MCX-SX Chairman, other board members likely to quit

Embattled MCX Stock Exchange may see tomorrow resignations by its Chairman G K Pillai and other public interest directors in the wake of CBI launching a probe into the grant of licence to the bourse over five years ago.
The directors on board of the exchange are likely hold an emergency meeting tomorrow, where Pillai and vice chairman Thomas Mathew T may resign, sources said, adding that two other public interest directors (Ashima Goel and D R Dogra) may also do the same.
There are apprehensions that the licence of the exchange, which is already battling low business volumes due to problems at NSEL, can be cancelled if CBI probe finds something detrimental, sources added.

Pillai and these three persons were appointed as public interest directors on MCX-SX after Sebi last year asked the exchange to recast its board and governing structure in the wake of a major payment crisis at NSEL, promoted by the the founders of MCX-SX (Jignesh Shah-led FTIL and MCX group).
Sources said that the board members of the exchange are of the view that CBI enquiry would jeopardise the prospects of MCX-SX and make it difficult to get any strategic investors.
The original promoters of MCX-SX have been issued show-cause notices by regulator Sebi after another regulator FMC ruled they were not "fit and proper" to run any exchange in the wake of NSEL fallout.

Sources close to the MCX-SX board members said that they have tried their best to revive the exchange in the last 4-5 months, but the things would get difficult going forward.

The CBI today registered a Preliminary Enquiry (PE) against former Sebi Chairman C B Bhave and ex-member K M Abraham, as also against Jignesh Shah-founded FTIL and MCX, among others.
According to the CBI, the PE was registered on issues of alleged irregularities in granting sanction to the MCX-SX by Sebi in 2008 and renewing the recognition in 2009 and 2010.
The probe by CBI is to ascertain how MCX-SX was granted permission despite opposition by Sebi.

Incidentally, Bhave and Abraham have been known to be opposed to grant of license to MCX-SX. MCX-SX began working as a full-fledged stock exchange last year after a prolonged battle with Sebi.
The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition its license would require approval every year.
The PE was registered on a day when the CBI carried out raids at various premises of NSEL.
Bhave became Sebi Chairman in February 2008 and his three-year term ended in February 2011. Abraham's term as a whole-time member of Sebi also ended in 2011.

Incidentally, Abraham had written in 2011 to the Prime Minister's Office that Sebi was being pressurised by the Finance Ministry to go easy on some corporates, including MCX and Sahara, against whom he had passed orders. However, these charges were rejected by the Finance Ministry as also Sebi.