Mehta Mum On Damani Tenure

D R Mehta, chairman, Securities and Exchange Board of India (Sebi), yesterday declined to comment on the re-election of M G Damani as the president of Bombay Stock Exchange (BSE) for a third term.

I dont know what the rules are, and they have not approached me so far. Moreover, the rules were framed much before I took over, Mehta said.

Though elected unanimously by BSE members on Monday, the extension of term for Damani is subject to the approval of the market regulator.

According to a 1992 Sebi directive, the term of the exchange president should not exceed two terms with a cooling period of one year while seeking a further extension. The high powered Patel committee had recommended that stock exchanges should have a non-broker as president, and allowing such extensions was against the interest of the investors.

 

Sebi nominee on the BSE governing board, executive director L K Singhvi, did not attend the extraordinary general meeting of the bourse on Monday.

Meanwhile, Sebi is soon expected to finalise regulations for credit rating agencies.

Three or four meetings have already taken place, and a regulation can be expected to be put in place shortly, Mehta said.

Speaking at a seminar on Preconditions for Marketisation, Mehta said the domestic market was marketised far too early, and old practices still continue, making for an imperfect market.

Even the best markets cannot be perfect, he said, citing the example of the New York Stock Exchange which closed on October 27 after having dropped eight per cent. In comparison, the domestic stock markets worked smoothly with margin amounts crossing Rs 400 crore.

Advocating the need for quarterly financial statements, he said further transparency in the financial system was required, and he envisaged a financial market system with significant self-regulation and minimal role for the regulator.

Earlier, Ram Gandhi, chairman, Indian Merchants Chamber, called for a critical appraisal of the institutions, players and regulation in the financial system.