MUMBAI (Reuters) - The Securities and Board Exchange of India (SEBI) has directed shareholders of the country's new MCX-SX stock exchange to resolve any conflicts of interest within its board and management team as a precondition for renewing the bourse's license.
In an order issued late on Wednesday, the regulator asked the MCX-SX shareholders to reconstitute its board and rejig its top management if necessary to improve governance standards within the stock exchange.
The order from SEBI comes after MCX-SX's affiliated commodity exchange, the National Stock Exchange of India Ltd (NSEL), abruptly suspended trading. NSEL has since struggled to square off outstanding contracts worth over 55 billion rupees.
SEBI did not elaborate on why it had issued the conditional approval. However a source at the regulator said the move was a direct consequence of the NSEL development and was aimed at preventing a similar situation on the stock exchange platform.
The regulator extended the exchange's licence for a period of one year beginning September 16 subject to its conditions being met. (For the SEBI order, see http://link.reuters.com/fyp92v)
SEBI also directed the exchange to form a committee of independent directors that will be responsible for overseeing financial transactions and management appointment at the bourse.
Financial Technologies (India) Ltd(NSI:FINANTECH.NS - News), which ran NSEL, holds a 26 percent stake in Multi Commodity Exchange of India Ltd(MCEI.BO). Financial Technologies and Multi Commodity Exchange are the promoters, or founders, of the MCX-SX stock exchange.
MCX-SX, which goes by the tagline "India's new stock exchange," commenced equity trading only earlier this year and sold itself as an alternative to the National Stock Exchange and the Bombay Stock Exchange.
The regulator has asked MCX-SX's shareholders to report to SEBI its findings as well as remedial actions within 30 days from the approval.
(Reporting by Himank Sharma; Editing by Sonya Hepinstall)