The Securities and Exchange Board of India (Sebi) has finally shone the green light at MCX-Stock Exchange’s (MCX-SX’s) equity aspirations.
Following a prolonged battle that went all the way to the Supreme Court, the regulator has allowed it to start operations in both cash and derivatives segments of equities as well as interest rate futures and the wholesale debt segment, according to a statement issued by the exchange.
The court battle with Sebi began after the regulator rejected its application in 2010 for starting operations in the equity segment for not appropriately meeting shareholding guidelines.
Under the then existing Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges (MIMPS) Regulations, ownership in an exchange is limited to 5% for ordinary stakeholders and 15% for specific financial institutions.
MCX-SX tried to meet these obligations by reducing the paid-up capital of the company and issuing warrants to its promoters.
Sebi denied MCX-SX permission to start equity operations, noting that it had not sought, nor obtained regulatory approvals for the scheme used by the exchange to comply with the regulatory requirements. The battle went to the High Court and then the Supreme Court.