SEBI Grants Conditional Recognition To MCX-SXCCL

Market regulator Securities Exchange Board of India (SEBI) has granted renewal to the MCX-SX Clearing Corporation Ltd (MCX-SXCCL) for a period of one year, ending on October 2, 2015. However, MCX-SXCCL’s recognition is subjected to five conditions laid down by the market regulator.
One of the primary conditions include that the clearing corporation will have to comply with the shareholding requirements of Securities Contracts Regulations (SECC), 2012.

In 2012, SEBI had capped the ownership of a single investor at 5%. At that time, it also announced that 51% of the equity will be held by public shareholders.

The second condition includes that MCX-SXCCL will disassociate itself from entities that were declared as not ‘fit and proper’ by the capital market watchdog. SEBI in a letter dated March 19, 2014 had declared Jignesh Shah-led Financial Technologies India Ltd (FTIL) as not ‘fit and proper’ to hold any stake in stock exchanges and clearing corporations, following the Rs 5,600 crore National Spot Exchange Ltd scam.

SEBI has also directed the clearing corporation to submit an action plan for achieving a minimum net worth of Rs 100 crore within the first nine months from the date of recognition that is October 3, 2014. The market regulator had also fixed the net worth of a stock exchange at Rs 100 crore under the SCR Regulations, 2012. The clearing corporation will be required to submit quarterly status update to SEBI in this regard.

The capital market watchdog has also asked MCX-SXCCL to appoint managing director and compliance officer at the earliest. The Clearing Corporation has invited applications for the same. Under the fifth condition, SEBI has asked MCX-SXCCL to “take immediate steps to rectify the deficiencies pointed out in the systems audit.”