In a remarkable effort to protect traders and ensure systematic balance, MCX contacts MF Global customers directly whether payments have been credited. Will National Stock Exchange and Bombay Stock Exchange, which always take a hands-off attitude to the problems of investors, traders and members, learn from this?
Commodity traders who trade in the Multi Commodity Exchange (MCX) and requested to withdraw money lying with MF Global have been getting strange calls from officials of the exchange. MF Global is a member of MCX and the Indian arm of the bankrupt global firm. Traders are being called to ask whether they have asked for a withdrawal of a certain amount from MF Global and whether the money has actually been credited to their account. When asked about the reason behind this strange call, the exchange official clarified: “MF Global is claiming that they promptly issuing cheques to any customer who is requesting withdrawals. We are calling customers to verify whether they have actually got the money.”
In the Indian context, this is an extraordinary effort from an exchange.
While MF Global has gone bankrupt internationally, the Indian unit is functioning as of now. However, there are concerns about MF Global’s viability in customers’ minds given that the US unit was involved in misusing customer money for proprietary trades. When Moneylife asked Vineet Bhatnagar about the safety of customer money and continuing operations of MF Global in India, he kept mum. The only information about MF Global’s operations came from a plant in CNBC TV18, which was dutifully reproduced in the Mint newspaper. In that, Mr Bhatnagar seemed to answer conveniently structured questions, making the answers sound like a self-serving corporate communiqué. Clearly, MCX’s calls to individual traders whether their cheques have been credited, have been of great help.
To understand how extraordinary the effort of MCX is, just consider how the two national stock exchanges behave. While price rigging and insider trading are rampant, the exchanges are quick to give a short shrift to individual investors about their complaints against brokers and listed companies. Often questions about the patently anti-investor moves of listed companies are ignored. Companies are able to leak selectively information in the media and get away without offering clarification when asked. Brokers easily milk their customers, walking away without paying any price. The exchanges were absolutely silent about the gross abuse of power of attorney by brokers through the boom years of 2006-08. Tens of thousands of investors have got disgusted and left the market, unable to get justice from the exchange, which are supposed to be the first line of regulation. Even members’ problems are dragged on for years and confirmed cases of wrongdoing are not penalised. The only time you hear exchanges talking about investors, is when they want to dip into investor protection fund for worthless events or indulge in tokenism like flagging off Rajdhani trains that supposedly reach out to ‘investors’.
Set against this, it is quite remarkable that MCX, by far the dominant commodity exchange, has gone out of its way to directly talk to customers when the parent company of one of its members, ran into trouble. But, of course, unless there is competition, don’t expect either the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) to step down from their ivory towers and emulate MCX.
Is media aware of what its audience thinks?
The new chairman of the Press Council of India (PCI), Justice Markandey Katju, has raised hackles across the media with his sweeping generalisation about the low quality of the Indian media and its poor intellectual standards. Actually, Justice Katju’s comments would apply equally to the mainstream media in many countries, but what ought to worry the Indian media greatly is the public reaction to the PCI chief’s comments.
One television survey showed that 74% of viewers supported Justice Katju’s views. Comments on Twitter, Facebook and blogs also show overwhelming support for the judge’s views. Even earlier, the movie Peepli Live had captured, with chilling accuracy, the daily farce enacted on national television in the name of breaking news or covering issues. Brokering News, a documentary produced by Umesh Aggarwal for the Public Service Broadcasting Trust, further exposes how paid news has penetrated business, politics, entertainment and sports.
Unfortunately, media owners and advertisers have failed to notice the viewer/reader’s revulsion. They have reacted to shrinking viewership by dumbing down news, cutting costs on grass-roots reporting and investigation and substituting it with noisy and pointless debates. Strangely, even regulators have not recognised the larger impact of fake news. SEBI passed the buck of dealing with private treaties (between media and corporate house) to the PCI, but failed to notice that investors, lured into making wrong investment decisions, have quietly eschewed financial products and prefer to keep their money in bank deposits. Will Justice Katju’s comment, which also holds the threat of action, force the media to introspect? The first hint of this is a collective decision to cover the birth of Aishwarya Rai-Bachchan’s baby with some decorum and sobriety. Let’s wait and watch how this turns out.
How does this company escape investigation?
No amount of ‘investor education’ will...