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Insiders say infighting led to BSE resignations

Insiders say infighting led to BSE resignations
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First Published: Fri, Jun 20 2008. 12 24 AM IST
Updated: Fri, Jun 20 2008. 12 24 AM IST
Mumbai: The resignations of the Bombay Stock Exchange (BSE) chairman Shekhar Datta and a director, Jamshed Godrej, is a culmination of intense infighting in the 12-member board of Asia’s oldest exchange, say exchange insiders who do not wish to be identified.
According to them, the board members are clearly divided into two camps and have been fighting on several issues ranging from BSE’s Rs100 crore investment in Calcutta Stock Exchange, a Rs200 crore technology upgrade programme and a 26% stake purchase in Ahmedabad-based National Multi-Commodities Exchange. BSE has a cash reserve of about Rs2,700 crore
BSE’s chief operating officer Ashok K. Rout also resigned last month. The exchange has not made any announcement on this. Rout was not available for comment but Kalyan Bose, BSE spokesperson, confirmed that he had resigned.
According to people familiar with the developments who do not wish to be identified, Securities and Exchange Board of India chairman C.B. Bhave met the board members in early June and at that meeting the division within the board was apparent.
“I have put in my papers and there is no question of reconsidering it,” Datta told ‘Mint’. He added that “it was an independent decision and has no link to Jamshed Godrej’s resignation.”
“The root of the problem is a centralized management and lack of transparency,” said a former board member, who does not want to be identified.
BSE managing director and CEO Rajnikant Patel was not available for comment and Bose said the exchange had nothing to add to the formal announcement on the resigination of the two.
Another former BSE official said there has been deep resentment among some members of the exchange on the lost opportunity of running the corporate debt market in India which was initially awarded solely to BSE by the capital market regulator.
The Singapore Stock Exchange and Deutsche Borse picked up 5% stake each in BSE last year at Rs5,200 per share and on both occasions the exchange issued fresh shares. Both the exchanges also have the right to pick up additional shares to maintain their 5% stake as and when BSE issues new shares to other institutional investors.
The “infighting” will harm the exchange which operates the nation’s benchmark 30-share Sensitive Index and is finding it difficult catch up with younger rival National Stock Exchange of India Ltd. Founded in 1992, the young exchange in which New York Stock Exchange holds a stake has much higher daily trading volume than its 132-year-old counterpart.
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First Published: Fri, Jun 20 2008. 12 24 AM IST