SEBI Rejected MCX-SX's Application

The Securities and Exchange Board of India (SEBI) rejected MCX-SX's application to offer trading in equities, debt, and derivatives on 23 Sept 2010. SEBI also rejected the exchange's request to offer an SME trading platform. The management and control of MCX-SX was with two promoters, Multi-Commodity Exchange (MCX) and Financial Technologies India Ltd (FTIL). SEBI pointed out that the holdings of the promoters in MCX-SX were beyond the permissible limit of 5 per cent stake allowed to any entity in any stock exchange in India. MCX-SX therefore undertook a capital reduction scheme as well as issued warrants to the promoters- MCX and FTIL, to bring down their combined holding of 70.92 per cent. The content of the warrants which constituted “right to equity” resulted in MCX and FTIL holding an effective 71.90 per cent in MCX-SX.
MCX-SX offers trading in currency futures and was recognised as a stock exchange by SEBI in 2008 for a period of one year pending compliance. SEBI had twice extended this recognition and SEBI’s current recognition tenure would extend up to 15 September 2011.