MCX Stock Exchange gets conditional one-year renewal; Sebi seeks business plan DATE: 14-10-2014

Radhey Radhey!

MUMBAI: As crisis at its erstwhile promoter group continues to cast a shadow, MCX Stock Exchange today got a one-year conditional renewal to function as a bourse and regulator Sebi asked it to submit a long-term sustainable business plan and take other remedial actions.

Besides, the exchange would not be allowed to introduce any new contract till it meets minimum networth requirement of Rs 100 crore, for which it has been given three-months time.

The current recognition of MCX-SX, which was set up by Jignesh Shah-led Financial Technologies group, expired today, but Sebi has now decided to extend it for a period of one year, commencing tomorrow and ending on September 15, 2015.

The renewal is subject to five specific conditions and compliance to other conditions specified by Sebi from time to time, the Securities and Exchange Board of India (Sebi) said in a statement.

"The exchange shall build its networth (undisputed) to the level as prescribed in Sebi ( SECC) Regulations 2012 within a period of three months from the date of renewal of recognition. Further, the exchange shall also submit a business plan to satisfy the regulator about the long term sustainability of the exchange," the regulator said.

While the exchange has been claiming to have a networth of Rs 100 crore, the regulator does not share the same view and pegs the figure at about Rs 56 crore, sources said.

Sebi further said that MCX-SX "shall not introduce any new contracts till fulfilment of networth requirement" and it would have to comply with Sebi's directions with regard to entities which have been declared not 'fit and proper' person.

The regulator also asked the exchange to "take immediate steps to rectify the deficiencies pointed out in the systems audit as well as special audit."

Besides, the exchange will have to take necessary steps for compliance with shareholding requirement by all the shareholders as per SEBI (SECC) Regulations 2012, Sebi said.

Earlier in March this year, Sebi ruled that Financial Technologies group was not "fit and proper" to own stakes in any stock exchange and directed it to divest existing holdings in MCX-SX and four other entities.

This order followed Shah-led group coming under scanner of various agencies, including CBI, for alleged irregularities in the grant of license to MCX-SX, as also for the payment crisis worth thousands of crores atNational Spot Exchange Ltd ( NSEL), also set up by the same group.

While FTIL group has challenged the Sebi order on their 'fit and proper status', they no more qualify as 'promoter' in MCX-SX and some other entities such as Multi Commodity Exchange (MCX).

Regards
Chandan Singh
CommodityMarket2008 Advisory Services
((91-11-9899993052, 91-11-9818982844))