The capital markets regulator Securities and Exchange Board of India (SEBI) has renewed the licence of MCX Stock Exchange (MCX-SX) for one year till September 15, 2015, subject to five conditions and compliance to other conditions.
The securities market watchdog has directed the exchange to build its net worth (undisputed) to the level as prescribed in the regulations within a period of three months from the date of renewal of recognition, it said.
The exchange is not allowed to launch any new contract before fulfilling the net worth requirements. Recently, MCX-SX cancelled the warrants worth Rs 56.24 crore held by the promoter Financial Technologies India Ltd (FTIL) and also transferred the non-refundable deposit against the warrants to the capital reserve to increase its net worth.
The decision by the company came under dispute after Jignesh Shah-led FTIL decided to contest the action.
SEBI has also asked the exchange to present a business plan about the company's long-term sustainability. MCX-SX has also been asked by the regulator to comply with 'fit & proper' criteria for exchanges.
Also, the regulator has asked the exchange to initiate action on the basis of the forensic audit of the exchange. Earlier, Kalyaniwalla & Mistry, in the forensic audit, had pointed out certain discrepancies in the terms of software contract with FTIL, which was skewed in the favour of the erstwhile promoter.
Previously, SEBI had declared FTIL as unfit to be in stock exchanges, in light of the Rs 5,574.35 crore National Spot Exchange Ltd (NSEL) scam. FMC also directed FTIL—which owned 26 per cent stake in MCX—and Shah to bring down their stake in the exchange to 2 per cent.
The firm had started the process to reduce holding in March 2014 for divesting its 24 per cent stake in MCX and had appointed JM Financial as an investment banker for the same.
Last month, FTIL received commodity market regulator Forward Markets Commission's approval to sell 15 per cent stake to Kotak Mahindra Bank in MCX for Rs 459 crore ($76.2 million). FTIL had separately sold its remaining 5 per cent holding in MCX last month, thereby exiting the commodity bourse completely.
(Edited by Joby Puthuparampil Johnson)