Hearing an appeal against the market regulator's denial of information sought through RTI (Right to Information) Act, the Appellate Authority has ruled the process relating to grant of recognition of MCX-SX in 2008 has been completed.
"In view of the same, I note that the decision-making process that contributed towards such grant of recognition cannot be argued as totally exempt from disclosure under the provisions of the RTI Act, though a part of it may qualify as such," the Appellate Authority said in its order.
"In light of the above, what emerges is a requirement for striking a balance between maintaining transparency in respect of regulatory policy formulation by the regulator on the one hand and ensuring compliance with the principle of confidentiality... on the other hand," the order said.
It, however, observed that any breach of the principle of confidentially may cause substantial harm to the competitive position of stock exchanges and therefore adversely impact the regulator's ability to obtain necessary input from such entities in future.
"Accordingly, the respondent may examine the information relating to file notings of recognition of MCX in 2008, to determine which information is exempt from disclosure.
"Upon such determination, information exempt from disclosure may be severed from that part of information that may be identified as disclosable," the Appellate Authority said.
It asked Sebi to re-consider the appellant's application and provide an appropriate response to the appellant within 20 working days from the date of receipt of this order, which was passed on January 16.
In case Sebi decides to withhold certain information from disclosure, which in his opinion fall within the exemptions provided under the RTI Act, the regulator can pass an appropriate order, it added.
The appellant had filed an RTI application in November last year with Sebi, seeking copies of correspondence including file notings on approval to stock exchange licence granted to MCX for MCX-SX for currency futures in 2008.
The appellant had also sought a copy of letter of approval to MCX for MCXSX.
However, Sebi in its response dated December 3, 2013, informed the appellant that the information pertaining to related file notings of recognition of MCX-SX in 2008 "was strategic in nature and contained confidential information".
Sebi further said that such disclosure "may impact the strategic decision making of the regulator, the competitive position of the regulated entities and market participants of the securities market and compromise the economic interest of the country".
Consequently, the appellant had filed an appeal with the Appellate Authority against Sebi's response.
While agreeing with Sebi's observation that file notings of recognition of MCX-SX may contain information of a strategic nature concerning regulatory policy formulation, the Appellate Authority said that information of such nature cannot be provided through RTI.
However, Sebi has not informed the appellant that the entire information sought by him was "exempt from disclosure in totality" and the regulator can severe the information exempt from disclosure from the details that can be disclosed.
MCX-SX was granted licence in 2008 after a long regulatory and legal battle with Sebi, as questions were raised about the 'fit and proper' status of its promoters.
Incidentally, the question of their 'fit and proper' status has again come to the fore in recent months after a major crisis broke out at National Spot Exchange, which was also founded by the same promoter group including Jignesh Shah-led Financial Technologies group.