The struggling Metropolitan Stock Exchange (formerly MCX Stock Exchange) is faced with a new crisis with most of its members surrendering their licences and seeking refund of the ₹10-lakh deposit as the three-year membership term comes to an end from this year.

Few equity traders The exchange had launched a membership drive in January, 2013, after receiving SEBI approval in December, 2012. Actual trading started in February 2013. Members, who signed up during the initial membership drive in January, 2013, have started surrendering their licences following very low volume of trading in equity, even as trading in currency futures are being executed directly by banks and corporates.

The stock exchange has 300 active members out of about 900.

Dr Naresh Maheshwari, President, Association of National Exchanges Members of India, said some of the members have applied for refunds from MSEI and it is not being granted on the pretext that three years have not lapsed since SEBI registration.

Refund or escrow “The issue was discussed at the recent meeting and we are yet to collate data on the actual number of refunds sought. We have written to exchange officials to either refund the money or keep it in a separate escrow account,” he said.

Financials of the stock exchange appear to be beleaguered as it incurred an expense of ₹22 crore to generate an income of ₹6 crore in the September quarter. It registered a loss of ₹15 crore during the quarter against a loss of ₹12 crore in the same period last year.

The exchange, which faces stiff competition from rivals, registers average monthly turnover of ₹1,000 crore in currency futures and less than ₹1 crore in cash equity. The cost of currency trading in MSEI is on the higher side at ₹105 for ₹1 crore of trade logged, against a fee of ₹40 for ₹1 crore charged by the BSE. However, the NSE charges ₹110.

“I had taken the stock exchange membership during the initial drive in January 2013 and have not logged in a single trade till date. Now, I have applied for refund of the deposit but is yet to receive a response,” said an MSEI member on condition of anonymity.

‘Refund after SEBI nod’ Confirming the development, a spokesperson of MSEI said, “We have received few surrender cases which are at different stages of processing and SEBI approval. Refunds would be made after receiving SEBI approval.”

Denying that members are facing a problem in getting refunds, he said according to the terms and conditions, membership can be surrendered only after a period of three years from the date of SEBI registration. Members’ deposits constitute a part of the Settlement Guarantee Fund which cannot be used for any other purpose other than those stipulated by SEBI, he added.