Bourses may have to wait more for currency options

Sebi unlikely to give go-ahead before a decision on MCX-SX tussle.

Stock exchanges in India will have to wait for some more time before getting the final regulatory approval for launching currency options trading. According to people familiar with the development, the Securities and Exchange Board of India (Sebi) is unlikely to give the go-ahead before a final decision on the ongoing legal tussle with MCX-SX. The high court here has set a deadline of September 30 for Sebi to decide on the MCX-SX matter.

Currently, only the National Stock Exchange (NSE) and MCX Stock Exchange (MCX-SX) offer trading in currency futures, the segment on which currency options will be launched. Both have been doing mock trading in currency options for quite some time and are waiting for the final approval. It is well over a month since the regulator released a circular allowing the introduction of options contracts on the rupee-dollar spot rate.

Industry observers say the regulator will give exchanges the permission to go live with currency options only after sorting the legal tussle with MCX-SX. The one-year extension to the latter does not allow it to launch any "new class" of contracts in securities.

"Sebi wants to promote a level playing field between all the exchanges. If Sebi gives approval to one exchange, the other might raise an objection, which is not conducive to the current situation," said a person familiar with the development. It is believed that if NSE is given approval for launching currency options even while a final decision on the court battle with MCX-SX is awaited, then questions might be raised even in the court rooms. Sebi is already facing allegations of "favouritism" towards NSE.

MCX-SX has petitioned the HC for a response from the regulator on its application for permission to operate as a full-fledged stock exchange. The petition says Sebi should either reject or approve its proposal to do trading in equities, equity derivatives, interest rate derivatives, mutual funds and a separate platform for small and medium enterprises. The petition said the regulator gave no response even three months after MCX-SX fulfiled a key condition, of bringing down the promoters' stake.