Justice A N Gupta, also directed SEBI to submit the rationale behind calling of a panel of names from the concerned stock exchange against the quota for public nominees. The notice is returnable in four weeks time.

Nalini Jain, counsel for the petitioner Midas Touch Investors Association argued that no representation has been given to investors or their associations on the board of directors of stock exchanges.

The criteria adopted by SEBI for nomination of public representatives, she said, is arbitrary and the composition of the governing bodies of stock exchanges is not representative of stakeholders.

The petition has cited example of UP Stock Exchange (UPSE) whose board of directors consists of twelve directors (excluding one executivedirector) out of which six are elected by its member-brokers amongst themselves, three officials are nominated by SEBI and the other three are nominated by SEBI as ``public representatives'' amongst the panel recommended by the stock exchange.

She said that neither the 884 companies listed on UPSE. Nor the investors whose securities valued over Rs 58,000 crores have been nominated on the board of the exchange. It is further alleged in the petition that due to non-representation of investors and companies whose securities are listed and all pervasive control of brokers, the stock exchange governing board's energy, activities and resources are basically focussed on trading and speculative activities.