03 April 2012

Jalan report and opinion pieces

If was surreal to hear Dr. Bimal Jalan commenting on the Jalan Report on CNBC just now.  In short, he dis-agrees with his own report and fully supports SEBI's views which came out yesterday. Whoa.

Also amazed to hear connections being drawn between  the SEBI decision on governance and listing of exchanges and MCX-SX decision (who I have advised). The  most in the face innuendo is of Mobis of Mint,  who states in his column that "Sebi’s choice of timing is interesting. It is currently also in the process of deciding its next course of action in the MCX Stock Exchange Ltd (MCX-SX) case". How, this links to MCX-SX is unclear.  Last fortnight Mobis had a column that raised a war cry to implement the Jalan Report promptly, but now he finds the timing suspicious (even the last column was after the Bombay High Court ruling). Last week, he couldn't find a single recommendation of Jalan which could  be implemented (at least he has not mentioned it) - but he wanted the Report implemented nonetheless. In fact, the SEBI policy and each recommendation separately, has differing impacts on many stakeholders in exchanges - it's shareholders, its brokers, its management, its directors/independent directors and its regulator.

The only reference Mobis makes to draw a connection - is the treatment of warrants. But this is quixotic.  SEBI has now made it more stringent rather than less by treating even contingent contracts with no voting rights at par with voting rights. This is a massive departure from  SEBI's existing policy which is taken from  its takeover regulations - of  connecting control with voting power. This hugely hurts MCX-SX, does not help it. In fact this policy also departs from the position of the Bombay High Court which permitted MCX-SX to exercise warrants etc subject to not exceeding the 5% ownership limit. I don't like being a spokesperson for my clients and I am not asked to do so or paid to do so - but these 'opinion' pieces are impressively short of information and facts.

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