CBI examines ex-Sebi chairman Bhave in MCX case
New Delhi: CBI today quizzed former Securities Exchange Board of India (SEBI) Chairman C B Bhave in connection with granting sanction to Jignesh Shah-founded Financial Technologies (India) and MCX to function as a full-fledged private
New Delhi: CBI today quizzed former Securities Exchange Board of India (SEBI) Chairman C B Bhave in connection with granting sanction to Jignesh Shah-founded Financial Technologies (India) and MCX to function as a full-fledged private stock exchange.
Bhave was examined in Bangalore by a team of CBI officers two months after the agency registered a Preliminary Enquiry (PE) against him, another former member K M Abraham and FTIL and MCX, among others.
The PE was registered on issues of alleged irregularities in granting sanction to the MCX Stock Exchange (MCX-SX) by SEBI in 2008 and renewing the recognition in 2009 and 2010. The examination of Bhave was to ascertain how MCX-SX was granted permission despite opposition by SEBI when he was head of the regulatory authority.
His examination comes barely three days after Abraham was examined by the CBI last Friday.
Efforts to seek a reaction from Bhave, an IAS officer of 1975 batch from Maharashtra cadre, were not successful. A caller at his residence said that he was in office and refused to share his mobile number.
Bhave became SEBI Chairman in February 2008 and his three-year term ended in February 2011. Abraham's term as a whole-time member of SEBI also ended in 2011. However, after registering of the PE, Bhave had said that CBI was working with a “crazy logic” and also indulging in “pick and choose” policy.
He had said that CBI will have to “publicly apologise” to him for tarnishing his reputation if they find no substance.
“It's a completely crazy logic that CBI has. As regulators, we found that there was a need to create and encourage competition. NSE was the dominant player in the currency derivatives market and BSE was unable to compete with NSE. So by licensing a third party, in this case Shah's MCX-SX we helped create competition. Is that a crime?” Bhave had asked.
MCX-SX was set up by FTIL and its commodity exchange arm MCX and began functioning as a full-fledged stock exchange last year after a prolonged battle with SEBI.
The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition its licence would require approval every year.
Last year, SEBI asked MCX-SX to restructure its board and governance structure after a payment crisis broke out at the National Spot Exchange Ltd (NSEL), also promoted by FTIL.
The PE was registered on a day when the CBI carried out raids at various premises of NSEL.
Bhave was appointed a trustee of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), in 2012.
Incidentally, Abraham had written in 2011 to the Prime Minister's Office that SEBI was being pressured by the Finance Ministry to go easy on some corporates, including MCX and Sahara, against whom he had passed orders. However, these charges were rejected by the Finance Ministry as also SEBI.
MCX-SX was initially given licence to operate in a limited segment of currency derivatives in 2008, but SEBI refused permission to allow it to act as a full-fledged bourse for years as it was not found to be in compliance with existing regulations for the same.
Incidentally, it was Abraham's order in September 2010 that rejected MCX-SX application for a full-fledged exchange, saying it was not in compliance with shareholding regulations and it was not a ‘fit and proper' entity for such a business.
MCX-SX could launch services as a full-fledged bourse only last year after it met all the necessary regulations and conditions imposed by SEBI.
Bhave was examined in Bangalore by a team of CBI officers two months after the agency registered a Preliminary Enquiry (PE) against him, another former member K M Abraham and FTIL and MCX, among others.
The PE was registered on issues of alleged irregularities in granting sanction to the MCX Stock Exchange (MCX-SX) by SEBI in 2008 and renewing the recognition in 2009 and 2010. The examination of Bhave was to ascertain how MCX-SX was granted permission despite opposition by SEBI when he was head of the regulatory authority.
His examination comes barely three days after Abraham was examined by the CBI last Friday.
Efforts to seek a reaction from Bhave, an IAS officer of 1975 batch from Maharashtra cadre, were not successful. A caller at his residence said that he was in office and refused to share his mobile number.
Bhave became SEBI Chairman in February 2008 and his three-year term ended in February 2011. Abraham's term as a whole-time member of SEBI also ended in 2011. However, after registering of the PE, Bhave had said that CBI was working with a “crazy logic” and also indulging in “pick and choose” policy.
He had said that CBI will have to “publicly apologise” to him for tarnishing his reputation if they find no substance.
“It's a completely crazy logic that CBI has. As regulators, we found that there was a need to create and encourage competition. NSE was the dominant player in the currency derivatives market and BSE was unable to compete with NSE. So by licensing a third party, in this case Shah's MCX-SX we helped create competition. Is that a crime?” Bhave had asked.
MCX-SX was set up by FTIL and its commodity exchange arm MCX and began functioning as a full-fledged stock exchange last year after a prolonged battle with SEBI.
The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition its licence would require approval every year.
Last year, SEBI asked MCX-SX to restructure its board and governance structure after a payment crisis broke out at the National Spot Exchange Ltd (NSEL), also promoted by FTIL.
The PE was registered on a day when the CBI carried out raids at various premises of NSEL.
Bhave was appointed a trustee of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), in 2012.
Incidentally, Abraham had written in 2011 to the Prime Minister's Office that SEBI was being pressured by the Finance Ministry to go easy on some corporates, including MCX and Sahara, against whom he had passed orders. However, these charges were rejected by the Finance Ministry as also SEBI.
MCX-SX was initially given licence to operate in a limited segment of currency derivatives in 2008, but SEBI refused permission to allow it to act as a full-fledged bourse for years as it was not found to be in compliance with existing regulations for the same.
Incidentally, it was Abraham's order in September 2010 that rejected MCX-SX application for a full-fledged exchange, saying it was not in compliance with shareholding regulations and it was not a ‘fit and proper' entity for such a business.
MCX-SX could launch services as a full-fledged bourse only last year after it met all the necessary regulations and conditions imposed by SEBI.