A day after CEO quits, business as usual at BSE

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The drama that started at the Bombay Stock Exchange (BSE) in June with the resignations of two directors – Shekhar Datta and Jamshyd Godrej - culminated on Thursday with Rajnikant Patel deciding to step down from the post of managing director and chief executive officer (MD & CEO) of the bourse. Patel’s resignation comes close on the heels of the BSE board focusing on controversial issues like the exchange’s plan to buy a 26% stake in National Multi-Commodity Exchange (NMCE), its technology agreement with OMX and termination of the market making contract for sensex futures, which cost the exchange around Rs 65 crore.

The fate of BSE’s two deals, one with NMCE and another with OMX, is also uncertain as of now, with the board, at its last meeting on July 26, deciding to go slow on them. Confirming the move, Jagdish Capoor, chairman, BSE told FE, “Patel has tendered his resignation on personal grounds and it has been accepted. In the meantime, till the new appointment is made, we have asked Mahesh L Soneji, chief operating officer (COO), to look after the interests of the exchange. The BSE board will meet shortly to take stock of the situation.”

Speaking to FE, Soneji said, “I’ve joined the exchange to contribute whatever little I can to this great institution and will try to meet the expectation and confidence of the people that is expected of me.”

The board also discussed in its July 12 meeting, the technology agreement the exchange had signed with the OMX, a Swedish company, providing technology platforms to stock exchanges across the globe. The same meeting also discussed the recommendations of price waterhouse coopers (PWC), which recommended immediate termination of market making of the sensex futures contract given to two BSE brokers. The PWC recommendations were part of an internal probe ordered by the audit committee of the board.

However, in spite of the turbulence the exchange is going through and business goes on as usual. Just a day after Securities & Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) unveiled final norms on Exchange Traded Currency Futures, BSE moved Sebi on Friday to set up a Currency Derivatives Segment.

In a release issued Friday, BSE said, “BSE is now awaiting Sebi approval, after which certain post approval activities for launch of the segment would be undertaken. The Exchange Traded Currency Futures (ETCF) contracts facilitate increased transparency, efficient price discovery, enable better counterparty credit risk management, wider participation, trading of a standardised product and reduced transaction costs.”