CSE president, elected directors quit board

CSE president, elected directors quit board
ENS ECONOMIC BUREAU

Kolkata, Mar 30: After the Bomaby Stock Exchange, brokers have now exited from the governing board of the scam-hit Calcutta Stock Exchange (CSE). In a significant development, all the eight elected committee members of the Calcutta Stock Exchange, including its president Kamal Parekh and vice-president K K Daga, resigned from the board on Friday.

CSE Executive Director Tapas Datta said in an official release that the resignations have been submitted with a view to facilitate the proposal for demutualisation mooted by the Securities and Exchange Board of India (SEBI).However, when asked whether the resignation's were as per SEBI's instructions, Dutta said that this was not the case.

With the resignation of eight elected directors including J M Choudhury, Girish Mehta, Ajit Khandelwal, Raju Bachhawat, Rajendra Agarwal and Bipin Dewra, the committee will now comprise six public representatives and three SEBI nominees and the Executive Director. "We are resigning from the board of CSE with a view to demutualise the stock market as mooted by SEBI," a past committee member said.

It may be recalled that the Sebi on Wednesday ordered that brokers would not be allowed to sit on the Bombay Stock Exchange (BSE) governing board until further orders. The decision follows an earlier one, passed on March 12, when Sebi had banned the former BSE president Anand Rathi and six other broker-directors from sitting on the BSE board until further notice.

"We are awaiting instructions from SEBI for the future course of action," a senior CSE official said. The official said the stock market regulator's suggestions would be required for future formation of the CSE governing committee. The resignation of all the elected members on the governing board of the Calcutta Stock Exchange was `not unexpected' and planned late last night, even as the bourse was looking at all possible options in the wake of the new development.

"Had they (the elected members) not resigned the SEBI would have superceded the governing board of the Exchange," highly placed CSE sources said. The sources said that the CSE elected members were expecting that the market regulator would take the line as it did in the case of BSE, where it did not recognise the newly elected members of the bourse, and supercede the board of Lyons Range.

The stage for today's development was set yesterday when a section of CSE brokers came charging towards committee members accusing them of irregularities. The agitated members reportedly entered the president's chamber and contacted SEBI Chairman D R Mehta over telephone and offered him a number of suggestions bypassing the committee members. They had claimed that their suggestions were acknowledged.

Sources close to outgoing elected committee members said they (the committee members) wanted to resign soon after the payment shortfall was detected, but later decided to continue till the crisis was solved. But as soon as yesterday's pay-in was announced, they decided to resign.

A meeting of the elected committee members was fixed forday. After the meeting all of them decided to tender their resignations to exchange secretary P K Roy, the sources said. Though it was not clear whether the resignation was accepted or not, a member of the outgoing committee said, "it is understood to have been accepted. Now SEBI will decide who will be on the administration of the exchange."

Meanwhile, the resignations evoked mixed reactions among exchange members. "I am not sure to whom they submitted their resignation. Ideally they should have submitted it to the members who have elected them," a senior member said. Others said there would be no effect on the administration of the bourse following the resignations, as the executive director was in control of administration as well as surveillance.

"They should have resigned much earlier when the payment shortfall was reported, to keep their position intact," another member said. Some said elected members were being made `scapegoats' following the payment shortfall as they were not responsible for surveillance and supervision of the exchange.