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AHEAD
Global Custodian: Obviously NSE has had a
big hand in helping to shape the Indian cap-
ital markets ecosystem. Is there anything
still missing in your view?
Vikram Limaye: There’s a lot that can be
done from a market development perspec-
tive. The list is actually quite long, if we
want to broaden the investor base. While
5% of household savings are in equities to-
day and the equity markets in India are rel-
atively well developed, we need to increase
both retail and institutional participation
in equity markets. For other asset classes,
markets are at very early stages, whether it
is bonds, commodities, currencies, credit
derivatives, interest rate swaps, etc.
Part of it has to do with regulation, part
of it has to do with the ecosystem not
being developed the way it needs to be
developed for these markets to take off. In
many of these areas, institutional partici-
pation is not where it needs to be. Institu-
tional capital in India is controlled by four
different regulators, amongst whom there
needs to be alignment to develop a market.
Various people have to come together and
move in the right direction. Obviously the
Exchange also plays an important role. I’m
hopeful of market development because
64
Global Custodian
Spring 2018
Vikram Limaye, CEO, NSE, sat
down with Global Custodian in
Mumbai to outline his vision
of where the Indian securities
markets need to focus in
the sort to medium term.
people at senior levels in government and
the regulators are interested in moving in
this direction.
I do feel that a lot can be done in terms
of surveillance of the market to ensure fair
market practices and that trust in markets
is enhanced. For that, we have to use big
data analytics and artificial intelligence to
see how we can try and predict patterns of
trading and behaviour.
From a systemic risk perspective, we
need to keep on top of cyber security
risks because that obviously is a huge
threat. Unfortunately 99.9% uptime for an
exchange is not good enough; it has to be
100%. And the cast of characters you’re
dealing with for cyber security threats is
increasingly sophisticated. Many of them
could also be state-funded, so you have
to stay ahead of the curve. Investment in
technology is critical to be at the cutting
edge of prevention.
GC: Will the introduction of a common plat-
form for equities and commodities later in
the year make that easier or more difficult?
VL: It’s certainly easier for members, be-
cause you’re trading from one account and
to that extent it’s easier to move margins
and collateral across different segments if
you’re on one exchange.
GC: What’s the impact going to be on com-
petition?
VL: The commodities market had a sepa-
rate regulator called the FMC (Forward
Markets Commission). This was merged
with the securities regulator, SEBI. So now
we have one regulator, which is why bring-
ing commodities and equities together is
also feasible. The first step was to permit
the brokers to have a unified entity for
commodities and equities. Competition
will increase with exchanges being permit-
ted in all asset classes.
GC: And that is still on target for October?
VL: That’s right. NSE will be ready to offer
commodities contracts from October 1.