NSE seeks conditional nod from Sebi on Limaye's appointment as MD & CEO

NSE aims to settle unfair access probe with regulator and is open to monetary penalty, say sources

The National Stock Exchange (NSE) has sought conditional approval from the Securities and Exchange Board of India (Sebi) on the appointment of Vikram Limaye as its managing director (MD) and chief executive officer, said sources.

NSE has been waiting since March for Sebi to approve this. Limaye is also on the Supreme Court-appointed Committee of Administrators (COA) to run the Board of Control for Cricket in India. Sebi is concerned at Limaye's dual roles and wants him to step down from the COA if he is to take charge at the country's largest bourse.

“The issue is falling between two stools. Limaye wants a confirmation on his appointment before he can give up on the (BCCI) assignment,” said a source in the know. 

“NSE has expressed to Sebi that Limaye is keen to take up the NSE job full-time but needs more certainty on his appointment. To resolve the situation, NSE has approached Sebi to approve the appointment as conditional on Limaye quitting the COA before he joins NSE.”

The exchange’s board of directors had approved the appointment in February. Limaye is a former MD of IDFC, the infrastructure finance company. A four-member search panel had suggested his name.

Sources say the NSE board might have to start looking for an alternative if the issue doesn't get resolved quickly. The appointment is critical for NSE – it wished to also settle the preferential access controversy with Sebi. And, has initiated the process for its much-awaited Initial Public Offer of equity.

In the absence of a full-time chief executive, the onus has shifted to NSE’s board. Chaired by Ashok Chawla, it is keen to get the preferential access issue settled. Sources say it is even willing to pay a monetary penalty for the alleged lapses at its co-location facility, on unfair access on data feeds to certain brokers. 

Last month, Sebi issued showcause notices to NSE and 14 of its officials in the matter.

“The thinking within the board is that the exchange as an organisation shouldn’t suffer. They want to pay a reasonable penalty and settle the issue,” said a person in the know.

“The issue is being dealt with separately by NSE and the employees who have been issued notices. The employees might want to challenge the Sebi order but NSE is looking at a quick resolution, so that it can move ahead with its IPO,” the person added.

NSE filed its offer document with Sebi in December. 

“If NSE goes ahead with the IPO without settling the controversy, it might have to take a hit. The exchange and investors would want the issue to be resolved,” said an investment banker.

The issue is critical from the financial point of view. In September 2016, Sebi had asked NSE to set aside revenues generated from its co-location service into a separate escrow account till a final decision on the matter.

In waiting

• Dec 2: Chitra Ramkrishna quits as MD, CEO of the NSE
• Dec 5: The NSE board sets up a four-member panel to find a new CEO
• Jan 30: SC appoints a four-member panel to run BCCI, Limaye named in the panel
• Feb 8: The NSE board approves appointment of Limaye as MD, CEO of the exchange
• March 7: NSE shareholders approve Limaye's appointment and remuneration package; Exchange seeks Sebi nod 
• April 27: Sebi says have set condition on Limaye appointment; Will take a call on appointment soon
• June 4: The NSE seeks conditional nod from Sebi on Limaye