February 20, 2008
PR No. 057/2008
Order against Madhya Pradesh Stock Exchange Ltd.
Dr. T. C. Nair, Whole Time Member, SEBI has passed an Order on February 18, 2008 granting an opportunity to Madhya Pradesh Stock Exchange Ltd. (MPSEL) to rectify the deficiencies observed in the inspection report of SEBI. The order further directs MPSEL to put in place the basic systems required to perform as a recognized Stock Exchange within a period of three months from the date of the order failing which SEBI would withdraw the permanent recognition granted to the Stock Exchange.
SEBI had conducted an inspection of MPSEL in November 2006 which revealed that the earlier observations of the inspection had not been complied with. The Exchange did not have proper trading infrastructure including the computerized systems effectively in place and the infrastructure relating to various support functions remained outdated and ineffective. Further, the exchange also did not have Standing Committees.
Further, the inspection conducted in the year 2006 depicted a continued dismal picture of affairs. The major deficiencies observed in the inspection report included absence of basic platform for trading and settlement such as Clearing House, a separate bank a/c for pay-in/pay-out, separate demat account for clearing & settlement, licensed and tested trading software. The other major deficiencies observed were non-appointment of Executive Director on the Exchange since December 2004, failure to maintain the minimum level of Base Minimum Capital, failure to set up the Investor Protection Fund, non-constitution of Listing Committee etc.
The Whole Time Member, in his aforesaid Order, observed that MPSEL has recently been Demutualised and 51% of the equity shares of the Exchange is currently held by non-trading members. Further the management has changed since Shareholder Directors and Public Interest Directors have been inducted on the Governing Board of the Exchange. Hence, an opportunity is now being granted to MPSEL to rectify the deficiencies observed in the inspection report of SEBI and put in place the basic systems required to perform as a recognized Stock Exchange.
The Order will come into force with immediate effect.
Mumbai
February 20, 2008
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