sebi:Order/SM/DP/2022-23/22692
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Facts / Headnote
Penalty of Rs. 2,00,000 imposed on the Noticee
Provisions invoked
- s. 15
- s. 15H
- s. 15I
- s. 15J
- s. 28A
- s. 15F
- s. 18
- s. 23H
- s. 23J
- s. 23
- s. 7(3)
Regulations
- Reg. 7
- Reg. 30
- Reg. 38(2)
- Reg. 41(3)
- Reg. 41
Parties
- Multi Commodity Exchange of India Limited
Holding
MCX violated Regulation 38(2) of SECC Regulations, 2018 read with Regulation 41(3) of SECC Regulations, 2012 by entering into a contract and deploying funds for development of spot-trading software without prior SEBI approval and without a separate legal entity, and penalty of Rs. 2,00,000 under Section 15HB of the SEBI Act was imposed.
Full text
In the matter of Multi Commodity Exchange of India Limited Page 2 of 19 Regulations, 2018”) and Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (hereinafter referred to as “SECC Regulations, 2012”) was observed.
In the matter of Multi Commodity Exchange of India Limited Page 3 of 19 approval of SEBI. Further, Regulation 41(3) of SECC Regulations, 2012 mandates that a recognized stock exchange and recognized clearing corporations shall not engage in any unrelated activity except through a separate legal entity and as permitted by SEBI.
In the matter of Multi Commodity Exchange of India Limited Page 4 of 19 6. Further, in response to the SCN, the Noticee vide letter dated November 29, 2022, inter alia, submitted the following: i. In the Union Budget for the Financial Year 2017-18, in the budget speech, Hon’ble Finance Minister of India announced to integrate spot market and derivative markets for commodities. ii. The Government of India set up an Expert Committee under the Chairmanship of Prof. Ramesh Chand, Member, NITI Aayog to examine the legal, technical and operational aspects of the commodity spot and derivatives markets with a view to eliminate the gaps and overlaps that exist between these two markets and recommend requisite measures for achieving the desired integration between the commodity spot and derivatives markets in India. The Committee in its report dated February 2018 concluded that the integration of these two markets was imperative and one of the ways of operationalising the same was by creating an electronic spot market platform, where the price of a commodity from across the country is available. iii. In fact, around this time, there was a proposal approved by the SEBI Board which contemplated issuance of unified licenses for brokers, integrating their registration for the equity and commodity derivative markets. Thus, it became apparent since this time that spot commodities markets would be materializing soon, which necessitated existing commodities exchanges like MCX to ready itself f
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Source: SecMarx — sebi:Order/SM/DP/2022-23/22692. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.