Whistleblower allegations about MCX are false: P S Reddy

P S Reddy, managing director and chief executive officer, Multi Commodity Exchange (MCX), talks about the letter available on social media that accused the platform of misdeeds, in an interview with Anil Singhvi. He termed all the allegations as false and baseless.

Has MCX received any letter from a whistle-blower that is raising certain questions from the management of MCX?

Yes, we did receive a letter from Sebi seeking some clarification on the letter, which will be furnished to them. But the issues raised are baseless and we will deal with them suitably.

The letter alleges about certain loopholes in cotton trades benefitting some players. What is your take on it?

That is baseless as the names that have been mentioned have bought the stock on the platform and they delivered the same on the platform. It is completely baseless, and I am telling you that the stocks are being lifted by the buyers and everything is happening as usual.

It also alleges that the contract of size for developing a trading software was made big to help some members of the top management of MCX to make some money... 

This contract is actually for the gold spot exchange that we wanted to develop as when the government will permit the gold spot trading, we wanted to have this platform ready and there were additional requirements that have come up over the year depending on the business requirement and that will happen in any software development. I don’t think that anybody has any vested interest in assigning this contract.

It alleges that MCX didn’t have sufficient insurance coverage to take delivery of the gold... 

That is factually incorrect again because we had three vaults in Ahmedabad; there is a base delivery centre and the insurance coverage is distributed almost all was about Rs 2,000 crore across the three vaults. If one wants to deposit at a particular vault, then all the Rs 2,000 crore may not be able to accommodate but across the three the insurance coverage is adequately available. In any case, we have increased it to about Rs 3,000 crore and that is not an issue at all. And, again we tried to accommodate the customer as much as we could, but the insurance coverage could not be increased in that particular vault overnight, which is why the gold has to be deposited beyond the insurance limit to other vaults when the delivery takes place.

There are questions related to the quality of cotton in MCX godowns...

I doubly reassure that the quality in the godowns of MCX is as per the contract and everybody is taking delivery. There are no issues and that is what I can re-emphasise.

—Zee Media Newsroom