 "Why today's MCX board meeting is crucial")
The board of directors of the country’s largest Multi Commodity Exchange (MCX) is meeting today to discuss some sensitive issues. The board was reduced to just 8 members from a full strength of 14 members in a period of 2 months. The slew of resignations came in following the NSEL scam and the market regulator's new norms on board composition. The 8 member board is expected to be expanded today with 6 new appointments.
The board is also expected to discuss the fallout of the resignation of MD & CEO,Shreekant Javalgekar from the exchange last week. The FMC had directed the 5 member committee of the board to run the exchange till a new candidate is found to head the exchange.Sources say that like in the case of MCX-SX, the new MD for MCX may also be an outsider as MCX’s existing deputy MD, P K Singhal has refused to take up the top job. FMC had also told the MCX board to divest Dipak Shah from his responsibilities of heading the surveillance department.
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Another crucial development that will be closely watched is the possible reappointment of Jignesh shah on the board as a director. FMC had issued a directive a few days back to all the commodity exchanges that no shareholder director can be a permanent director on the board.Jignesh shah has continued to be a permanent director since 2006 on the board of MCX. He will now have to resign and seek reappointment.Usually, this should have been a mere formality, however Jignesh Shah is facing FMC’s fit and proper scrutiny to run a commodity exchange following the NSEL fiasco. Hence,FMC’s approval for reappointment will be a important development to watch out for.
As per the FMC’s norms, MCX board with a strength of 14 members can only have one anchor investor director. At present, there are 2 directors, Shah and Paras Ajmera. If the board size is kept at 14, Financial technologies can only nominate one representative on the board.However, the articles of association of MCX allowing raising the count to 18 members.If the restructured board opts to raise the count, FTIL will be able to place its 2 representatives on the board.
Sources also indicate that the board may declare one or two members as defaulters who could not meet their payment deadlines when gold prices scaled an all time high a month ago.