Joseph Massey may have to quit as MCX-SX MD

Move may be prompted by Sebi's directive that there should be no conflict of interest between exchange and its shareholders

Joseph Massey, managing director and chief executive of MCX Stock Exchange (MCX-SX) and a confidant of Financial Technologies Group (the promoter of MCX-SX) founder Jignesh Shah, might have to resign, owing to the terms set by the Securities and Exchange Board of India (Sebi) while renewing the exchange’s licence for a year.

In a late evening directive on Wednesday, Sebi said, “The shareholders of MCX-SX and MCX-SX-CCL (MCX-SX Clearing Corporation Ltd) in AGM (annual general meeting)/EGM (extraordinary general meeting) would examine conflict of interest and compliance with the Stock Exchanges and Clearing Corporation Regulations by the directors and key management personnel, including the managing director, and take appropriate action, including reconstitution of board and reappointment of any key management personnel, and report to Sebi within 30 days from the date of renewal of the recognition.”

Sebi also did away with the powers of the managing director and said a committee comprising two public interest directors and three nominees from institutional investors in MCX-SX would oversee all financial transactions related to the investment, lending and borrowing of funds and related party transactions, the appointment of top management personnel, all facility/infrastructure-sharing arrangements and all major capital expenditures. The new committee would also advise the board on all major policy matters. A similar independent committee would look after the settlement process.

When contacted, an MCX-SX spokesperson said, “We have received directions from Sebi while granting the renewal for MCX-SX and we would comply with the directions within the stipulated period. We cannot comment further at this stage.”

Apart from Massey, another MCX-SX director, Paras Ajmera, is representing shareholders’ interest.

The fate of whole-time director U Venkataraman, who looks after the debt segment as chief executive, isn’t known yet. Lawyers say the Sebi directive is in line with the ‘fit and proper’ guidelines for directors that seek adherence to the highest standards of corporate governance from a director.

The public-interest directors on the MCX-SX board are Vepa Kamesam, Asha Das, M Y Khan, Jayanth Deo, V K Khanna and P K Chhokra.

Financial Technologies Group companies are facing regulatory issues after one of the group’s exchanges, National Spot Exchange Ltd (NSEL), defaulted on payments worth Rs 5,500 crore to investors. NSEL, as well as its board and directors are facing investigations from multiple agencies including Sebi, the Forward Markets Commission, the Enforcement Directorate and the Mumbai Police.

Small investors have filed public interest litigation in the Bombay High Court, seeking action against NSEL and its promoters.