KP Krishnan systematically schemed & orchestrated the downfall of FTIL

1. Government’s scheme
to sabotage FTIL ?

2. Agenda
 Government’s interest in helping NSE
 KP Krishnan’s strategy to bring down MCX
 Acting beyond jurisdiction?
 Krishnan’s role in promoting NSE

3. Government’s interest in helping NSE
 Joint Secretary KP Krishnan took unusual interest in
NCDEX (National Commodity & Derivatives Exchange), a
National Stock Exchange (NSE) subsidiary
 Krishnan wrote a letter suggesting, competing interests
were threatened by FTIL’s growing power
 RTI inquiry, dated 19th Dec 2007, shows government’s
interest in helping NSE
 KP Krishnan systematically schemed & orchestrated the
downfall of FTIL

4. KP Krishnan’s strategy to bring down MCX
 Krishnan was the right hand of the then Finance minister,
P Chidam-baram
 Krishnan wanted 2 public sector undertakings, LIC &
NABARD to divest their shareholding in NCDEX
 This was to be done in favor of NSE so that it could become
the single-largest shareholder of NCDEX
 This strategy was to be executed at the earliest to revive
NCDEX so as to provide credible competition to MCX (Multi
Commodity Exchange of India Ltd)

5. Acting beyond jurisdiction ?
 MCX was the crown jewel of FTIL
 India’s topmost & the world’s 2nd biggest commodity
exchange
 NSEL (National Spot Exchange Limited) was not operational
at that time
 MCX & NCDEX (both commodities exchanges), were
regulated by the Ministry of Consumer Affairs (MoCA)
 Neither MCX nor NCDEX were within the regulatory purview
of Krishnan or the ministry of finance
 Clearly, Krishnan went beyond his jurisdiction

6. Krishnan’s Role in promoting NSE
 Expressed concerns about declining market share of NCDEX
in comparison to MCX in a letter
 Urged NCDEX management to improve performance
 Pressed NSE to increase its ownership of NCDEX
 Suggested LIC & NABARD (government controlled bodies)
should be asked to relinquish their shares up to 5-6 % each in
favor of NSE
 NSE could then become a strong anchor investor in NCDEX
 Market analysts started questioning whether NSE & its
subsidiaries were under the then government’s protection