SEBI permitted MCX Stock Exchange (MCX-SX) to operate as a Full-fledged Stock Exchange

Market regulator Securities and Exchange Board of India (SEBI) on 10 July 2012 permitted MCX Stock Exchange (MCX-SX) to operate as a full-fledged stock exchange thereby ending nearly four-year-long wait of the bourse. With the grant of the permission MCX-SX will from hereon be able to offer additional asset classes such as equity and equity F&O (Futures and Options), interest rate futures and wholesale debt segments.

So far the market regulator had been renewing MCX-SX’s licence for one-year periods only. However it had not allowed MCX-SX to operate in segments other than currency derivatives stating that the bourse was not compliant to the shareholding and other regulations.

The promoters of MCX-SX, in their submissions and the undertakings to SEBI mentioned that the shareholding of MCX and Financial Technologies (India) Ltd. (FTIL) (the two promoters) would be brought within the 5 per cent limit within 18 months from 10 July 2012 itself. The promoters also informed SEBI that the combined voting rights of FTIL and MCX in the stock exchange would not exceed 5 per cent at any point of time. MCX and FTIL would reduce their rights over equity arising from instruments such as warrants to within the shareholding limit in accordance to what was specified in the revised SEBI regulations within three years.

SEBI’s decision is likely to bring in more competition in markets.

MCX is the largest commodity exchange in the country while its promoter FTIL offers technology and other solutions for exchange businesses. MCX-SX was first granted recognition by SEBI in September 2008, however it was allowed to conduct trading only in the currency derivatives segment only.

SEBI granted permanent recognition to eight stock exchanges in the country. Of the total eight only two of them — BSE and NSE are operating as active national level bourses across the segments.