MCX-SX gets one-year renewal of recognition from SEBI
Moneylife Digital Team 11 September 2013
SEBI renews MCX-SX recognition but directs the bourse and its Clearing Corporation to strengthen governance structure in a manner that Jignesh Shah’s team virtually loses management control or core decision-making powers to a team of directors 
In a late night development, the Securities and Exchange Board of India (SEBI) issued a press release granting a one-year renewal of recognition from 16th September to MCX-SX, promoted by Financial Technologies Ltd (FT), despite the massive scam that has erupted in the FT-promoted National Spot Exchange Limited (NSEL). Under the SEBI directive, effective control over key decisions will now vest with a committee of directors. Does this really mean that a professional management will run the bourse? Well, it will depend on who the chosen directors are. There has been a spate of resignations at the entire FT-MCX group, but barring the public interest directors, most have been chosen by Jignesh Shah’s team.
MCX-SX has been asked to set up a committee comprising two Public Interest Directors and three nominees from among its institutional investors within two days from 16th September to oversee the following functions: all financial transactions related to investment, lending, and borrowing of funds and related party transactions as defined in AS 18; appointment of key management personnel, all facility/infrastructure sharing arrangements and all major capital expenditure. The committee will also advise the board on all major policy matters and maintain a record of proceedings. 
The SEBI release says that a similar committee will also be constituted by MCX-SX Clearing Corporation (MCXCCL), which is a subsidiary of MCX-SX to oversee the clearing and settlement functions in addition to the functions listed above. 
The SEBI release says: “In-order to further secure the management of the exchange and clearing corporation, shareholders of MCX-SX and MCX-SX-CCL in AGM/EGM would examine conflict of interest and compliance with SECC Regulations 2012 by the directors and the key management personnel including managing director, and take appropriate action including reconstitution of board, reappointment of any key management personnel and will report to SEBI within 30 days from the date of renewal of recognition. Any non-compliance with the directions of SEBI as given above or which may be given from time to time or any adverse findings by any other regulator may result in withdrawal of recognition of the exchange.”
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