The Securities and Exchange Board of India (SEBI) has granted the Multi Commodity Exchange of India (MCX) approval to operate as a fully fledged stock exchange, after lengthy litigation in Bombay High Court and the Supreme Court of India.
The approval means the MCX Stock Exchange (MCX-SX) – like the National Stock Exchange and Bombay Stock Exchange – is free to offer trading in stocks, futures and options on stocks and indexes, interest rate derivatives and other products. Lawyers at J Sagar Associates say the increased competition could lead to more products for the Indian market, improved trading platforms and cost benefits.
As a condition of the approval, MCX-SX’s promoters – MCX and Financial Technologies (India) – must reduce their combined shareholding in the exchange to 5% within 18 months. They also have to reduce their entitlement to equity or rights over equity from instruments such as warrants to 5% within three years. The combined voting rights of the two promoters cannot exceed 5% of MCX-SX’s equity capital, as stipulated by SEBI.
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