Sebi rejigs MCX-SX board; Shah, Massey step down

Jignesh Shah, founder of the Financial Technologies group, and Joseph Massey, managing director and CEO, MCX-SX have resigned from the board of MCX-SX as teh Sebi on Wednesday stepped in the Securities and Exchange Board of India (Sebi) on Wednesday stepped in to ring-fence the bourse from any fall-out of the NSEL scam.

The move was widely expected after the Forward Markets Commission (FMC) issued show cause notices to Financial Technologies and directors of NSEL – Jignesh Shah, Joseph Massey and Shreekant Javalgekar.  Also Read: EOW arrests NSEL's Amit Mukherjee, is Anjani Sinha next? The decision came after MCX-SX shareholders met at an extraordinary general meeting (EGM) conveyed under the directions of Sebi. MCX-SX has 18 banks and financial institutions as shareholders who together hold 87.42 percent stake in the exchange. (Shareholders include: IFCI, Union bank, PNB, IL&FS Financial Services, Corporation Bank, Indian Overseas Bank, Indian Bank, OBC, Allahabad Bank, Andhra Bank, BoI, BOB, Syndicate Bank, HDFC Bank, SBI, United Bank, Vijaya Bank, Axis Bank) The capital market regulator had asked shareholders of MCX-SX to hold an EGM to examine conflict of interest and compliance with SECC (Stock Exchanges & Clearing Corporations) Regulations by directors and key managerial personnel including its managing director, Joseph Massey. Sebi also asked shareholders to take appropriate action including reconstitution of the board, reappointment of key managerial personnel and report by October 16. This corporate action has led to founder and vice chairman Jignesh Shah and Joseph Massey resigning with immediate effect. Massey had earlier withdrawn his nomination as director of MCX. Sebi had earlier warned MCX-SX that its conditional recognition could be revoked if any of its directors were to get an adverse finding from any regulator. The move ring-fences the stock exchange from any adverse action by Sebi. Sebi also appointed Thomas Mathew as the public interest director on the board of MCX-SX. The board of MCX-SX now has five directors including U Venkataraman, whole time director who would be assisting the Special Committee of public interest directors in running the day to day affairs of the stock exchange. The new board of MCX-SX comprises: - Thomas Mathew, Public Interest Director - SU Kamdar, Public Interest Director - U Venkataraman, Whole Time Director - Ashima Goyal, Public interest director - DR Dogra, Public Interest Director Sebi had as part of its September 11 circular asked MCX-SX to set up a special committee comprising of two public interest directors and three nominees of institutional investors. MCX-SX is yet to disclose the constituents of this committee. Repeated query from CNBC-TV18 on the constituents of this committee met with no response from MCX-SX spokesperson, but he clarified that information on the committee and its constituents have been shared with Sebi.