The Metropolitan Stock Exchange of India (MSEI) is seeking to merge its clearing and settlement arm, Metropolitan Clearing Corporation of India Limited (MCCIL), with itself.

However, the board of MCCIL, consisting of former bureaucrats and senior tax officials, has asked MSEI to present a business plan and rationale for the merger. BusinessLine has seen letters written by MCCL board members to SEBI, asking the market regulator to seek a rationale for the proposed merger.

Public interest directors (PIDs) Rita Menon, a former IAS officer, and Alok Mittal, a long-standing chartered accountant, quit in likely protest, sources said. When contacted, Menon said: “My reasons for quitting MCCL are in black and white. It is definitely a set of peculiar circumstances, in which one feels better to resign. To our (board’s) mind a stock exchange and clearing corporation do not merge. We were very clear that there are too many failings within MSEI and it [merger] is really to cover them up and avail the capital of MCCL, which we guarded all these years. MCCL had no big losses. We don’t think MSEI was well run and hence there was no point in putting good money after bad money. We asked MSEI for a rationale and most important, a business plan.”

When contacted, Mittal said, “the documents and letters will speak for themselves. Wait till tomorrow”. A board member of MCCL pointed out that sometimes PIDs signed off letters (to SEBI) about the state of affairs and sometimes the chairman. “There are plenty of letters,” the source said. Letters have also sought valuation strategy, employee retention and their compensation etc. 

Sources said the MCCL board has pointed to SEBI about MSEI’s accumulated losses whereas MCCL was profitable. The board members say, legally where public money is involved, mergers require a legitimate rationale.

When contacted, MSEI said, “You have sought to extract information which is extremely private and confidential. By merely responding to your email, it should not be construed that we have neither denied nor disputed the contents of your email. Price sensitive information- its possessor and disseminator have obligations under the law.”

SEBI did not reply to an email query.