The Bombay High Court has adjourned the hearing of the SEBI-MCX-SX case to August 26.

On Friday, SEBI argued that it was unsure about the possibility of a breach in the MIMPS regulations by MCX-SX in the future. SEBI argued that it has to balance a competing interest — interest of the petitioners as well as the public interest.

It also held that if the petitioner would breach regulations in the future, the impact would fall on investors who are relying on SEBI's recognition of the new trading platform.

The bench hearing the SEBI - MCX-SX case said, SEBI could not reject MCX-SX's application on the basis of a future possibility of non-compliance or breach of regulations.

Mr Justice D.Y. Chandrachud and Mr Justice Anoop Mohta who were hearing the petition filed by MCX-SX against SEBI for rejecting their application to start equities trading, suggested a middle ground for the case.

They asked the petitioner if they were agreeable to give an undertaking which would state that Financial Technologies India Ltd (FTIA) and MCX would reduce their holdings and have a consolidated holding of five percent in MCX-SX. FTIA and MCX, the two promoters, hold 10 per cent stake collectively as of Friday.

MCX-SX's application for equities trading was rejected by SEBI, one of the grounds being that there was too much concentration of ownership in the hands of the promoters — Mr Jignesh Shah and his wife.

The petitioner instantly agreed to bring down the stake to five per cent and submit an undertaking to comply with the MIMPS regulations. However, Mr Darius Khambata, who was presenting SEBI's case, said that he would have to take instructions on this matter from his client.

To ensure that there is no breach of regulations in the future, the judge suggested a veto period during which SEBI could monitor compliances by the applicant.

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