The board of Indian Commodity Exchange (ICEX), in consultation with Sebi, has appointed a forensic auditor to probe the alleged misuse of a market-making scheme run by the bourse to increase liquidity in derivatives contracts of steel, paddy, diamond, and rubber since October last year. The scheme stands suspended as of now. The audit has been mandated on the basis of two anonymous email complaints received by the public interest directors of the ICEX board and the Securities and Exchange Board of India (Sebi) in March-April this year. The complaints allege that certain key management personnel (KMP) of ICEX in collusion with the market makers misappropriated funds allotted for the so-called liquidity enhancement scheme (LES). The forensic audit will be undertaken by Chokshi & Chokshi LLP and the terms of reference include the misuse of LES; whether board members were in sync with the KMP; examining trading data from September 2020 onwards in contracts like steel, paddy, etc.; compliance issues and conflict of interest of KMP, among others. Senior partners of Chokshi & Chokshi were not available for comment. The audit will lay bare the facts and establish the veracity of the complaints, which are not of the whistle-blower type. Sanjit Prasad, CEO of ICEX, was not available for comment. He has been asked to proceed on leave by the board until after the audit findings are released. The findings are likely to be out by July. On the allegation of “truck” between the KMP and market makers, a person in the know said that one market maker was incentivized for providing two-way quotes in each of the four commodities and that the entire process for LES was undertaken in consultation with the board, as per Sebi norms. “The public interest directors were apprised of the payout being done each month to the market makers under the LES. The payout was audited by an independent auditor,” he claimed. ICEX’s CEO Prasad, who earlier worked with MCX and MCX-SX (now MSEI) at a senior level, joined the bourse in August 2018. The key shareholders of ICEX, which began operations in September 2017 after a three-year hiatus, are Reliance Exchangenext and Indiabulls Housing Finance who between them hold around 24% equity of the stock exchange. A proposed stake purchase by energy exchange IEX in ICEX has been put on hold in the context of the forensic audit. Note: The news is source from Economic Times without any changes in the original content.