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Sebi bars brokers in 11 bourses from top posts

Sidhartha & P Vaidyanathan Iyer

The Securities and Exchange Board of India has issued an order to amend the by-laws of 11 stock exchanges to ban brokers from holding senior positions.

The move is part of the demutualisation process announced by Finance Minister Yashwant Sinha last March.

The list of exchanges with by-laws to be amended by the market regulator includes Ahmedabad, Bangalore, Hyderabad, Chennai, Coimbatore, Pune, Bhubaneswar, Mangalore, Magadh Stock Exchange in Patna and the Madhya Pradesh Stock Exchange in Indore. There are 23 recognised stock exchanges in India.

The move was confirmed by Sebi Chairman G N Bajpai who said the order was issued last week. He said the legislative changes would follow soon.

In January, Sebi exercised powers vested under Section 8 of the Securities Contracts (Regulation) Act, 1956, and asked all regional stock exchanges to suitably amend their rules before March 10 to give effect to a decision taken at its board meeting on December 28, 2001.

Sebi said if the exchanges failed to comply with its order, it would form or amend the rules of the exchanges in accordance with the provisions of Section 8, read with Section 4(3) of the Sebi Act, 1992.

The move irked the stock exchanges and they later gathered to protest against the decision.

The amendments to the rules and by-laws had been recommended by the Mayya Committee set up to examine the articles and memorandum of association, rules, by-laws and regulations of stock exchanges.

Sebi has also set up a three-member committee to examine the treatment of assets post corporatisation of the bourses. The committee, which has held two meetings so far, is expected to submit its report next month.

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