When it comes to technology implementation in the stock market, National Stock Exchange (NSE) is one of the leading stock exchanges, says Ravi Varanasi, Head, Business Development, NSE, in conversation with Poulami Chakraborty of Elets News Network (ENN)
What is the role of National Stock Exchange (NSE) in the development of the economy of India.
The stock exchanges are the places where the capital, along with the market space is allocated among the well-performing companies. The allocation of space in the capital market is usually scarce and market usually allocates capital among stakeholders, especially among new growing sectors and sectors that are performing well in the economy.The basic function of stock exchange is to direct market activity to performing sectors. We have always been ensuring that the infrastructure being provided is the state-of-the-art and best in class. When we started twenty years back, we ensured that top-notch infrastructure is being provided to investors in the market, so that they can act better without minimum diculties.
Before NSE came into picture in the Indian economy, each state had their own stock exchanges without any statement guarantee and nalities to settlement. We introduced complete electronic trading system and set up our own electronic network in the country. When we came into the picture of Indian economy, the telecommunication sector was not that robust and organised, hence we have to set up our own V-SAT network; besides setting our own dishes so that we can take trading to all parts of the country. In a way, we have taken the market to the investors, instead of expecting the investors to come to the market; which has been one of the biggest changes in the economy.
Another big change that we have tried to bring in till the time the market was run by intermediaries is, to demutualise the market. Earlier, the market was run and owned by market intermediaries, who also had trading rights. Currently, it is run by government institutions and the trading rights have been rendered with market intermediaries. So, we tried to segregate the interests of all the categories, so that the exchange works as a rule-based organisation and these rules are applied to each and every stakeholder.
How has technology been adopted by NSE and what are its outcomes?
Initially, we were a technology company and had set up our own technology ecosystem and operations; besides ensuring that we are constantly upgrading our technology over the period. Since we entered into the market, volumes have signi“cantly exploded because we use a transparent and easy-to-use technology through which each individual investor has been able to reach the exchange through their brokerages.
Recently, we have introduced mobile-based trading through apps, now enabling clients to trade in the market with their mobiles. In fact, about 12 per cent of the total trading happenings are through electronic systems– from terminals, computers and PCs or whatever their mode of trading is.
There are two lakh and fifty thousand terminals installed across the country, besides the fantastic reach we are able to create through Internet and mobile-based trading. Nowadays, much of the trading happens through algorithms. Algorithmic trading has been slowly taking o in the market, with broker’s servers connected in the exchange premise enabling them to react to market dynamics really fast. Also, our computers are capable of processing over 2000 order messages every second.
There are two lakh and fifty thousand terminals installed across the country, besides the fantastic reach we are able to create through Internet and mobile-based trading
How do you describe your presence in the Indian market and how does it impact the stock market players?
When it comes to technology and its implementation in the stock market, NSE is one of the leading stock exchanges. We control almost 85 per cent of share market transactions happening through NSE and about 100 per cent of features and transaction derivatives happening through NSE. Since we created a robust technological platform for banks, traders and brokers, the maximum volume of share market transactions happens through NSE. Our prime focus is to provide our stakeholders with the stateof- the-art robust infrastructure, so that they do not need to worry about whether they will be able to access the market. While doing this, we also tend to ensure that we have a fairly robust clearing and settlement infrastructure. Our risk-management framework is one of the best infrastructures and can compete with any stock market in the world.
How has digitisation in NSE benefitted the economy at large?
Every aspect of National Stock Exchange has been electroni“ed over a period of time, right from shares in 1984 to our communications in the recent times. A lot of work is happening towards Aadhaar, eKYC and similar outlines. In a way, we have been able to eliminate paper completely from the ecosystem of our operations in NSE. Some paper work is still involved, during the time of on-boarding between the broker and the client, to which the Security and Exchange Board of India (SEBI) is seriously looking into for providing some solutions to make it absolutely hassle-free procedure.
Also, we send email and SMS for any transaction happening through broker for any trade confirmation in the market.
What is the role of SNS and how has it catalysed the growth of business for NSE?
We use social media extensively to make people aware of our products and services available in the market. It enables us to reach out to the unmarked boundary of unreached populace of the economy.
Does NSE play any role in financial inclusion?
Of course, it has a major role. We keep conducting workshop for bankers and “nancial institutions to educate them on the stock market dynamics and aspects which contribute in the growth of stock market. Initially, when we came to the market, we noticed that the intermediary skills were signi“cantly weak, for which we started standard skill set training programmes to enhance the intermediary skill-sets at par with the global standards. The exams are conducted online and in the last 17 or 18 years, we have reached about 17 lakh people through these programmes. While doing this, we realised that we need to conduct similar kind of training programmes for investors to create the awareness.