Sources said MCX holds warrants in MSE, issued when Financial Technologies (FTIL) reduced its stake along with that of MCX, by converting shares into warrants without any voting rights, to meet Sebi guidelines. Later, FTIL exited MCX and MSE.
MCX has the five per cent and warrants. It recently wrote to Sebi to be allowed to convert the warrants into equity, so as to result in the exchange holding 15 per cent in MSE. It has also started selling the extra warrants.
Sebi has not decided on the MCX proposal. A questionnaire sent to MCX on this wasn’t answered.
Recently MCX, according to reliable sources, sold warrants to IL&FS amounting to Rs 2.50 a share. With this, IL&FS will now hold five per cent in MSE, the maximum permissible equity to any corporate body.
A source in the know said if Sebi granted MCX the permission to raise stake, the latter would become the single largest shareholder in MSE. And, could use its expertise in lifting the fortunes of MSE, which has been losing market share for some quarters. MCX-SX was once the first in market share in the currency derivative segment. Since then, BSE has significantly increased its market share and MSE’s has fallen substantially, though its interest rate futures volume has been rising of late.
The MCX proposal to raise stake was sent prior to presentation of the Union Budget. It now has added significance, as the Budget proposal to merge the commodity market regulator, Forward Markets Commission, with Sebi would result in commodity exchanges being re-termed as stock exchanges. In that scenario, MCX would be able to offer its members a facility for dealing in currency derivatives that are traded on MSE. The analyst said commodity traders need more currency hedging and this would be a much better combination for the exchange business.