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Sebi suspends all brokers on BSE governing board

Netscribes/Salil Panchal in Bombay

In an unprecedented move the Securities and Exchange Board of India suspended all seven broker members of the Bombay Stock Exchange's governing board.

The decision was taken late on Monday night at a meeting with finance ministry representatives. The move, Sebi insiders said, is required to impose better governance of the BSE and transparency in transactions. This decision will be valid until further directives are issued.

The brokers-directors suspended are current BSE president Deena Mehta, Motilal Oswal, Himanshu Kaji, Jayesh Sheth, Niranjan Nanavati, Kirit B Shah and Anand Rathi who stepped down as BSE president on Thursday following allegations that he had misused his office to access information.

Sebi said Rathi and 'his concerns...are directed not to undertake any fresh business as a broker till further orders.'

The BSE Sensex has fallen nearly 12 per cent since March 1, the day before Rathi is alleged to have leaked information to some brokers.

The new BSE board will consist of eight public representatives and one executive director.

The BSE will decide who will head the exchange in the interim period. Alternatively, it could approach Sebi who can issue an order on who will head the exchange. Dharmishta Rawal, Sebi senior executive director, said, "This move has been triggered to improve the transparency and governance within the BSE."

Sebi will introduce a code of conduct for governing board members at all stock exchanges in April, Rawal said. "Until the code of conduct is not in place, Sebi had no option but to intervene," she added.

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