The inspection also revealed that under Kumar’s tenure payments were said to have been made to some vendors without submission of bills and the exchange seemingly had less computers than it had paid for, Sebi said in the order on Friday.
Markets regulator Sebi has barred Udai Kumar, former MD and CEO of MSEI (Metropolitan Stock Exchange of India) for six months from being associated with any market infrastructure institution or its associated entities.
Udai Kumar was sent on indefinite leave from the post of MD and CEO from July 2018 onwards, without completing his tenure.
The present proceedings emanate from a show-cause notice issued to Udai Kumar in December 2021 by the Securities and Exchange Board of India (Sebi).
The notice states that Sebi had conducted an inspection of MSEI during February 2018.
Pursuant to inspection, Sebi found that under Kumar’s tenure the policy for reimbursement of clearing fees in the currency derivative (CD) segment and technology scheme of MSEI were introduced, which had violated the market norms.
The regulator also noted that there was unauthorised utilisation of exchange funds for market making in the CD segment during FY18.
Separately, non-adherence to its Standard Operating Procedure (SOP) while making payment against fictitious bills was also observed by the Sebi.
In addition, several irregularities were found in providing contracts to Viewmore Marketing, RSB Industries and Marlabs Software, which were given without seeking competitive bidding.
The inspection also revealed that under Kumar’s tenure payments were said to have been made to some vendors without submission of bills and the exchange seemingly had less computers than it had paid for, Sebi said in the order on Friday.
The regulator noted that the exchange had failed to disclose the fixed deposits amounting to Rs 41.24 crore and deposits with banks (with maturity more than 12 months) for Rs 14.56 crore which were made out of a member’s fund lying with the exchange, thereby violating SECC (Stock Exchanges and Clearing Corporations) norms.
“I find that the MD and CEO of a stock exchange has the overall responsibility to ensure that the entity functions in compliance with all applicable laws and regulations. I find that once non-compliances have been identified for which Kumar is responsible, then it would not be appropriate for him to continue as MD and CEO of the exchange,” Sebi’s whole-time member Ananta Barua said.
Therefore, Kumar being a director of the exchange failed to comply with SECC norms and code of conduct prescribed under it.
