A little over a decade after it was launched amidst much fanfare in 2009, the Metropolitan Stock Exchange of India (MSEI) may find it difficult to get its licence renewed next year if it fails to raise funds in the near future.

As per the rules, stock exchanges have to maintain ₹100 crore net worth all the time. But MSEI’s net worth in terms of cash is likely to have slipped below the ₹100-crore mark, sources told BusinessLine.

MSEI was known as MCX-SX earlier when the exchange was jointly promoted by Financial Technologies (rechristened as 63Moons) and commodity bourse MCX.

SEBI forced Financial Technologies out from the exchange space after it was embroiled in the NSEL spot exchange fiasco in 2013. But since then, MSEI’s fortunes have worsened as the management remained mired in controversies even as it did not find enough regulatory support.

Pain points galore

MSEI has also not been able to recover ₹856 crore from the National Stock Exchange. In 2011, the Competition Commission of India found NSE guilty of anti-competitive practices and awarded ₹856 crore to MSEI.

But the NSE has challenged the award in the Supreme Court (SC) and the matter has been languishing there for nearly a decade now. While it awaits the apex court view on the matter involving the NSE, MSEI has been claiming GST credit of ₹43 crore and MAT credit entitlement of ₹1.86 crore to boost its net worth.

But, SEBI recently told the exchange that it cannot claim available tax credits as part of its net worth, sources said.

As of March this year, MSEI enjoyed a net worth of ₹165 crore, which dropped to ₹158 crore for the June quarter.

But MSEI does business for only a few lakhs of rupees now and has been living on the edge even as Latika Kundu, MD, told BusinessLine that things were improving. Large institutional promoters had pumped in huge cash into the exchange through a rights issue a few years ago in anticipation that bourses in India are a scarce commodity.

But MSEI has failed to live up to the expectations. It has also not pursued the NSE-related case in the SC agressively.

As of th June quarter, MSEI’s loss stood at ₹6.7 crore. The net loss for the financial year ended March 2021 was ₹24.03 crore. SEBI has ordered a forensic audit of MSEI’s dealings and financial transactions on whistleblower complaints of mismanagement and fraud.

MSEI did not respond to an an e-mail query sent to it on October 6.

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