MCX Stock Exchange seems to be on a comeback mode. It recently received approval from SEBI to change its name to Metropolitan Stock Exchange of India. The name change was part of the turnaround strategy to give the exchange a new identity, disassociate from the erstwhile promoters, Financial Technologies. In an interview with BusinessLine , Saurabh Sarkar, MD, MCX-SX, clears concern over regulatory compliance. Edited excerpts:

Have you received SEBI approval on FTIL stake sale?

The transaction has gone through and the same is subject to post facto approval of SEBI with respect to nine parties, as they are exceeding the 2 per cent limit. We have submitted all papers relating to their fit-and-proper status to SEBI, which is under the regulator’s consideration.

Even assuming a worst-case scenario, where post facto approval is not given for one or more parties, it would only mean that the relevant parties would have to divest their excess shareholding to other persons who are ‘fit and proper’ (to hold a stake in an exchange). The issue of shares would not have to be reversed, nor is it capable of being reversed. Hence, the accretion to our net worth is also irreversible.

What is the latest on FTIL stake sale after one of the nine investors, SKS Capital and Research, calling off its deal?

Though it’s true that one of the investors who originally proposed to purchase a small stake of 50 lakh warrants from FTIL reneged on his commitments, another purchaser has come forward to take the same. The papers relating to the alternative deal have already come to the exchange and are in process.

Is SEBI open to FTIL holding 17.26 crore warrants in the escrow account?

FTIL has indicated its intention to exit the stake in our company in toto unambiguously. Their continuance to hold 17.26 crore warrants is temporary. We have sought certain clarification from SEBI regarding the interpretation of the regulations, in application to the said additional warrants and shall abide by the directions of the regulator.

Do you have ‘undisputed’ net worth of ₹100 crore without including the sale of FTIL warrants?

The exchange has net worth (undisputed) comfortably above the regulatory minimum.

Does the board under the Companies Act have the rights to cancel warrants of an investor and then allot them to the same person?

The Companies Act does not have any provision regarding cancellation of warrants. We are an unlisted company.

Our board had considered a legal opinion confirming that revisiting the decision to treat warrants as extinguished was not subject to any legal infirmity under the circumstances. We have provided all details to SEBI.

Why did SEBI not allow you to launch new contracts?

All necessary papers have been submitted to SEBI, which seem to be under their consideration. We are awaiting their go ahead.

Have you requested MCX to hold its stake in the exchange?

We have requested MCX to maintain 5 per cent shareholding in the exchange under the extant regulatory norms. It currently owns 2.88 per cent equity shareholding, besides warrants in the exchange.

Are members surrendering their licence?

No. In fact, we have been receiving new membership applications. MCX-SX is a six-year-old institution. We are grateful to our members who have stood firmly by us in what have been dark hours. They recognise the need for active competition in this crucial infrastructure space. Repaying their faith is what drives us.

Your views on foreign direct investment in the stock exchanges...

We recognise this as a very positive reform. It will help us bring best practices to the market. It will also bring in high quality FDI in this space.

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