Sebi renews MCX-SX currency futures licence for one yr

Focus now shifts to application for starting equity trading, interest rate futures

The Securities and Exchange Board of India (Sebi) has renewed the MCX Stock Exchange’s (MCX-SX’s) licence for offering currency futures for one more year. The licence was due to expire on September 15.

“As directed by the (Bombay) High Court, Sebi had to take a decision on the stock exchange licence renewal,” said an MCX-SX spokesperson. The court, while hearing a writ petition on August 10, had given Sebi one month to renew the licence.

This comes in the backdrop of the ongoing legal tussle between the exchange and the market regulator. MCX-SX has filed a writ petition in the Bombay High Court against the delay in getting the regulatory approval for launching trading in equity, derivatives and interest rate futures segments and a separate platform for small and medium enterprises (SMEs). MCX-SX alleged Sebi was not giving the final approval even though it had complied with the shareholding norms for exchanges.

With the renewal for currency futures in place, the focus will now shift to the September 30 deadline that the court has set for the regulator to decide on the exchange’s application for launching new segments. There are reports that Sebi has sought clarifications from MCX-SX on various issues, including compliance with the shareholding norms and the buyback arrangements with some banks.

“Sebi has since written to us and MCX-SX will reiterate its compliance (with all the rules) to Sebi soon. MCX-SX expects a right and lawful decision from Sebi by September 30, and has full faith in the government of India and the judicial system of the country,” the exchange spokesperson said in response to an email query.

The spokesperson added the exchange had told the regulator that the boards of Financial Technologies India Ltd (FTIL) and Multi Commodity Exchange of India (MCX) had passed resolutions that they would never raise their stake in MCX-SX in a manner that violated the Manner of Increasing and Maintaining Public Shareholding (MIMPS) guidelines.

The court, while hearing the arguments, had directed MCX and FTIL to pass these resolutions. This was after the Sebi counsel raised concerns over the issue of warrants that could be converted into equity shares at a future date. While the two promoter entities – MCX and FTIL – have brought down their stake to five per cent each, they continue to hold warrants amounting to 60 per cent of the exchange ownership.

“According to the high court directive of August 10 regarding MCX-SX permission from Sebi to start trading in equities and other segments, MCX-SX has complied with all necessary directives and informed Sebi accordingly. This includes board resolutions of FTIL and MCX that it will, at no point of time, violate the MIMPS guidelines of shareholding structures and limit,” said the MCX-SX spokesperson.