NSE saga: Too many unanswered questions

India’s boards and regulators have a long way to go. That’s the larger message from l’affaire National Stock Exchange (NSE). And it is a message that is unfortunately, but not unexpectedly, lost in the details. That’s because the details are unbelievable. There’s Mr Nobody who is plucked from obscurity to become the second most powerful person in India’s largest stock exchange. There’s the chief executive officer (CEO) who, it emerges, is taking instructions from a yogi. There’s the yogi himself who displays an intricate understanding of NSE’s working.

But, and here’s where everyone should start paying attention really, there is also the board that didn’t bat an eye when Mr Nobody was appointed, or when his salary was revised by the CEO. There’s the board that allowed the CEO (and Mr Nobody) to resign in the wake of the co-location controversy — where some firms seemed to be getting an advantage in trades — with no punitive action, and no sign of having identified the beneficiaries. And the regulator was also slow to react to the controversy, didn’t push for a proper investigation of either the CEO or Mr Nobody, and accepted the premise of the yogi.

Even as federal agencies start taking interest in the case, several questions remain unanswered. Was there a connection between the co-location controversy and the appointment of Mr Nobody? Why did the board allow CEO and her confidant to get away lightly? What did the board know? And what did it not know? Why was some of the evidence disposed as e-waste? And what was the stock market regulator doing while all this was going on? In this case, as well as the one concerning ICICI Bank and its former CEO, it is clear that the boards allowed unprecedented leeway to rockstar CEOs, and there’s probably a lesson in that too.