (Nov-Dec 2008) as a leading innovator.
• FTIL founderis a recipient of the “E&Y Entrepreneur of the Year” award for business transformation. He has been recognized by CLSA as one of the “Top 20 Indians” who can change the face of world business and has been inducted in its Hall of Fame.
• FTIL founderwas honored with the “US-India Businessman of the Year” award and was chosen by the World Economic Forum (WEF), as a “Young Global Leader”. He was also awarded the “Global Social Entrepreneur” award by Rotary International.
• FTIL founder is deeply passionate about the role of markets in Corporate Social Responsibility (CSR) activities and has launched initiatives such as ‘Gramin Suvidha Kendra’ in association with India Post and ‘Pragati’ with Rotary International to empower underprivileged communities with education and training within the FTIL Group.
• FTIL founderis a technology evangelist and has helped create highly robust and scalable exchange and trading technology platforms that embody disruptive innovation. His skill and passion has helped create new asset and investor classes that were either under-served or economically unviable to be served by traditional markets.