MCX Stock Exchange Initiates Divestment Process

Total 18% equity to be divested in the first round with Indian Banks.
6.48% equity divestment with Union Bank of India and Bank of India completed.
Additional 11.52% equity divestment with other prominent public & private banks is in process of completion.

MCX Stock Exchange announced today divestment of 6.48% equity to Union Bank of India and Bank of India through primary offering at Rs.10 per share (Face Value Re.1/- per share) involving total investment of Rs.87.5 crores in the company.

The exchange is also expecting on further 11.52% equity divestment to other banks. This disinvestment is in line with the regulatory requirements of SEBI and subject to further compliances, if any. Total 18% equity will be divested with the top Indian public and private sector banks as strategic investors in the first round.

These banks have been long term partners and have earlier invested in MCX, the parent exchange which is also India’s largest commodity derivative exchange. MCX Stock Exchange is the new national level stock exchange recognized under section 4 of Securities Contract (Regulation) Act, 1956 by SEBI. Its currency market segment has been valued by Ernst and Young at Rs.1390 crores. The Central Board of Direct Taxes (CBDT) has notified MCX Stock Exchange Ltd. as a recognized stock exchange under the Rule 6 DDA of the Income Tax Act in its official gazette.

MCX Stock Exchange is one of the India’s largest currency futures exchange with over 575 (SEBI registered) members including 17 banks and is accessed from over 451 cities and towns in India. The Exchange has conducted over 100+ training workshops and education programs to drive awareness about hedging currency risk on the exchange. It has also launched its website in 11 national languages. The daily average volume of the exchange has grown from Rs.324.78 crores in October 2008, when it started operations to Rs.2923.46 crores in May 2009. MCX-Stock Exchange Clearing Corporation (MCX-SX CCL) approved by SEBI and RBI is the second clearing corporation in the country and subsidiary of MCX Stock Exchange with 51% equity ownership. MCX-SX CCL has state of art risk management system which uses SPAN based value at risk margining model apart from various other online and offline risk management tools. HDFC, ICICI, Union Bank, State Bank, Axis Bank, IndusInd Bank, Punjab National bank, Corporation Bank, Syndicate Bank, Vijaya Bank & YES Bank are among the 52 clearing members of the MCX-SX CCL offering their clearing services.

Mr. Joseph Massey, MD & CEO, MCX Stock Exchange, said “MCX Stock Exchange, India’s new stock exchange has established global reputation as the new generation financial institution with highest standards of governance and impeccable track record of execution on all fronts, in a relatively short time. The recent strengthening of the Board and the disinvestment to some of the best managed banks in India, as per SEBI guide lines, reinforces those credentials. MCX Stock Exchange has become the international case study on how regulators globally can implement fair and unbiased competition in capital markets with level playing field to foster innovation and democratize economic growth. This has been made possible, primarily because of the vision and conviction of the Government of India and the Regulator.”

Mr. Massey added “banks will be invited to have representation on the Board in proportion to their equity holding in the exchange on rotational basis. The exchange is also working with financial advisors on finalizing the list of Indian investors and International investors (including international exchange/s) for the second round of divestment to ensure that it remains on track to meet the timeline set by the regulator.”

The overwhelming response by the leading banks to invest in the new capital market infrastructure reaffirms the confidence in the reform process for further development of financial markets to drive inclusive and equitable growth.

Mr. Ashok Jha, Chairman IAS (retd.) (Former Finance Secretary, GOI)
Mr. Jignesh Shah, Vice Chairman
Mr. Joseph Massey, MD & CEO
Dr. S. A. Dave Director(Former Chairman UTI & SEBI)
Mr. U. Venkataraman, Director & CEO (Currency Segment)
Mr Vepa Kamesan, Director (Former Deputy Governor, RBI),
Mr. S S Thakur, Director (Former Controller of Foreign Exchange, RBI),
Mr. B D Sumitra, Director (Former Managing Director, CCIL),
Mr. C M Maniar, Director (Senior Partner, Crawford Bailey & Co) and
Mr. V Hariharan, Director

MCX Stock Exchange Advisory Board includes –

Mr. G N Bajpai, Former Chairman of SEBI and LIC
Mr. Venkat Chary, IAS (retd.), Chairman, MCX (Former Chairman FMC)
Mr. A V Rajwade, Risk Management Consultants- Forex, IRD, Derivatives
Mr. Jamal Meclai, CEO of Meclai Financial and authority on forex markets
Dr. L. C. Gupta, Director, Society for Capital Market R & D.
Mr. Naresh Deshpande, Former Principal Legal Advisor, RBI
Mr. Ganesh Rao, CEO of IBS Forex Ltd