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Business News/ Companies / No shortage of candidates to fill MCX chief’s slot
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No shortage of candidates to fill MCX chief’s slot

Some 60 candidates are in the race to become the MD and CEO of India's largest commodity bourse Multi Commodity Exchange

The commodities exchange has to name a new chief by 10 July after former CEO Manoj Vaish resigned in May, adding to the list of senior management exits from the firm since the beginning of the year. Photo: Ramesh Pathania/MintPremium
The commodities exchange has to name a new chief by 10 July after former CEO Manoj Vaish resigned in May, adding to the list of senior management exits from the firm since the beginning of the year. Photo: Ramesh Pathania/Mint

Mumbai: Nearly 60 candidates are competing to become the managing director and chief executive officer (MD and CEO) of the nation’s largest commodity bourse Multi Commodity Exchange of India Ltd (MCX), according to two people familiar with the matter.

The commodities exchange has to name a new chief by 10 July after former CEO Manoj Vaish resigned in May, adding to the list of senior management exits from the firm since the beginning of the year. The MD’s position cannot be left vacant for more than 60 days, according to new guidelines issued by regulator Forward Markets Commission (FMC). Vaish left the company on 10 May. The last day for submitting applications was 30 June.

“In case a vacancy of managing director arises due to unforeseen reasons, the exchange shall forward the new names to the Commission (FMC) within 60 days from the date of submission of resignation or such vacation of office," according to the FMC circular.

Saurabh Sarkar, MD and CEO of MCX Stock Exchange Ltd (MCX-SX), is one of the applicants and a strong contender, according to three different people familiar with the selection process. They declined to be identified.

“While most of the applicants are either retired senior officials of public sector banks or consultants, Saurabh Sarkar has emerged as a strong candidate," said one of the three people.

A second person familiar with the matter said that Sarkar’s experience with two exchanges and good equations with some of the directors of MCX would work in his favour. Both MCX and MCX-SX operate from the same building in suburban Mumbai.

“There is a general dearth of people with the right qualifications to head an exchange. He (Sarkar) was the head of United Stock Exchange before joining MCX-SX and so, the selection panel could favour him. He knows people within the group," said the second person.

An MCX-SX spokesperson has, however, denied that Sarkar is one of the applicants.

An MCX spokesperson, too, declined to disclose details related to the selection process, merely saying the procedure will be completed within the stipulated time frame. “We can neither disclose the number of applications received, nor can we share the names of the candidates who have applied. As a policy, we do not comment on market speculation," the spokesperson said.

Sarkar had joined MCX-SX in February, after working with United Stock Exchange India Ltd earlier.

“Exchanges need to get people who can act as thought leaders, as new regulations are changing the entire landscape and one needs to give strategic feedback to the policymakers rather than just manage exchange operations," said Rajnikant Patel, a former managing director of BSE and founder of the Strategy Co., which advises boards and top management on strategic planning, diversification and expansion.

Under Sarkar, MCX-SX raised 60 crore from a rights issue, which was, however, less than the initial target of around 550 crore.

To be sure, the rights issue was planned before Sarkar joined. MCX-SX is planning to raise more capital through a preferential share allotment as it needs to strengthen its net worth.

While the Securities and Exchange Board of India mandates a minimum net worth of 100 crore for an equity bourse, the latest financial statement of MCX-SX pegs its net worth at 120 crore. This, however, does not factor in an expense amounting to 10.71 crore payable to Financial Technologies (India) Ltd, or FTIL, which would bring the net worth further down to 110 crore.

MCX is on a much stronger ground in the commodity space against MCX-SX in the equity arena, which is dominated by National Stock Exchange of India Ltd and BSE Ltd.

Shares of MCX, which controls about 80% of the nation’s commodities market, have gained 4.4%since 31 July 2013, when National Spot Exchange Ltd (NSEL) suspended trading in most commodities. FTIL, which owns 26% of MCX, also owns NSEL.

FMC later termed FTIL’s founder Jignesh Shah and two other entities to be unfit to be shareholders in any exchange and ordered them to reduce their holdings to less than 2% in any regulated commodity exchange. The order followed a probe into the payments crisis at NSEL.

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Published: 05 Jul 2014, 12:05 AM IST
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