Frequent panel meets a drain on MCX funds

Almost 25 committee meetings in the last three months have proved to be a big liquidity drain on the Multi Commodity Exchange of India Ltd , which is also in the midst of a forensic audit ordered by the Forward Markets Commission (FMC).

According to persons privy to the development, the 14-member board of the commodity futures exchange has created around 15 committees to oversee various functions of the bourse with some of them meeting on a weekly basis till recently.

?The Oversight Committee has created around 15 different committees with 4-5 members in each of them. With the committees meeting quite frequently, the sitting fee, along with travel and accommodation costs, has become a big billing head,? said a person on conditions of anonymity. It is believed that each committee member gets Rs 20,000 as sitting fee.

While exchange officials say that it is not uncommon for a bourse to have 15 committees, they add that, typically, a committee meets once every quarter to take stock of the functions for which it has been created.

Incidentally, NCDEX, which competes with MCX, has only four committees. NSE, however, has 15 committees that, on an average, meet once every three months.

Some of the committees created by the FMC-constituted Oversight Committee are, Remuneration Committee, Audit Committee, ESOP Committee, CSR Committee, Disciplinary Committee, Defaulter Committee, Investor Grievances Committee, SGF Committee, Risk Management Committee and Vigilance Committee, among others.

Responding to an email query, an MCX spokesperson said that the ?committees in MCX are in the normal course and have been constituted as per the requirements of Companies Act, Listing Agreement and FMC requirements. Sitting fees paid to the committee members is in line with the provisions in Companies Act?.

Sources, however, add that the frequency of the meetings of some of the committees is expected to come down with the exchange trying to put in place a full-fledged senior management in place.

While Manoj Vaish joined as MD & CEO on February 1, the company secretary and chief compliance officer P Ramanathan resigned early this week. Interestingly, at a time when commodity volumes are under pressure due to the levy of the commodities transaction tax (CTT), the board of the exchange has approved a gross package of R3 crore for Vaish, which is double than that of his predecessor, Shreekant Javalgekar.

?The remuneration of the MD & CEO is as per the approval of Remuneration Committee, Board of the Exchange and FMC, and is in line with the remuneration paid in comparable exchanges,? said the MCX spokesperson.