CBI examines ex-Sebi chairman Bhave in Jignesh Shah's Financial Technologies, MCX case

May 12 2014, 19:09 IST
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The examination of Bhave was to ascertain how MCX-SX was granted permission despite opposition by SEBI. (PTI) The examination of Bhave was to ascertain how MCX-SX was granted permission despite opposition by SEBI. (PTI)
SummaryC B Bhave quizzed over alleged irregularities in granting sanction to MCX.

CBI today quizzed former Securities Exchange Board of India (SEBI) Chairman C B Bhave in connection with granting sanction to Jignesh Shah-founded Financial Technologies India Ltd (FTIL) and Multi Commodity Exchange of India Ltd (MCX) to function as a full- fledged private stock exchange.

C B Bhave was examined in Bangalore by a team of CBI officers two months after the agency registered a Preliminary Enquiry (PE) against him, another former member K M Abraham and Financial Technologies and MCX, among others.

The PE was registered on issues of alleged irregularities in granting sanction to the MCX Stock Exchange (MCX-SX) by SEBI in 2008 and renewing the recognition in 2009 and 2010.

The examination of Bhave was to ascertain how MCX-SX was granted permission despite opposition by SEBI when he was head of the regulatory authority.

His examination comes barely three days after Abraham was examined by the CBI last Friday.

src="http://static.indianexpress.com/frontend/iep/story_images/FTIL.jpg" align="right" vspace="4" border="0" alt="Jignesh Shah-FTIL">

Efforts to seek a reaction from Bhave, an IAS officer of 1975 batch from Maharashtra cadre, were not successful. A caller at his residence said that he was in office and refused to share his mobile number.

Bhave became SEBI Chairman in February 2008 and his three- year term ended in February 2011. Abraham's term as a whole- time member of SEBI also ended in 2011.

However, after registering of the PE, Bhave had said that CBI was working with a "crazy logic" and also indulging in "pick and choose" policy.

He had said that CBI will have to "publicly apologise" to him for tarnishing his reputation if they find no substance.

"It's a completely crazy logic that CBI has. As regulators, we found that there was a need to create and encourage competition. NSE was the dominant player in the currency derivatives market and BSE was unable to compete with NSE. So by licensing a third party, in this case Shah's MCX-SX we helped create competition. Is that a crime?" Bhave had asked.

MCX-SX was set up by FTIL and its commodity exchange arm MCX and began functioning as a full-fledged stock exchange last year after a prolonged battle with SEBI.

The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition its licence would require approval every year.

Last year, SEBI asked MCX-SX to restructure its board and governance

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