The Bombay high court has set aside an order of market regulator, Securities and Exchanges Board of India (Sebi) barring MCX Stock Exchange (MCX-SX) from beginning equity trading.

The high court has asked SEBI to review the petition by MCX-SX to start equity trading. The court has said that the regulator has one month to hear MCX-SX. SEBI had ruled that it has found MCX-SX non-compliant with ownership norms in 2010.

Justices DY Chandrachud and Anoop V Mohta said in the order today that Sebi should review its decision and reconsider the request of the exchange to set up a new equities trading platform.

SEBI was against the way in which the promoters of the exchange, Multi Commodity Exchange of India Ltd (MCX) and Financial Technologies India Ltd (FTIL) issued their warrants to banks and financial institutions. Sebi found the parties in violation of the rules. It also said that the exchange was not run properly and does not qualify for receiving the license for beginning equity trading.

MCX-SX had moved the Bombay high court against the decision by Sebi. The court observed that the three objections put forward by Sebi were incorrect.