Sebi may stick to its guns in MCX-SX case

The Securities and Exchange Board of India (Sebi) is likely to stick to its stand in its legal tussle with MCX Stock Exchange Ltd (MCX-SX).

According to sources, the regulator has stuck to its September order in an advance reply to be filed with the court this week. Sebi also may not agree to the demand to reopen the case to give a hearing to the promoters of the exchange, Financial Technologies (FTIL) and Multi Commodity exchange Ltd (MCX).

“The reply will be filed today or tomorrow, if it has not already been filed. It will be reiteration of the interim order,” a person directly involved in the proceedings told Business Standard.

Lawyers representing the MCX group said they are yet to receive a copy of the reply. An MCX spokesperson said the matter was sub judice and hence he would not like to comment.

The case is scheduled to come up for hearing in the Bombay High Court on June 27.

MCX-SX, an exchange operating in the currency derivatives segment, has challenged a September 2010 Sebi order that rejected its application to deal in other segments, including equities.

Sebi had found the exchange short of compliance in its shareholding norms. It also took objection to two key shareholders, FTIL and MCX, holding warrants and their buyback arrangements with some banks. FTIL and MCX were found to be acting in concert, again a violation of Sebi rules.

In a hearing in April, the counsel representing FTIL and MCX argued the findings were all related to the promoters, who were never given an opportunity of hearing by Sebi before the exchange’s application was rejected.