The decision follows an April directive from the Supreme Court asking Sebi reconsider MCX-SX’s plea to offer new asset classes on its platform. MCX-SX has until been operating a metals and energy trading exchange. It was first granted recognition by Sebi in September 2008, but it was allowed to conduct trading only in the currency derivatives segment.
Following the Sebi approval, it will now be able to offer equity and equity futures & options, interest rate futures and wholesale debt segments.
“This is indeed a huge development for the Indian Capital Market industry and will create a conducive environment for growth of all asset classes,” said Ashok Jha, chairman of MCX-SX, in a statement.
At present, Sebi has granted permanent recognition to eight stock exchanges in the country, but only two of them -- Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) – are operating as active national level bourses across the segments.
MCX-SX and USE (United Stock Exchange) are present in the currency derivatives trade only. With Sebi's latest decision, MCX-SX is likely to become the third major national-level full-fledged stock exchange.
Sebi has been so far renewing MCX-SX's license for one-year periods, but had not allowed the exchange to operate in segments other than currency derivatives, saying the bourse was not compliant to the shareholding and other regulations. Its last license was valid up to September 15 this year.
The apex court had in April asked the markets regulator to give its reply by July 11.
Sebi had revised its MMPs norms on June 21, which paved the way for MCX-SX to start operating an equity exchange.
Under the new norms, exchanges have been given three years to comply with shareholding regulations. Currently, Sebi rules limit promoter shareholding at 5 per cent, and the regulator had said that MCX-SX’s promoters indirectly held more than that in the proposed exchange.
In a statement, the company said shareholding of MCX and Financial Technologies India Ltd (FTIL) in the equity share capital of MCX-SX will be brought under the 5 per cent limit within 18 months, and that the combined voting rights of the promoter groups would not exceed 5 per cent of the paid-up equity share capital of MCX-SX at any point.
“MCX & FTIL shall reduce their entitlement to equity or rights over equity arising from such instruments (Warrants) in excess of the shareholding as specified in the revised SECC regulations within a period of 3 years from the date of notification of the SECC regulations,” it added.
(With inputs from PTI)