SC deadline to decide on issue gets over in a week
MCX Stock Exchange (MCX-SX) is expected to get the final regulatory clearance for launching operations as a full-fledged equity bourse in the next couple of days. The capital market regulator has less than a week left to decide on the matter before the deadline as set by the Supreme Court comes to an end.
According to people familiar with the development, the Securities and Exchange Board of India (Sebi) will approve the application with a condition that promoters will have to bring their direct and indirect holding to 5% each within the next three years. This is in line with the amendments in the exchange ownership norms that were notified by the regulator last month.
?On April 12, the Supreme Court gave three months’ time to Sebi to decide on the application and, so, the decision is now expected anytime,? said a person privy to the development.
The last few days have already seen a series of meetings between Sebi officials and representatives of MCX-SX. ?The amended regulations give promoters three years to comply with the ownership rules and the same will be extended to MCX-SX,? he said, wishing not to be named. The Sebi approval will finally bring to an end a bitter legal battle between the regulator and the exchange, which started in 2010, when the promoters of MCX-SX ? Financial Technologies (India) (FTIL) and Multi Commodity Exchange (MCX) ? converted a significant part of their stake into warrants while bringing down their direct equity holding to only 5% each.
Jignesh Shah-promoted MCX-SX first filed a petition, demanding Sebi to decide on its application and, then, when the regulator denied permission to the exchange, it filed another suit to challenge the regulator’s decision. MCX-SX wanted to launch operations in equity and equity derivatives, interest rate futures along with a separate platform for small and medium enterprises (SMEs). Currently, MCX-SX offers trading only in currency derivatives.
Incidentally, the Sebi green signal will also lead to the entry of a new stock exchange in the highly competitive segment at a time when globally volumes and investor interest in the equity market are on the decline. It is believed that post the Sebi approval, MCX-SX will at least take a couple of months to start operations.
The exchange will first have to start a membership drive to get brokers on board and, then, invite companies to list on its platform. Market players say that it would be interesting
to see the companies that MCX-SX decides to list on its platform.
According to Sebi norms, stock exchanges should have diversified ownership with no single investor allowed to hold more than 5%. However, entities like stock exchange, depositories, insurance companies, banks and public financial institutions have been allowed to hold up to 15% in bourses.