The Bombay Stock Exchange (BSE) will hold an election of broker-members on March 6 to fill the 7 vacancies in its governing board for the year 2002-2003.
The election comes at a time when the Securities and Exchange Board of India (Sebi) is set to disallow elected brokers to function as directors on the board of stock exchanges.
The BSE, on the other hand, is bound by its bye-laws which obligates the board to hold the election every year by March.
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"According to the bye-laws, the powers of running the exchange is vested with the elected directors and it is mandatory for the BSE to hold elections every year till a new set-up such as corporatisation is put in place. It is up to Sebi whether to allow the elected directors to function as directors," a top BSE official said.
While the watchdog has yet not cleared the BSE's proposal of corporatisation and demutualisation, BSE has been shackled in the absence of the full quorum of the governing board.
A recent directive by Sebi quoted the finance minister's announcement in the Parliament on March 13, 2001, that "corporatisation of stock exchanges by which ownership, management, and trading membership would be segregated from each other".
The Sebi board, in its meeting on December 28, 2001, had decided that no broker member of the stock exchanges shall be an office bearer of an exchange i.e., hold the position of president, vice president, treasurer etc, and directed all the recognised stock exchanges to suitably amend its rules, articles of association etc, within two months from January 10, 2002.
However, the order has not specified whether the brokers cannot be elected and represented as directors on the board leaving room for interpretation, sources said.
Last year, Sebi had suspended the elected office-bearers of the BSE governing board in March 2001 following the scam investigation.
The bourse held fresh elections for the year 2001-2002 and elected 3 members but were restrained by Sebi from acting as directors on 28 March 2001.
Following the directive, the elected members Sunil M Shah, Apurva Shah and Ashok Kumar Damani had quit the board.
BSE governing board has a total strength of 19 members comprising of 10 elected broker members, 5 public representatives, one executive director, 3 Sebi nominees and one RBI nominee.
The move to elect broker directors on the BSE governing body has also revived hopes for the election of broker directors on the governing council of the derivatives segment. The election process, initiated by the BSE authorities has surprised the market players.