BackMCX-SX approaches HC against Sebi order
MCX-SX approaches HC against Sebi order
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Mumbai: MCX-SX on Monday said it has filed a writ petition in the Bombay high court challenging market regulator Sebi’s order rejecting the bourse’s plea to be allowed to function as a full-fledged stock exchange.
The petition was filed on 29 October in relation to Sebi order of 23 September, where the regulator rejected MCX’s application made by MCX Stock Exchange Ltd (MCX-SX) for approval to commencement of its equity, F&O, WDM and other segments and products, the exchange said in a statement.
The petition of MCX-SX is expected to be taken up for admission after court vacation.
Rejecting the application, Sebi had said that MCX-SX had violated shareholding norms and its promoters lacked honesty.
MCX-SX promoted by India’s largest commodity bourse MCX and another group company FTIL, 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 where BSE and NSE have a presence.
In a 68-page order, Sebi, after an enquiry into the application, said that it was “not satisfied that it would be in the interest of trade and also in public interest to allow the application."
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.
It noted 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 5% each in the exchange.
Later, Sebi gave approval to two other bourses, NSE and United Stock Exchange (USE) for currency options trading, but did not allow the same on MCX-SX.
Commenting on the petition, MCX-SX managing director and CEO Joseph Massey said: “The recent decision of Sebi 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."
Massey further said that 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 Sebi officials.
“This scheme was informed to the chairman, Sebi way back 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 added.
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