The markets watchdog Securities and Exchange Bureau of India (Sebi) while renewing the licence of crisis-hit MCX-SX has warned that the licence would be withdrawn if its governance standards were not improved.

The renewed licence for a one-year period will come into effect on September 16, according to a circular released by the regulator on Wednesday night.

Listing out the conditions, Sebi has directed the newest stock exchange to constitute a committee which would look after all its financial transactions related to investment, lending, borrowing and related party transactions. The committee would also supervise the appointment of managers at key positions, infrastructure sharing arrangements and all crucial capital expenditures. The committee, the regulator has said, would comprise two public interest directors and three nominees from institutional investors and would have to be constituted within two days of renewed licence coming into effect. In addition, the committee will also look after the exchange’s clearing functions.

“Any non-compliance with the directions of SEBI as given above or which may be given from time to time or any adverse findings by any other regulator may result in withdrawal of recognition of the exchange,” the regulator said.

The warning issued comes at a time when the stock exchange is neck-deep in crisis for defaulting payments to clients and was forced to suspend trading in commodities over a month ago.