For Sundararaman Ramamurthy, 61, who took over as the MD & CEO of BSE in January 2023, the challenges were clearly laid down. BSE was playing second fiddle to its much-younger rival NSE in almost all the important segments of the capital market and while it was still registering some amount of traction in the cash segment, its derivatives platform was practically non-existent. He tells Business Today why he decided to take up the most difficult challenge first and how the strategy worked this time. Edited excerpts:
It has been a year since you took over as MD & CEO. How has been the journey till date?
It has been a very interesting journey. I want to make BSE a vibrant place. In my opinion, concentration in anything is not good especially for a country of India’s size and structure, and it is better to have more than one infrastructure intermediary. BSE should have a meaningful presence in all the segments where it has a licence, and it operates. If it has a meaningful presence, in the event of a necessity, people will be able to come to BSE to do what their activity is. That is the very purpose of taking care of concentration risk and associated cyber risk, technology risk, etc. To me, making BSE vibrant means building a block and I visualise the pillar as people, with product, technology, intermediaries and other stakeholders [being] the [other] four pillars. Business development is the roof. The epitome of it is vibrance. It all has to stand on a strong foundation. To me that strong foundation is corporate governance, compliance and regulation. That’s how I visualise it.
Derivatives seem to be your first focus area. The past few months have seen BSE’s share in the F&O segment rise from low single digits to over 15%...
Derivatives is not a luxury for BSE, it is a necessity. If I don’t make derivatives active, there is no future for BSE. My understanding is that for anything to be successful, the important ingredient is the voice of the customer. So, we went to the market. The one question that I asked was, ‘If I have to survive, derivatives should be in existence. Tell me what I have to modify so you will look at me.’ The consistent reply was that we will look at you if you introduce derivatives on Sensex 30. They had additional conditions as well, like having the expiry on a separate day as it should not coincide with the existing expiries; reviewing the contract size to make it attractive and also bringing Bankex along with it. We relaunched in May [2023] and today 350 brokers are in, 13 software developers including TCS support us, my co-location space, which was languishing, is sold out. All these are happening, but it is still very rudimentary, and we have a very long path to travel.
It has been only a few months, but the results are clearly visible as the market share of BSE has gone up sharply...
Honestly, I am not looking at market share. I want 400 brokers to be enabled. I want 250 FPIs... currently, I have 50... I have a specific set of members in mind, who are in India but are not with BSE. I want to grow the second week, third week or the long-term monthly options. I want more institutional presence that brings balance and vibrancy in the cash market as well... because they will use the same infrastructure for the cash segment. That is how the derivatives journey has been and we are very happy that 1.5 million investors regularly trade Sensex derivatives. But it should be 15 million as we are aspiring to deepen the market.
You mentioned putting building blocks in place. Is that why the strategy worked this time, as this isn’t the first time that BSE has tried to revive the derivatives segment?
I can’t take credit for whatever success we have seen. Those who should take credit for the success are the brokers who gave me correct guidance, and my employees. We are working in a 150-year-old organisation and consistently we have seen reduction in volumes. In such an organisation, for the employees to suddenly gear up and say ‘Look, this man is asking me to work more; I should work more,’—I consider it as a big act of kindness. In the [past] 11 months, I would have done at least four to five town halls with not just BSE alone, but the entire BSE group. I told them I want to make this organisation vibrant, but I am finding these challenges. I told them we all will have to be very cautious about regulation, compliance and governance. I told them that you need to tell me and advise me what the weaknesses are, what resources you want, how I can garner those resources. If at all I can say that we are moving towards success, the credit does not go to me; it is because of so many people, including the board, who are supporting me.
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