MCX-SX to move Bombay High Court against Sebi order

MCX Stock Exchange Limited (MCX-SX),promoted by India’s largest commodity bourse MCX and group company FTIL,will move High Court following Securities and Exchange Board of India’s (SEBI) order rejecting the bourse’s plea to be allowed to function as a full-fledged stock exchange. “The bourse has already filed a writ petition in the Bombay High Court against the market regulator’s order,rejecting the bourse’s plea to be allowed to function as a full-fledged stock exchange,” said a company statement here,adding that the petition of MCX-SX is expected to be taken up for admission after court vacation. Sebi had earlier said that MCX-SX had violated shareholding norms and its promoters lacked honesty. “The petition was filed on October 29 in relation to Sebi order of September 23,where the regulator rejected MCX’s application made by MCX-SX for approval to commencement of its equity,Fand O,WDM and other segments and products,” the exchange said. MCX-SX currently offers trading in currency futures only. In April,MCX-SX had applied to deal in interest rate derivatives,equity,futures and options on equity and wholesale debt segments and all other segments which are all now being traded in both the BSE and NSE. After a thorough enquiry into the bourse’s application,Sebi said that it was not satisfied with the bourse and it would not to be allowed for the full-fledged trading. Sebi listed excessive concentration of economic interest in the stock exchange in the hands of the two promoters — MCX and FTIL — and not being fully compliant with shareholding regulations among the reasons for rejecting permission. However,MCX-SX managing director and CEO Joseph Massey said,“The recent decision of market regulator not granting currency options to us along with other exchanges was vindictive,biased and discriminatory like its earlier decision of not granting interest rate future (IRF) to us. Such a decision has already started impacting our business adversely. Currency options and IRF are part of the currency derivatives segment and we have an approved currency derivatives segment.” According to the bourse officials,Sebi’s decision of not granting IRF had discouraged its prospective investors and,therefore,the exchange had to adopt the Scheme of Capital Reduction to comply with MIMPS Regulation as suggested by the Sebi officials. “This scheme was informed to the Sebi chairman in December 2009,seeking guidance and Sebi never objected to the scheme,till the order dated 23 September 2010. We have confidence in the judicial system and we are sure that justice will prevail,” Massey said. It has been observed that the two promoters of MCX-SX were persons acting in concert,and therefore they can together hold not more than 5% of shares in the exchange. The two currently hold five% each in the exchange.