MCX-SX to challenge Sebi order

The MCX Stock Exchange (MCX-SX) has said it is exploring legal options after the Securities and Exchange Board of India (Sebi) today rejected its application for starting equity trading in segments other than currencies.

The markets regulator’s order said the exchange was not fully compliant with regulations.

“We will challenge the order in the relevant legal forum. We are studying the lengthy order in all its aspects and will take appropriate measures, in consultation with our legal counsels. We have confidence and respect in the resilience of our judiciary and the appellate forums and are sure that justice will be done to us in the near future,” Joseph Massey, MD & CEO of the exchange, told Business Standard.

An MCX-SX statement added: “Sebi has rejected our application for approval of other segments only. Till justice is done to us, we would continue to work on our currency derivative segment.”

It had, it said, given an undertaking to the regulator on legal options on capital reduction issues, the basis of Sebi’s stated objections, on the basis of a Bombay High Court order. “However, the regulator upheld allegations mentioned in the showcause notice given to us,” the MCX-SX statement said.

Earlier, the exchange had written to Sebi, questioning the regulator’s motive in opposing its capital restructuring plan. It had charged Sebi with ulterior intent in delaying its application. “The silence of Sebi despite having full information with them since October 5, 2009, appears to be with the design of damaging the applicant’s business and reputation. The advantage of this delay and the damage to our business and reputation is only to NSE (National Stock Exchange, a rial one),” the exchange had said.

An earlier notice of Sebi had said the exchange’s scheme of capital reduction was not acceptable to them and asked why the application should not be rejected. The MCX-SX statement of today said, “We find the same injustice, discrimination and prejudice continued in this order.”

MCX will have to decide where to challenge the order, for which normal appellate forum is the Securities Appellate Tribunal or to the high court, where a case was filed earlier.