The Securities and Exchange Board of India (Sebi) is in no mood to change its stance in the ongoing legal tussle with MCX Stock Exchange (MCX-SX).
In its reply filed in the Bombay High Court, the regulator has said that the exchange concealed important facts and has failed to comply with the regulatory requirements related on shareholding norms.
The regulator's reply is in line with the September 2010, order by which Sebi rejected the application of MCX-SX for launching new segments, including equities, derivatives and a separate platform for small & medium enterprises.
In its reply, the regulator highlighted the fact that the promoters of the exchange concealed its buy-back arrangement with other shareholders. It further reiterated that the promoters had not yet complied with the shareholding norms known as MIMPS (Manner of Increasing and Maintaining Public Shareholding in Recognised Exchanges Regulations). The next hearing iis scheduled for August 3.
MCX-SX, an exchange operating in the currency derivatives segment, has challenged a September 2010, Sebi order that rejected its application to launch a full-fledged exchange. 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.