MCX-SX chief, board may quit
Mar 13 2014 , New Delhi
CBI files case against Bhave, others over licence to bourse
The directors on board of the exchange are likely to hold an emergency meeting on Friday, where Pillai and vice-chairman Thomas Mathew T may resign, sources said, adding that two other public interest directors (Ashima Goel and D R Dogra) may also follow suit.
There are apprehensions that the exchange, which is already battling low business volumes due to the problems at the National Spot Exchange (NSEL), may lost its licence if the CBI probe finds something amiss, sources added.
On Thursday, CBI registered a preliminary enquiry (PE) against former Sebi chairman CB Bhave and ex-member KM Abraham, as also against the Jignesh Shah-founded FTIL and MCX, among others. The PE was registered on a day when the investigative agency carried out raids at various premises of NSEL.
CBI said the PE was registered over issues of alleged irregularities in Sebi granting sanction to MCX-SX in 2008 and in renewing the recognition in 2009 and 2010. The CBI probe is to ascertain how MCX-SX was granted permission despite opposition by Sebi.
The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition that its licence will require approval every year.
Bhave and Abraham were known to have been opposed to the grant of licence to MCX-SX, which began working as a full-fledged stock exchange last year after a prolonged battle with the market regulator. Bhave became Sebi chairman in February 2008 and his three-year term ended in February 2011. Abraham’s term as a whole-time member of Sebi ended in 2011.
Incidentally, Abraham had written to the Prime Minister’s Office in 2011 that Sebi was being pressured by finance ministry to go easy on some companies, including MCX and Sahara, against whom he had passed orders. However, these charges were rejected by the finance ministry and the market regulator.
Sources said the present board members of MCX-SX were of the view that the CBI enquiry would jeopardise the prospects of MCX-SX and make it difficult to get any strategic investor. Market regulator Sebi has already issued show-cause notices to the original promoters of MCX-SX after another regulator FMC ruled they were not “fit and proper” to run any exchange in the wake of the NSEL crisis.
Pillai and the three persons were appointed as public interest directors on MCX-SX after Sebi last year asked the exchange to recast its board and change the governing structure in the wake of a major payment crisis at NSEL. NSEL is promoted by the Jignesh Shah-led FTIL and MCX group, who are founders of MCX-SX.
Sources close to the MCX-SX board members said they had tried their best to revive the exchange over the past five months, but the things would get difficult going forward.