Initiating a major restructuring process, MCX Stock Exchange (MCX-SX), on Friday, said its board accorded in-principle approval to make a 1:1 rights issue to its existing shareholders, which include 22 banks and financial institutions.
The board “decided to have a meeting with institutional shareholder representatives on January 13 to obtain their concurrence on the proposal, after which the formal steps for the rights issue will be initiated,” MCX-SX stated in press release after its board meeting.
Commodity exchange MCX and stock exchange MCX-SX were undergoing restructuring since the exit of their promoters, including main promoter Jignesh Shah.
The Forward Markets Commission (FMC) declared Financial Technologies India Ltd (FTIL), Mr. Shah and former MD and CEO of MCX-SX, Joseph Massey, not ‘fit and proper’ to hold any management position in any exchange in India.
Without disclosing the name, the exchange said that it received approval from the Securities and Exchange Board of India (SEBI) for the appointment of the new Managing Director and CEO and that “he was likely to join shortly.”
The board asked the management to present a concrete proposal for restructuring of the liquidity enhancement schemes (LES) of the exchange so as to attract sustainable liquidity and optimise payouts.
“The board also noted that the exchange has been able to maintain business volumes even with about 50 per cent reduction in LES payout,” it added
The exchange also working on cost reduction by reviewing and renegotiating the existing contracts and agreements. It also proposed further actions for cost rationalisation “so that the viability of the exchange could be put on a sound footing.” FTIL is the software vendor for the stock exchange.
The board also appointed a chartered accountants firm to conduct a comprehensive audit/review of the exchange ‘since inception’. Further, the exchange had made applications to SEBI for introduction of a new product in the F&O segment and also for introduction of interest rate futures in the CD segment.
