Market regulator Sebi has asked the new stock exchange MCX-SX to explain why it should be given permission to start trade in equities in view of issues relating to its shareholding, including by Financial Technologies and commodity exchange MCX.
While sources said that a notice was sent to MCX-SX, a Sebi spokesperson declined to comment.
Incidentally, MCX-SX had sought the intervention of Bombay High Court complaining that Sebi was delaying permission to it for offering equity trading among other segments. The court in turn directed Sebi to take a decision on the issue by September 30.
When contacted, the exchange spokesperson said that MCX-SX had complied with all necessary directives and informed Sebi accordingly.
"As directed by the High Court that after 4 weeks from the date of the order (August 10) and after the MCX-SX has responded, Sebi has the right to seek further clarifications and opportunity be given to MCX-SX for hearing...," he said.
Amid reports of the Sebi notice, Jignesh Shah led Financial Technologies shares slipped by 0.38 per cent to close at Rs 1,365 a share on the National Stock Exchange. MCX, a commodity exchange promoted by Financial Technologies, is also planning to come out with an initial public offer.
Incidentally, MCX-SX had come out with an advertisement campaign recently claiming that its rival was killing competition by offering free services in currency derivatives and thus making it difficult for it to get business and investors. Though it did not name the rival, NSE is one of the exchanges that is offering free services in currency derivatives.
"Sebi has since (the Bombay High Court order on August 10) written to us and MCX-SX will re-iterate its compliance to the Sebi soon," the MCX-SX spokesperson said in a statement.
According to reports, MCX-SX was told to present its case relating to concerns expressed by the regulator about the way the exchange has allegedly violated the Manner of Increasing and Maintaining Public Shareholding (MIMPS) regulations.
While MIMPS norms stipulate that no single shareholder could have more than five per cent stake in an exchange, the reports said that the although in compliance with the norms, MCX-SX promoters, FTIL and MCX, had issued warrants to themselves, a move that raised possibility of they raising their holding at a later date.
Asked about the reports, the exchange spokesperson said board resolutions of both FTIL and MCX make it clear that at no point of time they would "violate the MIMPS guidelines of shareholding structures and limit."
He said that "as per the high court directive of August 10, 2010, regarding MCX-SX permission from Sebi to start trading in equities and other segments, MCX-SX has complied with all necessary directives."
