Mumbai: Capital market regulator Securities and Exchange Board of India, or Sebi, has extended the approval for MCX Stock Exchange Ltd (MCX-SX) to operate in the currency derivatives segment by one year till 15 September 2010.
MCX-SX will be allowed to launch new products such as interest rate futures and equities only after bringing down the holding of its main shareholders—Financial Technologies India Ltd (FTIL) and Multi Commodity Exchange of India Ltd (MCX)—to 15% each.
“The exchange is fully geared to launch new contracts and products once the divestment is complete as mandated and in compliance with necessary regulatory approvals,” MCX-SX said in a release.
The exchange launched currency derivatives trading last October but it has not been able to enter equity trading so far. Sebi has also not given its approval for interest rate futures trading.
Both National Stock Exchange and Bombay Stock Exchange have the regulator’s approval for interest rate trading. NSE has already launched the product.
MCX-SX has just concluded its international roadshows to divest promoter holding and expects to complete its divestment process to meet regulatory compliance shortly, the release added.
MCX-SX began operations a year ago with FTIL and MCX owning 51% and 49%, respectively.
The promoters’ holdings are now down to 70%. A group of banks, including Bank of India and Union Bank of India, hold 25% stake in the exchange and IFCI Ltd holds 5%.
Under current norms, an investor can hold up to 5% in a stock exchange while depositories, stock exchanges and select financial institutions involved in building market infrastructure can hold up to 15%. Foreign investment in such ventures is capped at 49%.