'NYSE has long-term focus on India'

Q&A: Lisette Spannbroek, Managing Director (listings), NYSE Euronext

NYSE Euronext is one of the world’s largest trading platforms, with close to 4,000 listed companies. Lisette Spannbroek, its managing director (listings), is here to attract Indian companies to list on it. In a telephonic interview with Palak Shah, she talks of the advantages of doing so. Edited excerpts:

What is the specific purpose of your visit?
India is a very important destination and a key market for us. We have a long-term focus on the country and I want to be in India as often as I can. Currently, 13 top Indian companies are listed on NYSE, including HDFC and Tata Motors. We are here to attract more and are in talks with several. We are also visiting some existing clients to better service their needs.

Our focus is also on small and medium-sized companies (SMEs), which are growing the fastest in India. SMEs are the backbone of the GDP (gross domestic product) growth of any emerging market country and we are spending a lot of time meeting these companies in India. A lot of SMEs have the potential to become large-cap companies. NYSE Euronext is the world's biggest platform for SMEs, with 2,000 such listed companies.

How many and which Indian firms are looking to list on NYSE in the near future?
We are in talks with several companies to help them facilitate their capital needs. However, it is difficult to say how many firms are looking to list in the near future. I can say that a lot of BPO (business process outsourcing), IT (information technology) and infrastructure firms we are talking to have shown their interest.

What makes NYSE different from other US exchanges?
Primarily, it is our strategy to partner with our clients, which differentiates us from other exchanges in the US. Other exchanges would provide a venue to list, trade stock and try to up-sell services. We go to the extent of approaching the Securities and Exchange Commission (the US markets’ regulator) in case of difficulties faced by listed companies. NYSE as a brand is 400 years old and our customer focus serves both listed companies as well as the trading community, while other exchanges serve only the latter.

More, the market structure we follow has a human factor, wherein we have a mechanism to add liquidity and diminish the risks of wild swings or huge spikes. Other exchanges would offer only electronic and order-matching engines. We help develop higher valuations.

NYSE holds a 5 per cent stake in the National Stock Exchange (NSE). Has NSE’s tie-up with the Chicago Mercantile Exchange, which is NYSE’s rival, hurt your interests in India?
The tie-up does not have any significant influence on NYSE's India plans.

Would you be talking to other Indian exchanges for a strategic tie-up for product developments or cross-listing?
Our approach for listing is directly with the issuer company and not with stock exchanges. It is more on a case to case basis, so we do not require to talk with stock exchanges in India.

Many more stock and commodity exchanges are coming up in India. Do you think there is enough space?
Indian is a big economy and there is room for different kinds of exchanges.

But, there should be a balance between too much and too huge. A monopoly is not beneficial. There has to be a balance between valuation, price and fragmentation. Exchanges in the US and Europe are trying to find their balance and so will exchanges in India.

Indian markets have not been able to develop retail participation, compared to US and European markets. What is lacking?
Timing. The stock exchanges and markets in India started a lot later than some other world markets. There are people in some parts of India where people don't even have a bank account, so there is no access. In the US and Europe, vehicles like pension funds also helped to create a large retail base.

But, all said, the development in emerging markets has been very quick. With the developing of the global investor base and high merger and acquisition activity, the retail base in emerging markets will develop soon.