Can Joseph Massey continue to be the chief of the MCX Stock Exchange? The question cropped up a day after capital markets regulator Sebi said its recognition of the bourse was incumbent upon key management personnel like its MD being in compliance with the Stock Exchanges & Clearing Corporations (SECC) Regulations 2012.
Massey, who is the MD & CEO of MCXSX, is also a director of MCX, the commodity exchange that has jointly set up the stock bourse with Financial Technologies (FT). He is also a director on the boards of other FT group ventures such as the Singapore Mercantile Exchange (SMX) and the Dubai Gold & Commodities Exchange (DGCX). Clause 25 (4)(C) of SECC regulations states that the MD of a recognised stock exchange shall not "hold any position concurrently in the subsidiary of a recognised stock exchange or a recognised clearing corporation, or in any other entity associated with a recognised stock exchange or a recognised clearing corporation."
While MCX is not a subsidiary of MCXSX, it is, according to two securities lawyers, associated with MCX-SX as its promoter.
This, they feel, may be reason enough for Massey to either resign as the chief of the stock exchange or give up directorships of other group ventures to hold his office in MCX-SX, they added. They declined to be quoted terming the matter as "sensitive."
Incidentally, Chitra Ramkrishna, MD & CEO, NSE, is also a director on NSCCL, the clearing arm of the exchange and Ashish Chauhan, MD &CEO, BSE, is on the board of the exchange's clearing arm ICCL. An NSE official clarified Chitra had stepped down from the CEO position of NSCCL in April and currently held a director position.
Asked whether Massey would resign as MD & CEO given the Sebi directive, an MCX-SX spokesperson said, "We would not like to comment on this at present and would comply with the regulations and directions."
Huzefa Nasikwala, founder partner of Nasikwala Law Office, said, "Sebi's directive is correct given the crisis that has engulfed the FT group. Decision making of any person could be affected by virtue of his or her holding directorships across promoter group ventures."
The Sebi circular on Wednesday said, "In order to further secure the management of the exchange and clearing corporation, shareholders of MCX-SX and MCX-SX-CCL in AGM/EGM would examine conflict of interest and compliance issues in terms of the SECC Regulations 2012 by the directors and key management personnel, including managing director, and take appropriate action, including reconstitution of board, reappointment of any key management personnel and will report to Sebi within 30 days from the date of renewal of recognition (September 16, 2013)."
The problems of the FT group relate to suspension of trading on spot exchange NSEL in which it is the dominant shareholder.
Twenty four counterparties on NSEL have defaulted in payout of Rs5,500 crore to thousands of investors after the government in July ordered the exchange to stop offering contracts which were in violation of the spot exchange norms.
Massey, who is the MD & CEO of MCXSX, is also a director of MCX, the commodity exchange that has jointly set up the stock bourse with Financial Technologies (FT). He is also a director on the boards of other FT group ventures such as the Singapore Mercantile Exchange (SMX) and the Dubai Gold & Commodities Exchange (DGCX). Clause 25 (4)(C) of SECC regulations states that the MD of a recognised stock exchange shall not "hold any position concurrently in the subsidiary of a recognised stock exchange or a recognised clearing corporation, or in any other entity associated with a recognised stock exchange or a recognised clearing corporation."
While MCX is not a subsidiary of MCXSX, it is, according to two securities lawyers, associated with MCX-SX as its promoter.
This, they feel, may be reason enough for Massey to either resign as the chief of the stock exchange or give up directorships of other group ventures to hold his office in MCX-SX, they added. They declined to be quoted terming the matter as "sensitive."
Incidentally, Chitra Ramkrishna, MD & CEO, NSE, is also a director on NSCCL, the clearing arm of the exchange and Ashish Chauhan, MD &CEO, BSE, is on the board of the exchange's clearing arm ICCL. An NSE official clarified Chitra had stepped down from the CEO position of NSCCL in April and currently held a director position.
Asked whether Massey would resign as MD & CEO given the Sebi directive, an MCX-SX spokesperson said, "We would not like to comment on this at present and would comply with the regulations and directions."
Huzefa Nasikwala, founder partner of Nasikwala Law Office, said, "Sebi's directive is correct given the crisis that has engulfed the FT group. Decision making of any person could be affected by virtue of his or her holding directorships across promoter group ventures."
The Sebi circular on Wednesday said, "In order to further secure the management of the exchange and clearing corporation, shareholders of MCX-SX and MCX-SX-CCL in AGM/EGM would examine conflict of interest and compliance issues in terms of the SECC Regulations 2012 by the directors and key management personnel, including managing director, and take appropriate action, including reconstitution of board, reappointment of any key management personnel and will report to Sebi within 30 days from the date of renewal of recognition (September 16, 2013)."
The problems of the FT group relate to suspension of trading on spot exchange NSEL in which it is the dominant shareholder.
Twenty four counterparties on NSEL have defaulted in payout of Rs5,500 crore to thousands of investors after the government in July ordered the exchange to stop offering contracts which were in violation of the spot exchange norms.
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