Sebi renews MCX-SX licence with riders

As of June networth of the exchange stood at Rs 121 cr

The Securities and Exchange Board of India (Sebi) on Monday renewed MCX stock exchange (MCX-SX) license for a tenure of one year with caveats.

In the release issued late evening the market regulator mandated the encumbered exchange to maintain it's networth as per the provisions of Securities Exchange and Clearing Corporations (SECC).

"The exchange shall build its networth to the level as prescribed in SEBI (SECC) Regulations 2012 within a period of three months from the date of renewal of recognition," said the circular.

As of June the networth of the exchange stood at Rs 121 crore with the conversion of Financial Technologies (FTIL) warrants the networth would have been boosted by another Rs 55-56 crore.

The exchange is currently struggling with low volumes and slipping networth, with the erstwhile promoter, FTIL contesting the extinguishing of the warrants, the exchange has an-uphill task to comply with the regulatory requirement.

The regulator has also stated that MCX-SX will have to ensure that they are in compliance of 'fit & proper' criteria for exchanges. Sebi had declared FTIL as unfit to be in stock exchanges. FTIL is yet to divest its stake.

In the final caveat the markets regulator has stated that SX will need to initiate action on the basis of the forensic audit of the exchange.

Kalyaniwalla & Mistry in the forensic audit had highlighted certain discrepancies in the terms of software contract with FTIL, which was skewed in the favor of the erstwhile promoter.