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Rediff.com  » Business » Sebi, govt assuage concerns as MCX-SX board threatens to quit

Sebi, govt assuage concerns as MCX-SX board threatens to quit

March 14, 2014 11:54 IST

Jignesh ShahWith the grant of licence to MCX Stock Exchange facing a CBI probe, the government and regulators have begun looking into ways to assuage the concerns of investors, trading members and newly appointed directors of the bourse's restructured board.

While a board meeting is scheduled for Friday, the chairman and other 'public interest directors' of MCX-SX have expressed their desire to quit in the wake of a preliminary enquiry registered by the CBI on Thursday into grant of licence to the exchange way back in 2008 and the subsequent renewals.

Surprisingly, the PE has also been registered against Sebi's former chairman C B Bhave and ex-member K M Abraham, besides MCX-SX promoters FTIL and MCX. Sources said the regulator and the Finance Ministry want MCX-SX's current chairman G K Pillai and other three public interest directors to continue on the bourse.

These four were appointed to the board after Sebi ordered last year an overhaul of board and governance structure of the bourse, after another entity set up by the same promoters got engulfed in a major payment crisis putting a question mark on their 'fit and proper' status to run an exchange.

Top officials had said last night that Pillai and other directors may offer to resign from the board at Friday's meeting as they fear that CBI probe may jeopardise the exchange's prospects and its search for strategic investors.

At a hurriedly-conducted press conference this morning, MCX-SX CEO and MD Saurabh Sarkar also said that ‘it would be speculative to pre-empt resignation of all public interest directors and we would request to refrain from rumours and await the announcement post the board meeting’.

"As in the case of other companies, new members would be nominated by shareholders or independent directors would be appointed by the regulator if the need arises," he said, while adding that today's board meeting was not an ‘emergency meeting’ and was planned a month in advance.

"The exchange has cleared stringent audits by the regulator before granting the renewal in October 2013.

"We were also granted permission to offer trading in Interest Rate Futures segment on our platform in January 2014 indicating the confidence of the regulator on the exchange and its systems and processes," the bourse said.

MCX-SX further claimed that its rights issue was on track and it has received a confirmation from several shareholders for participation. In the rights issue, the existing shareholders are being issued fresh shares to raise funds.

"The outcome of the rights issue will be made public upon its completion by end of this month. Meanwhile, we have also received expression of interest from new investors and the exchange could exercise a preferential allotment post the rights issue if it is not entirely subscribed," it added.

The exchange had also appointed new chief executive officer Saurabh Sarkar last month.

Image: Jignesh Shah

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