Everything has come together at the right time: BSE MD & CEO Ramamurthy

'Nobody expected the elephant to dance. People had doubts, but I didn't have any doubts. I also didn't expect it (turnaround) to be so fast.'

On May 15, 2023, the BSE relaunched its index derivatives under its newly-appointed MD & CEO Sundararaman Ramamurthy. In a year, the exchange’s market share has gone up from zero to nearly 20 per cent. Exactly 12 months after its relaunch, Ramamurthy tells Samie Modak in an interview in Mumbai how Asia’s oldest stock exchange has gained ground. Edited excerpts:

The relaunch of the BSE derivatives has been a resounding success. What are the reasons?
 

Nobody expected the elephant to dance. People had doubts, but I didn’t any have doubts. I also didn’t expect it (turnaround) to be so fast. When I was about to join here, I was thinking about what makes an organisation succeed. I think organisations succeed if they serve an economic purpose. When they meet certain needs, when they fill certain gaps. When the NSE started, there was a gap. Membership was not available at that time. It gave free access (to members) anywhere in the country. It identified the gap and became successful. So what gap did the BSE find now? We went to our customers and told them why don't you help us increase our market share in the cash segment. 

They told us, you don't have derivatives. So why will we put all our infrastructure in trading equities? Because derivatives were the flavour of the day, you need to bring derivatives, then we will be able to look into your cash. They told us not to just bring derivatives in a copycat format. Give us a different expiry date. Give us Sensex and one more index derivative. I never realised the power of that statement. The rest is history.

But changing the expiry date cannot be the magic formula.
 

Of course, there is a lot of hard work that went into it. There have been a lot of smaller things. Providing two-way quotes, finding the right people who will be interested in market development, the right software vendors, the back office vendors.

Do you also attribute the timing to the success?
 

Every factor has contributed to the success. The market, the regulator, my board, the employees, our technology. Everything has come together at the right time. It is not a single man’s effort. There was no magic wand. We manage 4 billion orders on expiry day. Our starting order capacity was just 100 million orders. Scaling up wouldn’t have been possible without the support of one and all.

What are the targets for the next year?
 

I would be lying if I said that I don’t set targets. But my targets are not around gaining market share. It is to create a more sustainable product for the future. People like us come and go. But the BSE will exist. It has been done for 150 years, and it will continue for many more centuries. For a sustainable product, we will need to create more depth and breadth. For that, I will need at least 500 members, 300 FPIs, another 1 million unique clients, and more open interest not just for the current week but for the next week and the next month. I am introducing stock futures from July 1. We need that to be exuberant. Our investor set should be more diverse.

Do you have plans to ramp up investments?
 

Our investments will go up. We are expanding on colocation. All the servers will be old. I am refurbishing everything. Human resources, physical infrastructure, and technology infrastructure are the three key areas. I will be utilising all my profits and retained earnings after paying my shareholders. The aim is to build a strong BSE for years to come.

BSE has raised the transaction charges to offset the blow from higher Sebi fees. Will it impact volumes?

I don’t think it will impact volumes as the liquidity in our products has now matured. A product, which has inherent strength and liquidity should not be impacted by transaction charges. As charges are not away from the market, they are just in line with the market.

You have appealed Sebi’s decision to charge the fees in a certain way.
 

Yes. This is an 18-year-old issue. Sebi has written to us on April 26 this year. I am just 16 months into this organisation. BSE appears to have been paying this way, based on the expert advice and their understanding. So we have requested not to be asked to pay retrospectively. We should be asked to pay prospectively with an affordable charge.

How has been your experience of heading an exchange?
 

Heading a market infrastructure institution (MII) gives you the opportunity to serve mankind. I had a comfortable job at Bank of America. If it was only about employment and making money, I might as well have continued there. The moment you decide that you want to do service for your country, it gives you a lot of pride, even though it is a stressful job.