 "MCX scores in High Court, promoter scores in trade")
Financial Technologies has reacted positively to the Bombay High Court ruling which favoured MCX-SX in its case against market watchdog SEBI.
Sebi had raised objection to Financial Technologies promoted Multi Commodity Exchange (MCX) creating a new stock exchange. Sebi had said that the stock exchange has not complied with the norms of shareholding pattern.
There is a ceiling above which promoter stake can not be increased in case of a stock exchange, says Sebi. In the case of MCX-SX the shareholding was above the norm.
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In the November 2011 hearing, MCX and Financial Technologies would reduce their holdings to 5 percent from their previous holding of 10 percent.
MCX and Financial Tech held 51 percent and 49 percent, respectively, in the stock exchange. This was later brought down by divesting their stake to financial institutions and issuing convertible warrants with an option to buy them back in the future.
According to the shareholding pattern the two promoters were found to be “persons acting in concert” - meaning they were controlled by a common entity.
The regulator had argued that since the two are acting in concert, their combined stake should be lower than 5 percent.
Reduction of stake by issuing convertible warrants was not the right way, Sebi had argued. The regulator had maintained that these were make-believe arrangements because money was temporarily parked outside. Also, it argued that the buyback arrangement was not legal.
The Bombay High Court set aside Sebi’s objection, paving way for a new equity exchange. The court after dismissing most of the argument has given Sebi till 13 April 2012 to consider the application on fresh grounds.
Financial Technologies currently trades at Rs 819.50 - a gain of 6.5 percent.
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