HC tells SEBI to revisit curbs on MCX-SX

The Bombay High Court today asked the Securities & Exchange Board of India to reconsider its obstruction of MCX-SX, the country's premier derivatives exchange, from setting up a full-fledged stock exchange to deal in equity and securities.

The decision comes as a vindication and a relief to the Financial Technologies-promoted MCX-SX, which has been fighting SEBI for over a year over the blockage of its stock exchange plans.

The market watchdog has been claiming that MCX-SX does not meet the rules for the move, particularly in relation to promoters' holding.

"We are setting aside the order passed by SEBI on 23 September 2010. SEBI is directed to reconsider MCX's application afresh within a month after considering the observations made by this court," a bench comprising Justices D Y Chandrachud and Anoop V Mohta, said.

The SEBI had rejected the MCX-SX application saying that it wasn't in "the interest of trade and public interest to allow the application" and cited violation of the MIMPS (manner of increasing and maintaining public shareholding in recognised stock exchanges) rules, which mandates that promoters cannot hold more than a 5 per cent stake.

Earlier, the court had directed SEBI and MCX to arrive at a mutually acceptable solution. This having failed, the high court today set aside that order and said, "During the proceedings before SEBI and the high court, undertakings have been filed by MCX promoters to the effect that the provisions of MIMPS regulations, including the ceiling on the holding of shares by promoters, would be complied with," it said.