Mumbai/New Delhi: Former Home Secretary G K Pillai on Friday resigned as Chairman of MCX Stock Exchange, even as the government and market regulator Sebi tried to assuage concerns arising out of the bourse coming under CBI scanner.
The resignation came hours ahead of a scheduled board meeting of MCX-SX, where former LIC Chairman Thomas Mathew T has taken over as new Chairman.
Sebi is looking at ways to assuage the concerns of investors, trading members and other stakeholders in MCX-SX, according to senior officials.
Meanwhile, Finance Minister P Chidambaram said he hopes that directors of MCX-SX would act in public interest and that there was an orderly resolution of the crisis.
Soon after a Preliminary Enquiry registered by CBI yesterday into the grant of licence to the exchange way back in 2008 and the subsequent renewals, Pillai and some other 'public interest directors' of MCX-SX had expressed their desire to quit.
Surprisingly, the PE has also been registered against Sebi's former chairman C B Bhave and ex-member K M Abraham, besides MCX-SX promoters FTIL and MCX. Bhave and Abraham were said to have been opposed to the grant of licence until the exchange met strict guidelines set out by the regulator.
Pillai said MCX-SX is run by a professional management team and has an eminent board.
"I took charge of the exchange at a time when it had several challenges. However, in the last few months we have managed to appoint a new board and MD & CEO to take charge of the exchange. The ongoing rights issue is on track and we have received confirmation from several shareholders for participation," he said.
"We have also been successful in rationalising costs in a significant manner, which will improve our balance sheet in times to come. It was a wonderful experience to work with the team and I am stepping down due to personal reasons," he added.
In a statement, MCX-SX said Thomas Mathew, formerly Vice Chairman of the board, has been elected as the new Chairman, while public interest director Ashima Goyal would be the new Vice Chairperson.
The board also dismissed speculations that other members were likely to resign. The Exchange CEO Saurabh Sarkar said that the board meeting was going to held as per the schedule and had been planned one month in advance.
"Pillai has played a key role in ring-fencing the exchange at a critical juncture and helped bring stability to the exchange. All other directors continue to be on the board and we look forward to guidance from Thomas Mathew and Ashima Goyal," he added.
Mathew said the board's immediate priority is to increase operational efficiency, market participation and volumes on the exchange.
"We are confident that the policy reforms for Currency Derivatives segment will give the desired boost to the volumes resulting in a turnaround in the balance sheet. In addition to this, launching new products will give the exchange the much needed differentiation," he added.
Earlier in the day, the exchange's management announced that the ongoing rights issue (in the ratio of 2:1) has received good response and the exchange has also received expression of interest from new investors.
Sources said the regulator and the finance ministry wanted Pillai as well as the other three public interest directors to continue on the bourse.
These four were appointed to the board after Sebi ordered last year an overhaul of the board and governance structure of the bourse after another entity set up by the same promoters got engulfed in a major payment crisis putting a question mark on their 'fit and proper' status to run an exchange.
Top officials had said last night that Pillai and other directors might offer to resign from the board at today's meeting, fearing that the CBI probe may jeopardise the exchange's prospects and its search for strategic investors.
"We were also granted permission to offer trading in Interest Rate Futures (IRF) segment on our platform in January 2014 indicating the confidence of the regulator on the exchange and its systems and processes," the bourse said.
The exchange further said it has successfully ring-fenced itself from the crisis and is run by a professional management team, while FTIL and MCX have been shifted from the category of 'Promoter shareholder' to 'Public Shareholder'.
There are apprehensions that the licence of the exchange, which is already battling low business volumes due to problems at NSEL, can be cancelled if CBI finds something detrimental.
The original promoters of MCX-SX had been issued show-cause notices by Sebi after commodity market regulator FMC ruled that they were not "fit and proper" to run any exchange in the wake of NSEL fallout.
The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition that its licence would require approval every year.
