Anand Sinha, former Deputy Governor of RBI, is yet another member of SEBI’s High Powered Advisory Committee (HPAC), who may be kept away from hearing the matter relating to a consent application filed by the NSE in the ‘co-location case’ to avoid ‘possible conflict of interest’, a source close to the developments told BusinessLine .
NSE, which is being probed for alleged preferential treatment it gave to certain brokers for high frequency trading, filed for a consent settlement with SEBI on July 20. Under the consent mechanism, capital market wrongdoers can negotiate a settlement with the regulator without accepting or denying guilt. SEBI’s HPAC can decide the fate of consent applications.
Sinha is an independent director on the board of IDFC Bank, which owns nearly 1 per cent stake in the NSE valued at more than ₹400 crore based on past few deals.
Chain link
The NSE is eyeing a share sale for which it has already filed the prospectus and IDFC can be said to be a beneficiary of any settlement reached between the regulator and the exchange, experts say.
IDFC owned more than 6 per cent stake in NSE, which it has reduced over the years. As on date, IDFC Bank held 0.9 per cent and IDFC SPICE Fund held 0.28 per cent stake in NSE. Sinha is also an advisor to law firm Cyril Amarchand Mangaldas, which in turn is the legal advisor to the NSE on its IPO.
In SEBI’s four-member HPAC, Sinha is the third member facing potential conflict of interest. The other two members of the committee, who have requested SEBI to recuse them from the matter due to conflict of interest, are PR Ramesh, Chairman of Deloitte, Haskins & Sells, and Dharmishta Raval, an NSE board member. Ramesh wanted to recuse himself as Deloitte recently conducted an audit of NSE’s systems after allegations were levelled against the exchange.
SEBI did not respond to an email query. Sinha could not be reached for a comment on his phone. An email sent to Sinha’s Cyril Amarchand Mangaldas ID did not receive any response.
Legal experts say there is no precedent wherein SEBI has recast its committee for deciding on just one consent application. But this is a special case as it involves a first-level regulator, which is seeking settlement and hence SEBI may look to recast its committee, a lawyer said.