MCX-SX distances itself from promoters, plans rebranding

After reclassifying MCX and Financial Technologies as non-promoters, the MCX Stock Exchange is firming up plans for a name change and move out its head office from Jignesh Shah-owned Exchange Square at Andheri.

Last month, the MCX-SX board reclassified both its promoter entities, which hold 5 per cent each, as non-promoters without assigning any reason.

“We are already in the process of evaluating a change in identity as well as shifting closer to offices of banks and other financial institutions for operational efficiency. It may take some time but the process of evaluation has commenced,” said an MCX-SX spokesperson.

On reasons for reclassifying promoters, he said that over a period of time the shareholding pattern of the exchange had changed, and now over 88 per cent of MCX-SX stake is held by public and private sector banks and domestic financial institutions.

The reclassification is in line with the provisions of the Companies Act and SEBI regulations, he said.

Incidentally, the commodity market regulator Forward Markets Commission has ruled both the MCX and Financial Technologies as not ‘fit and proper’ to own stake in a commodity exchange after a group company, National Spot Exchange, defaulted on a ₹5,600-crore trade settlement.

With the MCX-SX declaring these entities as non-promoters, it remains to be seen whether MCX can take a leaf out of this development to classify Financial Technologies as a non-promoter. If this happens, it will be interesting to see whether the FMC ruling on the ‘fit-and-proper’ account can be applied on a non-promoter — Financial Technologies, which holds 26 per cent stake in MCX.

Asked whether MCX-SX is trying to distance itself from the scam-tainted group companies, the spokesperson said the exchange is run by an eminent board and a professional management team and FTIL continues to be the technology vendor for the exchange.

The major shareholders of MCX-SX include IFCI (13.2 per cent), Union Bank of India (11.47 per cent) and IL&FS Financial Services (9.18 per cent). Capital market regulator SEBI has instructed both MCX and Financial Technologies to halve their holding from 10 per cent in the stock exchange.

MCX-SX plans to raise capital through a rights issue on a 1:1 basis at ₹10 a share. It expects to complete the rights issue before mid-March. MCX and Financial Technologies have expressed their intention not to subscribe to the rights issue. If the board of these companies approve the proposal, then their holding in MCX-SX will come down and meet the SEBI directive.