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MCX-SX Gets Nod To Start Bourse

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The Securities and Exchange Board of India (Sebi) on 10 July allowed the MCX-SX to operate as a full-fledged stock exchange, a development that ends nearly four-year-long wait of the bourse and will impart more competition to the capital market.

The MCX Stock Exchange (MCX-SX) was first granted recognition by Sebi in September 2008 but was only allowed to conduct trading in currency derivatives.

With this approval, the MCX-SX would be able to offer additional asset classes such as equity and equity F& (futures and options), interest rate futures and wholesale debt products.

Welcoming the decision, MCX-SX vice-chairman Jignesh Shah said: "We are thankful to the regulator and policy makers for effecting calibrated reforms that will foster a pro-competitive environment in India's exchange industry."

Sebi has so far granted permanent recognition to eight stock exchanges in the country but only two of them — the Bombay Stock Exchange and the National Stock Exchange — operate as national level bourses across segments.

The MCX-SX and the United Stock Exchange conduct trades in currency derivatives only.

With Sebi's latest decision, the MCX-SX is likely to become the third major national-level full-fledged stock exchange.

The market regulator has so far been renewing MCX-SX's licence for one-year periods, but has not been allowing the exchange to operate in segments other than currency derivatives, saying the bourse had not complied with the shareholding and other regulations. Its current licence is valid up to September 15.

The promoters of MCX-SX, in their submissions and undertakings to Sebi, have said that the shareholding of MCX and FTIL (the two promoters) will be brought within the 5 per cent limit within 18 months from today.

The combined voting rights of FTIL and MCX in the stock exchange would not exceed 5 per cent at any point of time, the promoters have told the regulator.

The MCX is the country's largest commodity exchange, while its promoter FTIL offers technology and other solutions for exchange businesses.

MCX-SX's MD and CEO Joseph Massey said the exchange would soon announce its plans for launching trading in new asset classes.

Chairman Ashok Jha said: "This is indeed a huge development for the Indian capital market industry and will create a conducive environment for growth of all asset classes."

(The Telegraph)


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