Some old cases and some new
The week gone by has been one of the most hectic news weeks this year, at least from the Street’s perspective. It started with an evening announcement of the commencement of the selection process for the appointment of the next chairman of the Securities and Exchange Board of India (Sebi). Next morning, the controversial decisions of the Sebi in dealing with the MCX Stock Exchange (now known as Metropolitan Stock Exchange of India) came under scrutiny of federal investigators. The sleuths of the Central Bureau of Investigation (CBI) raided several premises, including that of some serving and former Sebi officials, and arrested Jignesh Shah. Then, The
Economic Times broke the news of the regulator’s move directing the National Stock Exchange to investigate allegations of wrong-doing in its co-location facilities and directed the deposit of revenue generated from these segments in an escrow account. Friday saw much drama as the Supreme Court terminated the parole of Sahara chief Subrata Roy and a Sebi board meet cleared a wide range of things that will hit the market soon. And, amid all the mayhem, the Reliance Industries stock crossed the ~1,100-levels, predicted for it long ago. To escape the complex task of choosing one of the above and ignoring others, Street Food decided to give short notes on each of these developments, some of which are inter-related.
New Sebi chief: Assuming that this time the process would not turn out to be an eyewash like the last one, the focus should be on selecting a young (relatively speaking), capable candidate, preferably tech-savvy, who will take the market forward with a vision for 2025. ~4.5 lakh per month would certainly not be enough for such a person, so we may eventually settle for some retired or retiring bureaucrat, who will not disturb status quo. The MCX-SX case: The sudden emergence of action in this case is intriguing in multiple ways. Three days after the raids, the Supreme Court ordered a detailed probe by all arms of the government into the irregularities in the stateowned IFCI, which included buyback agreements with MCX-SX. IFCI was not the only state-run entity with buyback arrangements with the exchange. Several top banks also had them. The Sahara case: It has been four years since the final order in the matter was passed. Yet, the matter has continued in the courts with numerous hearings. On Friday, the court took exception to certain unsavoury remarks made by a Sahara lawyer. In an earlier judgment in the same case, Judge J S Khehar had been critical of the ways of lawyers. It is in public interest the case is drawn to a swift close. NSE’s algo woes: The discussion paper put out by Sebi had said about 80 per cent of the trades in the bourses are generated by algorithms. People who have invested in co-location servers would account for a significant portion of these trades. Sebi directions mean crores of rupees in revenue earned in the form of fees and charges need to be put in an escrow. Not only that, the Sebi chief slammed the covert attempts to influence the outcome of the discussion paper on algos, saying it would not be influenced by “sponsored comments”. Board meet: As if to soothe the exchange's investors, the regulator’s board meet gave some sops to bourses going for IPOs by enhancing the foreign investment cap to 15 per cent. It also allowed exchanges to directly issue shares to foreign portfolio investors, which might help some pre-IPO and anchor investor allotment. Resurgent Reliance: With gains of over 34 per cent in the last one year, the widely owned Reliance Industries is now the second most valuable company. The ride to ~1,100 has spread cheer among its 2.5 million shareholders and hundreds of institutions that own it. Can Jio take it further?