The board of the Bombay Stock Exchange (BSE) is meeting on Monday to decide on the replacement for Jagdish Capoor, who resigned from the post of chairman on March 2 citing health reasons. Though indifferent health may have been one of the reasons for his resignation, people familiar with the development say that a difference of opinion among the board members, over some issues, could have prompted Capoor?s exit from the BSE. It?s not immediately clear whether Capoor would continue to be chairman of HDFC Bank. BSE officials were unavailable for comment while Jagdish Capoor declined to comment when contacted.
The latest rift among the BSE board members was, say sources, over the management?s decision to hike its stake in the Central Depository Services Ltd (CDSL) to 51% from 36.6%. One section of the board reportedly felt that making CDSL a 100% subsidiary of BSE would result in the depository losing its independent status, thereby resulting in a loss of some of its members to rival depositories. Of the 498 depository participants registered with CDSL, around 120 are exclusive members of the National Stock Exchange (NSE).
Speaking on the condition of anonymity a BSE board member, after its last board meeting, had said, ?CDSL is doing an excellent job and has managed to better NSDL in many areas. If BSE hikes its stake to 51% in CDSL, many of the existing DPs will hesitate to do business with CDSL?. In 2008-09, CDSL reported a net profit of Rs 34.02 crore compared to Rs 26.68 crore generated by NSDL.
Sources say there were also differences among the board members on the manner in which the BSE management concluded its deal with Marketplace Technologies Ltd, a firm engaged in providing software solutions to the capital market, making it a 100% subsidiary. They said that since Marketplace Technologies wasn?t generating enough revenue as was initially expected, BSE had allegedly asked CDSL to purchase the back-end software solutions, developed by its subsidiary, and distribute it free of cost to the depository participants. However, CDSL reportedly rejected the proposal on the grounds that most of its participants already had the necessary software, which was completely integrated with their respective broking software. CDSL officials were unavailable for comment.
Further the BSE?s decision to shift the currency futures and interest rate futures segment to the United Stock Exchange (USE), after picking up a 15% stake in it, is understood not to have gone down well with its members, according to some members.