Mumbai: Securities and Exchange Board of India (SEBI) has superseded the governing board of Ahmedabad Stock Exchange (ASE) for one year as it failed to take action against broking members indulging in unofficial trading.

The market regulator has appointed P K Ghosh as administrator of the Bourse.

The ASE board failed to ensure proper governance and implementation of SEBI directives and provisions of Securities Contract Regulation Act, SEBI chairman G N Bajpai said in the order dated March 25.

Bajpai observed in his order that "the governing board, which cannot even think of ways and means to ensure that illegal activities are not carried on, does not deserve to continue."

"SEBI is mandated to ensure safety and integrity of the market and restore the confidence of investors in the exchange," he said.

ASE, in a letter dated September 17, 2002, admitted that there was an unofficial market in derivatives in its premises.

Unofficial badla works to the detriment of stock-brokers, investors and securities market, the order said.

The regulator observed that ASE did not act on two warning letters issued in this fiscal for non-implementation of gross margining in cash market and disruption in trading.

Similarly, the exchange failed to segregate the ownership and trading membership from the management of stock exchange within two months of SEBI fiat dated January 10, 2002.

The Joint Parliamentary Committee (JPC) on the capital market scam in its report had said that illegal financing in various forms was existent in stock exchanges, including ASE.

Synchronised deals and gathering of brokers at a particular time in trading hall to fix badla charges was a common knowledge and SEBI need to take immediate action, JPC had said.

PTI