Within two days after the equity markets regulator, the Securities and Exchange Board of India (Sebi), said trading member-representatives would be barred from the boards of stock exchanges, the process of exit has begun.
Uttam Bagri, managing director at BCB Brokerage, a trading member-director on the board of the Bombay Stock Exchange, has given his resignation, according to sources. Asked to confirm, Bagri said, “No comments.” An e-mail query to BSE’s spokesperson remained unanswered.
Apart from Bagri, there are two other trading member-directors on the BSE board – Deena Mehta, managing director at Asit C Mehta Investment Intermediaries, and Anil Shah, promoter of Ahmedabad-based Span Caplease
Other stock exchanges also have trading member-directors on their boards. United Stock Exchange (USE), which offers trading in currency derivatives, has Gaurav Arora, founder and managing director of Jaypee Capital Services, and P C John, executive director, Federal Bank. So do a number of regional stock exchanges.
“The Sebi norms on not allowing trading member-directors are applicable to all stock exchanges. Once the new rules are notified, all trading members on the boards will have to resign,” said Sandeep Parekh, founder of Finsec Law Advisors and a former executive director (legal) at Sebi.
Sebi has allowed the boards of stock exchanges to constitute an advisory committee comprising trading members/clearing members, “to take benefit of experience of such members”. “All recommendations of the advisory committee shall be placed in the ensuing board meeting for consideration and appropriate board action,” it has said.
Once the new rules become applicable, public interest directors will constitute half the board of a stock exchange and shareholder directors the rest.
Besides stock exchanges, boards of clearing corporations will not be allowed to have clearing member-representatives, Sebi has said. Here, two-thirds of the board would comprise public interest directors and shareholder directors the rest.