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Rajnikant Patel's exit turns spotlight on BSE hot Saturday,August 9th 2008
MUMBAI: Top ranking officials of Asia’s oldest stock exchange, BSE and Indian cricketers seem to have one thing in common, few have been able to make a graceful exit.

Rumours of BSE chief executive and managing director Rajnikant Patel’s resignation had been doing the rounds for quite some time.

When he finally put in his papers late on Thursday after cutting short a trip to Hyderabad where he had gone on an official visit, it was the second controversial exit of a board member of the exchange in less than two months. ET reported Mr Patel’s resignation in its late edition dated August 8, 2008.

People familiar with the development say that Mr Patel’s resignation was “just a matter of time” as he was perceived to be quite close to Shekhar Datta who himself resigned abruptly from the post of chairman in June 2008.

BSE insiders say Mr Patel was instrumental in mustering support for Mr Datta’s election as BSE chairman in 2007, replacing Jagdish Capoor. Mr Capoor is now back as chairman of the exchange, taking over from Mr Datta.

Circles close to Mr Patel cite increasing interference from some of the broker members on the board as one of the reasons for his sudden exit. Mr Patel was unavailable for comment. But there are allegations of wrong-doings against Mr Patel too.

While the truth may lie somewhere in between, the latest chapter in the saga of BSE board room battles once again highlights the issue of clash of interests originating out of the presence of broker members on the board.

BSE brokers rue that they have been marginalised due to lack of adequate representation on the board. The 12-member BSE board has three brokers, Prakash R Kacholia of Emkay Share and Stock Brokers, Balkishan Mohta and Siddharth J Shah of JGA Shah Share Brokers.

Some feel that having more brokers on the board would help as they would be aware of the business realities. But then, BSE brokers have not exactly covered themselves in glory in the past, when given a free hand.

So, should the NSE model of zero broker representation on the board be followed? After all, it has worked fine, though brokers have often complained of high-handedness by the exchange. Those unhappy with NSE’s policies can surrender memberships is the bourse’s attitude to brokers, they say.

Leading brokers, who were optimistic of a revival in the exchange’s fortunes after Deutsche Borse took 5% stake in BSE at Rs 5,200 per share have all but given up hope. The value of a BSE share has reportedly fallen to nearly Rs 4,000.

During Mr Datta’s tenure as BSE chairman, Mr Patel was heading several important committees, including the one on derivatives. This committee is believed to have played an important role in signing the technology agreement with OMX costing $37.50 million, to improve BSE’s trading software for derivatives.

“There was absolutely no need for such an expensive agreement,” says a person who has worked with the exchange. “It is going to take not less than an year and a half for the platform to be delivered if the deal passes muster,” he added. The deal is believed to be under review by the BSE board that last met on July 26. Mr Patel did not attend that meet, citing “health reasons”.
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