Decide MCX-SX fate in a month: HC orders Sebi

In a big relief to MCX Stock Exchange (MCX- SX),the Bombay High Court on Wednesday directed the Securities and Exchange Board of India (Sebi) to reconsider its application for an equity trading platform. The court quashed and set aside a Sebi order dated September 23,2010,which rejected their application. The order came after Financial Technologies Limited and MCX — promoters of MCX-SX — gave a joint undertaking to the court that they would reduce their shareholding to less than 5% collectively in order to comply with Sebi Manner of Increasing and Maintaining Public Shareholding in Recognized Stock Exchanges (MIMPS). If the Sebi clears the fresh application,MCX-SX will be competing with the National Stock Exchange and the BSE in the equity trading business. The bench of Justice D Y Chandrachud and Justice Anoop Mohta also set aside Sebi’s objections regarding non- disclosure of buyback agreements with PSU banks. The judges noted that it cannot be said to be a forward contract and therefore cannot be held to be illegal. However,they rejected the contention that it was completely irrelevant in the circumstances,saying,“The relationship of a stock exchange with Sebi must be founded on utmost good faith. Material and relevant facts which have a bearing on the Act and regulations with which Sebi enforces must be disclosed.” The market regulator has now been directed to reconsider the application of MCX- SX within a period of one month. A spokesperson of MCX-SX said,“The MCX-SX stance was not against regulatory institution,but was for principles. We stand vindicated and always have full faith in the judiciary system.”