Jignesh Shah-led group firm MCX Stock Exchange (MCX-SX) has moved the Bombay High Court against market regulator the Securities and Exchange Board of India (Sebi) for not allowing it to start equity trading despite complying with all regulations.

In a writ petition filed yesterday, MCX-SX urged the high court to direct the Sebi to grant clearance for commencing operations in the equity segment as it had complied with the guidelines issued by the regulator.Three days prior to filing the petition, the MCX-SX came out with a public notice expressing anguish at the delay in getting licence and also at the misinformation campaign launched by rivals.

The petition filed through J Sagar Associates would come up for hearing on July 28, the Bombay High Court sources said.

The stock exchange pleaded that although it had complied with all Sebi regulations and norms to commence operations, it has not yet been given the permission to commence equity trading.

MCX-SX also alleged that the Sebi was favouring a rival stock exchange.

In its advertisement last week, the MCX-SX, without naming the National Stock Exchange, alleged that its rival was killing competition by offering free trading in currency derivatives, and thus making it difficult for it to get business and investors.

“There have been attempts by some elements at spreading misinformation to create doubts among our shareholders and to undermine our reputation and business for their benefit,” the MCX had said.

In an apparent attack on Sebi, it had said the go-ahead for doing full-fledged business was elusive despite MCX-SX having taken all the necessary steps to make it compliant to the relevant regulations about trading in equities, equity derivatives, interest rate derivatives, mutual fund and debt market among other instruments.

Although MCX-SX became operational in October 2008, it is offering only currency derivatives product.

The stock exchange had said that one of the key conditions put on it was related to bringing down promoters’ stake and it did so with a “capital reduction cum arrangement” scheme and Sebi was informed about the same, way back in December 2009.

While the scheme was already approved by the board and shareholders, it also got the nod of the Bombay High Court in March 2010 and the same was also notified to the Sebi on April 7, 2010, MCX-SX said.

But, the exchange has got “no response from Sebi in this regard” as of July 2010, it had noted in the public announcement.

source: Business-Standard

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