The Security and Exchange Board of India (Sebi) has extended one year time for India’s newest stock exchange MCX Stock Exchange Ltd (MCX-SX) to complete its divestment process. The regulator gave the exchange a one-year extension till September 15, 2010 to complete its divestment in order to meet regulatory compliance, which was earlier to complete by September 30, 2009.
MCX-SX will benefit from this extension as it gets more time to rope in investors. Once the divestment procedure is completed, the MCX-SX management will approach Sebi for formal permission to offer equities trading. The exchange has just concluded its international and domestic road shows for disinvestment, and expects to complete the process to meet regulatory compliance shortly.
Joseph Massey, Managing Director & CEO, MCX-SX stated that the renewal and extension of divestment offer by the Sebi will be well accepted by all market participants in the financial space and ensure appropriate competitive interest in the market.
The promoters of the stock exchange, Financial Technologies (FT) and commodity exchange MCX, have already divested 30% stake to domestic public-sector and private banks and institutions, while the remaining 70% stake is with them. The promoters intend to bring down their respective stakes to 15% each, in line with regulations that limit promoter ownership in a stock exchange to 15%.
In October 2008, market regulator Sebi gave approval to the exchange to commence trading in currency futures on the condition that the promoters would divest their stakes within a year’s time by September 30 to get permission for equities trading. With this extension till September 15, 2010, the equities trading of the exchange has been deferred simultaneously by one year.
MCX-SX has already attracted interest from around six private equity funds for a 5% stake each. The firms include General Atlantic, Fidelity International Ltd, hedge fund TPG-Axon, CME Group, Abu Dhabi Investment Authority (ADIA) and a group company of Singapore’s sovereign wealth fund Temasek. The two exchanges LSE and NYSE Euronext have also shown interest in acquiring a 5% stake each in MCX-SX.
MCX-Sx will also enter interest rate futures (IRF), equities (Cash & F&O), indices and ETF, fixed income (Debt) and SME products, which are subject to regulatory clearance.
As of July, the daily turnover of MCX-SX has increased tenfold to Rs 3,838 crore, up from Rs.324 crore when it was launched in October 2008.