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The Supreme Court on Wednesday directed SEBI to take a decision within three months on the application of MCX Stock Exchange Ltd (MCX-SX) to start an equity exchange.
The apex court also said the capital market regulator should amend the regulations concerned before considering the MCX-SX's application. MCX-SX currently deals only with currency derivatives.
The regulations that will be amended are known as MIMPS regulations or the ‘Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges Regulations, 2006.
The amendments will relate to the legality of buyback agreements and whether commonality of objective is required to be proved when a person is deemed to be a ‘person acting in concert' for the purpose of MIMPS regulations.
The SEBI had filed a Special Leave Petition before the Supreme Court against the Bombay High Court order in the MCX-SX case.
The High Court had set aside the SEBI order, which did not grant permission for MCX-SX to start an equity exchange.
The SEBI had dismissed MCX-SX's application saying it was not in “the interest of the trade and the public to allow its plea.”
The High Court, last month, wanted SEBI to consider MCX-SX's application afresh within a month. However, SEBI said this time period was not enough.
The SEBI contended before the apex court that the High Court had failed to consider the illegality of the buyback agreements. It also opposed as “erroneous” the High Court view holding that something more is required to establish commonality of objective when a person is deemed to be a person acting in concert.
SEBI wanted the apex court to grant leave to appeal against the High Court order and an interim stay of the same order.
The apex court, in its order, said SEBI, while amending its regulations, will not be bound by the Bombay High Court findings.
The Supreme Court then disposed of SEBI's plea after noting that there was mutual consent between the parties on amending the MIMPS regulations.
The Attorney-General, Mr G.E. Vahanvati — representing SEBI — told the apex court that the capital markets regulator would amend the MIMPS regulations in three months.
Senior advocate Mr Harish Salve, appearing for MCX-SX, said his client does not intend to fight the regulator and will comply with the amended rules.
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