Moneycontrol Bureau
The Central Bureau of Investigation, which has launched a probe into the grant of license to the bourse five years ago, has registered a preliminary enquiry against former Securities and Exchange Board of India (Sebi) chairman CB Bhave and whole-time member KM Abraham.
According to the CBI, the PE was registered on issues of alleged irregularities in granting sanction to the MCX-SX by Sebi in 2008 and renewing the recognition in 2009 and 2010.
Interestingly, MCX-SX, which was initially allowed to only conduct trades in currency derivates, fought a bitter battle with Sebi to obtain a licence to conduct equity trading and had often accused Bhave and Abraham of favouritism and working against the MCX Group.
In fact, the now-retired Abraham, who later achieved fame for going after the Sahara bond issue, which is now in the apex court, had also written to the Prime Minister's Office complaining that the Finance Ministry was trying to pressure the regulator to go easy on MCX.
There were also reports that Bhave and Abraham’s tenure was not extended in 2011 only because of their tough stance against MCX and its group companies.
MCX-SX, which has also already been battling low volumes due to the discovery of Rs 5,600-crore payments default scam at sister exchange NSEL, is promoted by Jignesh Shah’s Financial Technologies.
The issue of grant of equity trading licence to the stock exchange went to court after the regulator took a stance that it did breached the maximum promoter ownership limit prescribed under the Manner of Increasing & Maintaining Public Shareholding in Recognised Exchanges (MIMPS) guidelines and after various stake sales, legal wrangling and back-and-forth over several years was it allowed to start equity trading.
MCX-SX had then accused Bhave of working against it as the former Sebi chief had previously worked for an arm of market leader NSE and thus had a conflict of interest.
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