ISE employees cry foul on severance packages

Employees write to Sebi requesting intervention

Disgruntled employees of the Inter-connected Stock Exchange (ISE) have approached the regulator, Sebi, in an attempt to secure an adequate compensation package before the closure of the exchange.

ISE, a regional exchange promoted by 14 regional exchanges, is on its way to shut down operations this month after failing to meet Sebi’s minimum networth criteria for stock exchanges. Sources said that the exchange has completed its closure formalities which include submitting an exit fund, to be used for compensating investors with the exchange, to Sebi. Exchange officials said the exit letter from Sebi was expected this month.

Even while the exchange readies itself to pull down its shutters, the 100-odd employees of the ISE are protesting the lack of a compensation package. Employees claim that the governing board of the exchange has reneged on its earlier promise of providing a compensation package for its employees, similar to the ones adopted by the other regional exchanges which are on their way out, like the Bangalore Stock Exchange and the Madras Stock Exchange.

EXIT WITHOUT COMPENSATION

• ISE, on its way to shutting shop, withdraws its promise of an employee compensation package
• Disenchanted employees write to Sebi asking for intervention
• Request for absorption into an alternative business plan also remains unheeded
• Employees allege the ISE governing board is under pressure from a group of shareholders
• Exit letter from Sebi expected this month
• Employees are worried that the exit letter would end all liabilities of the exchange towards its employees

In a letter written last month to Sebi, of which Business Standard has a copy, employees had alleged that an earlier decision for compensation packages is now being reconsidered.

“It was gathered that the Board of Directors in their different meetings had decided the compensation package but in every next meeting it has been revised and now it was gathered that the Board of Directors are not willing to honour their own decision and under the tremendous pressure of a group of shareholders restraining themselves from implementing their own decision,” said the letter dated October 27.

An email sent to the exchange and Sebi remained unanswered.

In an earlier letter written to Sebi, dated August 12, a copy of which has also been seen by Business Standard, employees said that their pleas to the ISE Governing Board for appropriate compensation package or retention in an alternative business plan was left unheeded.

The letter signed by over 50 employees of the exchange had also requested Sebi to ensure that the employees’ compensation is also made a part of the valuation report filed by the Sebi-appointed agency. Prior to the exit of an exchange, a Sebi-appointed valuation agency undertakes a complete assessment of the exchange to arrive at a valuation of the exchange including its liabilities.

Another request was to absorb employees of the exchange into an alternative business plan by the exchange but even that is unlikely now, employees said.

For now, the employees said that they were pinning their hopes on the regulator intervening in the matter.

“We are hoping to hear from Sebi before the exit letter is here. Many of us had moved from other cities with our families to join the exchange and worked hard on setting up the exchange and its trading platform. Our livelihood is at stake for now,” said another exchange employee. In 2012, Sebi had come out with regulations asking stock exchanges to maintain a minimum networth of Rs 100 crore alongside a turnover of Rs 1,000 crore. Those unable to meet the requirements were asked to shut down by May 2014.