The feud continues

MCX-SX challenges SEBI order with writ petition in the Bombay High Court

BY Siddharth Kumar
Delhi

MCX Stock Exchange (MCX-SX), which is at loggerheads with the capital market regulator, has filed a petition in the Bombay High Court challenging the order of the Securities and Exchange Board of India (SEBI) that rejects the bourse’s application against their starting business in equity and some other segments.

The writ petition was filed on October 29 and is expected to be taken up for admission after the court vacation.

"We have confidence in the judicial system and we are sure that justice will prevail," MCX-SX Managing Director and Chief Executive Joseph Massey said in a statement.

SEBI on September 23, 2010, had passed an order rejecting the application made by the bourse to get a regulatory nod for commencement of trading in equity, futures and options, wholesale debt market and other segments products. SEBI cited the failure to comply the mandatory shareholding norms by promoters, among several other issues, for the rejection of the application.

Earlier, in July, MCX-SX had dragged the market watchdog in the Bombay High Court for delaying the decision over its application to start new products.

MCX-SX, promoted by Multi Commodity Exchange (MCX) and Financial Technologies (India) Ltd (FTIL), presently offers trading in currency derivatives.

In a further setback to MCX-SX, last month SEBI granted the green signal to the National Stock Exchange and the Bombay Stock Exchange (BSE)-backed United Stock Exchange to begin trading in currency options. MCX-SX, however, failed to get the nod till now to start trading in currency options, a derivative instrument used to hedge against currency fluctuations.

"The recent decision of SEBI not granting currency options to us along with other exchanges was vindictive, biased and discriminatory, like its earlier decision of not granting IRF (interest rate futures) to us. Such a decision has already started impacting our business adversely," Massey said.

Despite a weaker broader market, shares of FTIL on Monday gained over 2 percent on the BSE to settle at Rs 1,063.40 each. The BSE bellwether Sensex shed was down 0.7 per cent.

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