NSE Committed To Maintain Highest Norms of Governance, Says CEO Ashish Chauhan

With share markets scaling new heights almost every other day, the role of the stock exchange gains more significance than ever to ensure transparency and good corporate governance. Managing Director and Chief Executive Officer, Ashish Kumar Chauhan, of the National Stock Exchange said that the NSE was committed to maintaining the highest norms of governance and transparency. 

Speaking to a group of business journalists from Delhi vising the NSE recently he said, investors who stay disciplined and stay within the regulatory framework, make money.

“Today, we have more than 80 million investors. When I joined this industry around 30 years ago, there were hardly 2.5–3 million investors,” he said.

Actually, the fast-burgeoning number of retail investors has, to a large extent, neutralised the impact foreign institutional investors used to have on bourses. Every time they would withdraw money, markets would crash, only to rise when DII or FII pumped in money. Market dynamics have changed to a large extent due to the sudden influx of retail investors.

As a society, even as we are more socialist in nature and give more importance to banking and less importance to the market, market-based capital allocation accounts for one-third of our wealth. As an exchange, our aim is to ensure we bring them to safer instruments, especially when they are entering the markets. Hence, we promote mutual funds and portfolio management services that have the expertise to manage money.

The National Stock Exchange (NSE) is waiting for a signal from the market regulator, the Securities and Exchange Board of India (SEBI), to initiate its Initial Public Offering (IPO) process, he said. As of December 31, 2023, 55.51 percent of NSE’s shareholding is owned by the public, while the rest is owned by the non-public.

It is difficult to predict when the listing will happen, as SEBI has to take a final call on that. Our job is to run the exchange as an exchange." Once SEBI indicates, we will file revised Draft Red Herring Prospectus (DRHP).”  NSE’s competitor, BSE (Bombay Stock Exchange), floated its IPO on September 2016 and is now listed on both exchanges. Interestingly, Chauhan was the CEO of BSE when it got listed. He has also been a founding member of the NSE and this is his second innings with the exchange.

NSE reported an 8 per cent year-on-year rise in its net profit for the December quarter to ₹1,975 crore. Consolidated revenue from operations grew 25 percent year-on-year to ₹3,517 crores for Q3.

FOCUS ON GOVERNANCE

Our focus is on governance and its core functions, along with investor services, while facilitating companies to raise capital and becoming a place where the public benefits, Chauhan said, adding, “We used to have technical issues, but in the last one and a half years, while the number of trades has more than doubled, there has not been any technical issue.”

The listing of NSE has been postponed for several years due to a series of corporate governance issues. These concerns include the involvement of its former chief executive officer, Chitra Ramkrishna, in the 2015 co-location scam and problems related to various technological failures. In 2021, the NSE faced a trading suspension for several hours when its mainframe and disaster recovery sites experienced malfunctions, attracting scrutiny from SEBI.

DON’T UNDERSTAND; DON’T INVEST

Chauhan said that if an investor is not fully understanding or losing money, he should not invest. Those who can manage risk and understand, they should be given opportunity. It may be noted that NSE is the world’s largest derivative exchange by trading volumes (contract), per the statistics maintained by Futures Industry Association (FIA) for calendar year 2023.

Chauhan said that the effort would be to focus on commodities where liquidity is high and investors are finding it easy to trade. NSE is also the largest shareholder of commodity exchange, NCDEX.