Sebi Reviewing Performance Of Public Nominees On Se Boards

Sebi chairman D R Mehta has asked the Sebi representatives on the stock exchange boards to submit a report on the performance of the public nominees before he decides on renominating them for another term.

Although the Sebi chairman consults the Sebi representatives before appointing the public nominees, the move by Mehta to call for a report from the representatives is significant in the light of the recent Sebi notice to the Pune Stock Exchange board threatening it with supersession. The Sebi finding, following a detailed inspection into the activities at Pune, was that the board had failed in its duty to prevent the irregularities at the exchange.

 

The public nominees perform a major function of keeping an external check on the activities at the exchange, and complement the functions of the Sebi representative. Selected from a variety of disciplines, they are expected to function as independent entities on the board.

Senior Sebi officials say the quality of public nominees on the bourse boards has generally been high, but the functioning of these nominees needs to be reviewed to strengthen the exchange boards and reduce market risks further.

The role of the nominees has also increased following the revamp of the board strengths by Sebi, wherein the regulator had stipulated that the number of the elected (broker) representatives and the non-elected members would be equal, barring the executive director.

For instance, the Bombay Stock Exchange has nine elected directors, nine non-elected directors and the executive director, totalling 19 members.

The quality of the public representatives on the BSE has also improved enormously of late, with prominent bankers, retired judges and academicians coming onto the board.

Sebi officials, however, said there was a case for the exchange boards being rid of broker members since that would interfere with free and fair decisions by the exchange authorities.

``The NSE has shown how a professional board can manage the stock exchange,'' a Sebi official said.