Sebi bars former MSEI MD&CEO for six months over multiple violations

Detects breach of clearing fee rules, issue of contracts without bidding process and vendor payments without supporting bills

The Securities and Exchange Board of India (Sebi) has barred Udai Kumar, former MD & CEO of Metropolitan Stock Exchange of India (MSEI), for six months from being associated with any market infrastructure institution or associated entities.

The capital markets regulator had conducted a special purpose inspection of MSEI in February 2018. Sebi found that the policy for reimbursement of clearing fees in the currency derivative segment and technology scheme of the exchange were in violation of different regulations set by the regulator.

Moreover, under Kumar’s tenure, several contracts were alleged to have been issued without seeking competitive bidding, payments were said to have been made to some vendors without submission of bills, and the bourse apparently had fewer computers than it had paid for.

MSEI had also failed to disclose that fixed deposits amounting to Rs 41.24 crore and deposits with banks (with maturity more than 12 months) for Rs 14.56 crore were made out of a member’s fund lying with the exchange, noted Sebi.

“I find that the MD and CEO of a stock exchange has the overall responsibility to ensure that the entity functions in compliance with all applicable laws and regulations,” said Sebi whole-time member Ananta Barua in the order.

Kumar was sent on indefinite leave in July 2018 without completing his tenure.