MCX-SX board approves 1:1 rights issue

To meet institutional shareholders to discuss issue; says form team to review technology, other contracts

The board of MCX Stock Exchange (MCX-SX) has approved a 1:1 rights issue, by which existing shareholders in the exchange will be given an option to purchase additional shares in the same proportion as their current stake in order to bring the shareholding in line with Stock Exchanges and Clearing Corporations (SECC) Regulations, 2012.

Multi Commodity Exchange of India and Financial Technologies, the two promoters of the exchange, are required to reduce their shareholding in the exchange to 5 per cent to be in compliance with the SECC regulations. They hold a total of 71.84 per cent if one takes into account warrants which can be converted into shares. The deadline for the exchange to meet the shareholding requirements is January 18, said a source. The board is set to meet institutional shareholders of the exchange to discuss the same on January 13, according to a press release issued by the exchange.

“The board accorded its in-principle approval to make a 1:1 rights issue to existing shareholders in compliance with SECC regulations and decided to have a meeting with institutional shareholders... after which the formal steps for the rights issue will be initiated,” it said.

The shareholders of the exchange include IFCI (13.2 per cent), Union Bank of India (11.47 per cent) and IL&FS Financial Services, which holds 9.18 per cent stake in the exchange. The release also said the Securities and Exchange Board of India had approved the appointment of a new managing director and chief executive officer.

The board has also asked the management to restructure liquidity enhancement schemes which make use of financial payments as incentives for trading on the exchange platform, to attract sustainable liquidity and ‘optimise’ payouts. It noted that it had been able to maintain volumes even after reducing payouts by half. The board also asked for the formation of a separate team to renegotiate current agreements and contracts.

Financial Technologies is the sole technology vendor to MCX-SX, according to a source. Its agreement with the exchange would also, therefore, be subject to review. The release said a firm of chartered accountants had been appointed to conduct a review or audit of the exchange since its inception. It added that the exchange had made an application to start a new product in the futures and options segment as well as for starting interest rate futures.