Image: Joshua Navalkar
Vikram Limaye, the soon-to-be CEO of NSE is calm even though the stock exchange itself appears to be in the midst of a storm. This is because, in an odd way, Limaye has seen all of this, and more, in a different form, when, he joined IDFC in 2005.
Limaye, an MBA in finance and multinational management from the Wharton School of the University of Pennsylvania, says that he is “comfortable with what he leaves behind” in terms of the current position IDFC is in. Limaye was selected as the managing director and CEO of NSE in February.
“There is never a good time to leave an organisation, there will always be an unfinished agenda. But I am comfortable about what I am leaving behind…there is stability,” Limaye said. IDFC Bank has completed nearly two years of operations and there are no loose-ends which worry me, he said, sitting at his IDFC Bandra-Kurla Complex office.
Limaye is set to take charge at the NSE on July 17, in what could be described as possibly the toughest phase the stock exchange is going through. The exchange has seen two high-profile exits at the management level in recent months. The exchange may also have to re-file its papers for its Rs 10,000 crore IPO, until an ongoing probe against the exchange is resolved.
In June this year, Ravi Narain, vice chairman of the NSE stepped down from the board of the company, as he did not want to hinder an ongoing investigation which the market regulator Sebi is carrying out on the exchange. The NSE has been charged of favouring certain brokers by giving them co-location facility for hi-frequency trading that allowed them faster access to prices much in advance to the rest of the market players.
The job of the NSE CEO was lying vacant since December 2, 2016 after Chitra Ramakrishna, the managing director and CEO of NSE tendered her resignation due to personal reasons. The company set up a panel which comprised of Usha Thorat, Mohandas Pai, Dinesh Kanabar and Anand Mahindra on December 5 to look for the next MD. Two months later they selected Vikram Limaye.
‘NSE has some credibility-related issues’
“There is a management void, there are some credibility issues which need to be addressed and the institution needs to be taken public,” says Limaye, about his timing while taking charge at NSE. This was not dissimilar to when Limaye joined IDFC in 2005, when the institution had a different type of DNA, with a few senior management.
Limaye says the rationale for joining the NSE is also not dissimilar to that for joining IDFC. “This is an institution of national importance and the NSE can play a larger role of market development,” he says.
Limaye disclosed a bit of his strategy relating to his new role. “If one studies stock exchanges globally, one will find that in recent years, their non-exchange related revenues—compared to exchange-related revenues—are starting to rise and offer huge scope.” These would relate to data management, indices and technology.
Limaye wants to expand the fee-based revenue streams of NSE which include data as well as the further development of ETFs. While NSE has experimented with both these lines, unlike foreign exchanges, the success has been limited so far. Across the developed world, ETFs are big business because active fund managers find it difficult to beat ETFs or index funds as the markets are more efficient.
India is also getting to the stage where more active fund managers find it tough to beat the broad markets. And this, itself, can create a big opportunity for the stock exchange to grow its income from the ETF business. India is also one of the few markets where you see new companies list at a stock exchange each year, as private equity investors look for an exit.
The stock exchange is a model which requires less capital and the business is sticky. It is rare for traders and investors to move from one stock exchange to another even if the competitor decreases fees.Institution builder
Limaye appeared unfazed by the challenges which he might face at the NSE. He is optimistic about his ability to build institutions and relationships, and bringing in strategic thinking and focused execution.
Prior to joining IDFC, Limaye had come back from the US (as planned) and there was an urge to be involved in what he calls working in an area towards “nation-building”. Limaye was thinking of joining a public sector organisation but Deepak Parekh [IDFC’s founder chairman] asked him to join the firm, which at that time was just a small project finance company.
Talking about his most important achievements at IDFC, Limaye says it would be “people management, attracting and retaining talent and providing growth opportunities for talent to flourish”. Limaye is in a sweet spot. The NSE will need all and more of their new CEO’s qualities to ride them out of the current crisis.