Stock exchanges (SEs) in the country are finding it difficult to attract talent onto the top level. The Securities and Exchange Board of India (Sebi) norms on compensation package to key management heads of SEs and other norms are discouraging foreign experts from taking up jobs in India.
Hirander Misra, the British-born expert in trading technology, who was to join the Delhi SE (DSE) as its chief executive officer has pulled out of negotiations with the bourse. Misra says, he could not agree with the terms of the DSE after Sebi's new norms with regard to SEs came into effect. Even though DSE has been defunct for many years, it has all the necessary regulatory approvals to launch nationwide operations, except a chief executive officer.
“All the key management personnel in SEs globally have their economic interest. But the new norms make that a little difficult in India. Also, norms like dual reporting line for heads of departments seem unusual,” said Misra, talking to Business Standard from London. He, however, has offered to work as a consultant to DSE.
The DSE, launched in 1947, is the country's second oldest bourse after the Bombay Stock Exchange (BSE). Misra was to join the bourse after DSE partnered with the London Stock Exchange (LSE). The LSE owns a five per cent stake in DSE and also has a technology sharing agreement. Misra's appointment could have benifitted DSE as he played key roles in making big the electronic trading business in Europe. He was the chief operating officer and co-founder of Chi-X Europe, a small, nimble trading platform that emerged to challenge LSE.
Prior to Misra, BSE's chief executive officer and managing director Madhu Kannan had quit within a couple of days after Sebi announced new norms for SEs. Then, too, experts had linked Kannan's exit to Sebi's tough regulatory regime. Curbing powers of senior stock exchange executives, Sebi has prescribed that the head of departments of member regulations, listing regulations and surveillance would directly report to an independent committee of the board of stock exchange as well as to the MD and CEO. Also, Sebi had said that a compensation committee consisting of majority public interest directors will determine the compensation of key management personnel.
Sebi has said the variable pay component of senior stock exchange executives will not exceed one-third of total pay. Of the variable component, 50 per cent of the amount will be paid on a deferred basis after three years. Also, employee stock option plans and other equity-linked options in market infrastructure institutions like a stock exchange will not form part of the compensation for the identified key management personnel. Sebi will also approve remuneration to key management personnel.
Kannan's pay package was a little over Rs 2 crore in 2010-11, while that of NSE's MD and CEO Ravi Narain stood around Rs 6.6 crore.
Similarily, Joseph Massey of MCX SX was drawing around Rs 1.5 crore.
DSE is 21 per cent owned by foreign investors including Delaware Street Capital, a Chicago-based hedge fund that also makes private equity investments.
