The Bombay High Court today asked the Securities and Exchange Board of India (Sebi) whether it would accept an undertaking from the promoters of MCX Stock Exchange (MCX-SX) that they would maintain their equity holding at 5% and not exercise the option of converting warrants into equity.
The suggestion was made by Justice DY Chandruchud and Justice Anoop Mohata, who were hearing a petition filed by MCX-SX against the market regulator for not allowing it to start equity trading despite complying with all regulations.
The Sebi representatives responded by saying that they would seek instructions from the Sebi Board in this regard.
As per the Sebi guidelines, no promoter of a stock exchange can hold more than 5% equity stake.
In the above case, Financial Technologies (FTIL) and MCX, promoters of MCX-SX, had reduced their equity stake to five% by evolving a method wherein they gave warrants to 18 PSU banks.
They assured the court that the warrants would not be converted into equity.
FTIL concluded its arguments today, while MCX will give its submissions tomorrow. Thereafter, Additional Solicitor General Darius Khambata would argue on behalf of the Sebi.
In a petition filed on July 19 last year, Jignesh Shah-led MCX-SX had urged the high court to direct the Sebi to grant clearance for commencing operations in the equity segment as it had complied with the guidelines issued by the regulator.
Three days prior to filing the petition, the MCX-SX came out with a public notice expressing anguish at the delay in getting license and also at the misinformation campaign launched by rivals.
