Sebi's Abraham emerges front-runner for FMC top job

Ashish Rukhaiyar & Sanjeeb Mukherjee
Mumbai/New Delhi, 18 June 2011

K M Abraham, who is currently a whole-time member (WTM) of the Securities and Exchange Board of India (Sebi) is tipped to be the front-runner to head the Forward Markets Commission (FMC), the commodity markets regulator. While Abraham’s term at Sebi ends next month, the current FMC chairman B C Khatua’s one-year extension will also expire in July.

According to highly placed sources, consumer affairs minister is in favour of Abraham taking up the top job at FMC after he completes his three-year term with the capital market regulator. Ministry of Consumer Affairs, Food and Public Distribution, oversees the functioning of FMC.

Abraham, a 1982 Kerala cadre IAS — Indian Administrative Services — officer, has made a name for himself in the three years that he has spent with Sebi, passing quite a few high-profile orders including that against MCX Stock Exchange (MCX-SX), Anil Dhirubhai Ambani Group, Sahara India Real Estate, Pyramid Saimira and Societe Generale. As a whole-time member, he is overall in-charge of key portfolios including, corporate finance, investigations, vigilance and integrated surveillance among other things.

Abraham, incidentally, has been subject of a recent controversy, too. According to media reports, Abraham, along with fellow Sebi whole-time member M S Sahoo, has been under the Income Tax (I-T) scanner for purchasing residential flats in a Mumbai suburb at a discount to the then prevailing market price. Reports further suggest that while an internal enquiry done by Sebi gave a clean chit to the members, the I-T department continued its probe.

Interestingly, another report has suggested that Abraham has written to the Sebi board, saying that the regulator should ask the Ministry of Finance to follow the guidelines set by the Central Vigilance Commission before probing any of its members.

Persons familiar with the matter, however, add that there are some issues that need to be factored in before Abraham can be appointed FMC chairman. The FMC chief's post has traditionally been occupied by a person of additional secretary rank, while Abraham is currently joint secretary. This also assumes significance as the Forward Contracts Regulations Amendment (FCRA) Bill that is expected to be tabled in the monsoon session pegs the FMC chairman’s status on par with that of Sebi chief that is a secretary rank post. The current FMC Chairman Khatua holds the rank of a secretary.

There is also a belief that Khatua should be given another extension as continuity could play an important role when the new sets of rules are notified. Thereafter FMC would be a busy regulator and an experienced hand should be preferred. As such, Abraham has no experience of regulating commodity derivatives.