BSE@150: Primary goal is to deepen and broaden the market; attract 500 FPIs: Sundararaman Ramamurthy

Economic Times

28-04-2025

Sundararaman Ramamurthy, MD & CEO, BSE, says the exchange aims to deepen and broaden the market by increasing the number of brokers to 800 and data center racks to 500. They also plan to attract 500 Foreign Portfolio Investors (FPIs). Efforts are underway to distribute trading volumes across the week and promote monthly contracts, particularly for the bank index, to move beyond expiry-day focused trading.
What is BSE's prime focus on its 150th year of existence?
Sundararaman Ramamurthy: In order to ensure that the market acts as a meaningful alternate mechanism and also provide investors the diversity that they are looking for, we are looking to deepen and broaden the market, that will be our primary focus. What do we mean by deepening and broadening the market? We started with zero brokers. Today, we have 500. We want to go up to 800. If you are talking of six months, that will be part of this goal.
We started with no data centre, meaningful collocation racks, today we are having around 300, at least we want to go to around 500 racks. In the next six months, we will add probably 100 more and probably in the next six months further down we will have another 100 more so that we come to the number of 500. Today, from zero FPIs, we have 250 FPIs, we want to go into some meaningful number of 500 over a period of time.
In terms of deepening the market, today clearly every exchange can have only one weekly product. In that weekly product, only the current week trades are important. When the Sensex started, there was no option but to take Friday as the expiry day for us. Most of the volumes were happening on the expiry day. 85% and above was on expiry day. So, it was an expiry day product. Thanks to the regulatory framework changes, today that is not the case. It is somewhere around 45% on expiry day. The volumes are well distributed across all the week, throughout all the days of the week.
Not only that, the trading has started commencing next week and next to next week as well is coming into monthly contracts. All the other contracts have become monthly contracts. We have a bank index, which is a wonderful index and is a monthly product. We have to build that product. So, more and more of further weeks down the lane being traded, more and more monthly contracts getting traded, is the first important point that we need to achieve before we go for more products.
When we last discussed the expiry day, there was an ambiguity whether or not BSE expiry will remain on Tuesday. Now that Sebi's discussion paper has come, is that ambiguity gone now? It is completely out of the way that there will be no change in the trading days because even the direction which has come from SEBI has clearly defined there will be only two days of expiry, Tuesday and Thursday. Is it a fair anticipation?
Sundararaman Ramamurthy: As you will recall, we started with Friday because we had no option. And when an option was given to choose a day, we chose Tuesday. And subsequently there were some changes which necessitated this consultation paper. The consultation paper, the regulatory process in India is a co-created process, with due consultation from the market participants. Clearly the market would have given the feedback to the regulators. The last day of expiry was April 17th, it just went away. We are waiting for the SEBI directives. As far as what action BSE is planning to take, Tuesday is one of the days which the regulators have suggested, and we are already on Tuesday. So, I am not sure whether we need to take any action. Any action that we need to take would depend upon whatever is the regulator's directive that will come out post the consultation paper being fully taken into consideration by the regulators. After due thought process, whatever decisions they make and they direct us, we will as always abide by their directions. But in your intent, Tuesday is fine?
Sundararaman Ramamurthy: Tuesday is one of the days which is already stipulated in the consultative paper. We have no reason therefore to ask for anything different, that is what at least I feel, unless and until the market participants have directed something else to us through the consultation paper. So, from our perspective, since our expiry day is already one of the stipulated days in the consultation paper, I am not able to see a specific action point from our side necessitated at this point of time. What are your pockets of growth? We have talked about one part, which are the areas where you see the growth will be there for BSE in next few years?
Sundararaman Ramamurthy: What is the basic purpose of a stock exchange? The basic purpose of a stock exchange is one, capital formation. It should aid capital formation. It should help in the creation of liquidity. It should help in risk transfer. It should work for transparency. It should provide adequate safety mechanisms along with efficiency and speed. These are the starting points of all the requirements from a stock exchange perspective. Therefore, we should be aiding and helping in the capital formation of the country. What can we do about it? It is just not the equity capital that we are talking about. We are also talking about debt capital. So, I look at it in three areas. One, in respect of the equity capital main board, how are we going to become more efficient in helping all the people who are coming for listing, there no it is not necessary for you to go and tell people that you can list with us. They are mainboard people.
They have a lot of people working with them, they will advise. The most important part of our action in aiding the capital formation is how you bring in efficiency, how you make for ease of operations. So, that is one area we are working on. In respect of the non-main board, that is, SME , we have six crore companies and SMEs are very close to my heart because of their contribution to the economy. We hardly have 570 companies which are listed at BSE, that is not even scratching the tip of the iceberg. What we need to have is quality SMEs coming and listing with us. How do you identify what is quality? Thanks to all the regulatory recent changes that have come in place, there is a greater clarity on what the expectation of the regulators is how to identify good companies, how to identify bad companies, how to augment the banking sector by providing the risk capital for SMEs from the equity sector so that whatever working capital gets provided by the banks is meaningfully safe and also quality. Today, we are trying to leverage technological advantage on a test basis. Already, as a pilot study we have already incorporated the AI and LLM based system. What it basically does is when draft prospects come to us, that gets done in two to three weeks. It looks at the draft prospectors to check on SEBI compliances, BSE specific compliances which we have put extra, and also then based on the past records to check for any weak points, see if there are too many related party transactions, too much change in management, too much change in statutory auditors, whether funds are being diverted under the name of working capital. All these types of checks. So that is the third part of it. The fourth part is, it does a public domain analysis to see whether there is any enforcement action on any of the people, whether there are any problems about the promoters in MCA or about anybody involved in it and all that stuff and narrates to us. So, this helps in making much more meaningful analysis in a shorter period of time. This is an evolving process. Every one of the regulatory processes, every one of the checking and monitoring processes is evolving. We have started this pilot. Once we become satisfied with that, we will be implementing it and that will aid SMEs. Last but not the least is debt capital. It is very important that you provide service in the area of debt capital. Corporate bonds are active. We have to take it more to the public. We ensure that whatever warehousing of corporate bonds today happens in some pockets in India where the brokers warehouse it and help in liquidity creation, what is the type of help we can provide as a stock exchange to deepen there, is another important area of focus for us.