In the light of the discussion above on the role and position of a Stock Exchange as the first line regulator in the Securities market, classified, pari passu with other public bodies, as “State” under Article 12 of the Constitution, and based on all relevant material before me, I am not satisfied that it will be in the interest of trade and in public interest to allow the Application, for the reasons summarised below:
a. The concentration of economic interest in a recognised stock exchange in the hands of two promoters is not in the interest of a well-regulated securities market.
b. The Applicant is not fully compliant with the MIMPS Regulations as substitution of shares by warrants is an attempt to work around the requirements of Regulation 8 of the same and the same is not a mode recognised as falling within the scope of the said Regulations.
c. The Applicant has been dishonest in withholding material information on arrangements regarding the ownership of shares of its shareholders and therefore has not adhered to fair and reasonable standards of honesty that should be expected of a recognised Stock Exchange.
d. The Applicant has failed to ensure compliance with Regulation 8 of the MIMPS Regulations as its two promoters (FTIL and MCX) are persons acting in concert and cannot hold more than 5% in the equity shares of a recognised stock exchange.
e. The Applicant is instrumental to buyback transactions that are illegal under the SCR Act and cannot be considered to have adhered to fair and reasonable standards of integrity that should be expected of a recognised Stock Exchange.
On the basis of the aforesaid findings, I, in exercise of the powers conferred under Section 4 of the Securities Contracts (Regulation) Act, 1956 read with Sections 11(1) and 19 of the Securities and Exchange Board of India, 1992 hereby reject the Application of MCX Stock Exchange Limited dated April 7, 2010.
DR. K. M. ABRAHAM
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
PLACE: MUMBAI
DATE: SEPTEMBER 23, 2010
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