By Siddhant Mishra & Joydeep Ghosh
Sundararaman Ramamurthy, who took charge as the the MD and CEO of BSE on Wednesday, faces some of the exchange’s usual challenges – a low market share of 10% in both the cash and derivative markets. Its inability to get more investors and traders has a trickle-down effect on the impact cost, which goes up in the absence of more traders. So, it is a chicken-and-egg kind of a story. Like a stock market veteran said: “In short, his KPI is simple: Business has to go up.”
The BSE, a market observer said, is like an elephant. Ramamurthy has to make it dance. What is good news from Ramamurthy is that his predecessor and now MD & CEO of the rival exchange — Ashish Kumar Chauhan — left the exchange with a strong technology background. According to industry players, executing trades on the BSE is much faster compared with the NSE.
In fact, according to reports, the BSE is the fastest exchange in the world with a trading speed of 6 microseconds. Previously, BSE’s response time was 10 milliseconds. The new trading system has reduced latency, helping the BSE improve its response time to 6 microseconds — more than 1,000 times faster than before. As a result, BSE is now the fastest stock exchange in the world, with speeds 10 times faster than the next fastest exchange.
Industry players say it will take NSE a few years to play catch up, in terms of technology, due to archaic systems. Ramamurthy has to leverage this to improve volumes. What also works in his favour is that he knows everything about running a stock exchange. Having spent nearly two decades at the NSE, he is one of the few people who have a complete understanding of the business of the stock exchanges.
According to reports, Ramamurthy is credited for having launched indices like the India VIX – the volatility index and the Bank Nifty. He quit the NSE in 2014 to join Bank of America as the chief operating officer. His other advantages include BSE having a dominant market share in areas such as mutual funds (BSE StAR MF) and small and medium enterprises (SMEs) platforms. In December, the BSE StAR MF platform set a new record of 24.4 million transactions, against its previous best of 23.2 million transactions in November 2022. The platform processed 3.77 million transactions on December 12, outdoing its previous single-day record of 3.43 million transactions on October 10.
There is a number of newer areas such as social stock exchanges for which it has already got the nod from the market watchdog, Sebi. There are new opportunities in GIFT City and debt trading as well. Market observers say running an exchange now requires three key qualities — understanding technology, having a strong sales and marketing mindset and the ability to cause disruption. Ramamurthy’s stint will be keenly watched.