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MSE to tap opportunities in the post trade space through MCCIL

Monday, August 20, 2018

Balu Nair, Interim CEO, MSE

Metropolitan Stock Exchange (MSE) has witnessed a turbulent past and is now on the path to recovery. In conversation with Dominic Rebello, Balu Nair, Interim CEO at MSE shares details on the challenges faced by the exchange and the turnaround strategy that has been put in place

The exchange ecosystem is going to witness interesting changes in the coming months with unified products and extended trade timings. Can you share your views on how is MSE going to deal with this evolution?
Yes. Many changes are expected in the ecosystem around exchange traded markets in this financial year. While these changes offer lot of opportunities to expand business, they also involve deployment of significant amount of resources. Therefore, the Exchange is carefully examining and shortlisting avenues which can enhance its revenue potential with optimum deployment of resources. We would be focussing on market segments and product offerings that have huge business potential, both in existing and newer avenues while focus will also be on market expansion and service improvement.
 
Do you see some consolidation happening in the Exchange ecosystem going forward?
Regulatory framework applicable to exchange traded markets are largely uniform in India. This scenario provides immense opportunities to synergise and save significant amount of resources. While consolidation could be one of such options, there are many such opportunities on the post trade side. We have our subsidiary Metropolitan Clearing Corporation of India Limited (MCCIL) which is well capitalised with SEBI recognition and a proven track record of default free settlements. We are exploring to tap such opportunities in the post trade space through MCCIL
 
What are the new plans that the leadership team at MSE is working on?
We have undertaken several initiatives to introduce new offerings to gain traction. We have a decent pipeline of rollouts at advanced stages. DEBT, IRF, Currency offer huge potential, and we continue to focus on these segments. Further, our focus remains on Equity bulk and block deals. We are working on some effective rollouts that will help us revive our equity segment as well. We are actively working on re-launch of our flagship index SX40 soon. The growth of D-mat accounts in 2018 has been in double digits at 13.50% - the highest in last 5 years signalling a growing investor confidence and broad-based participation. The relaunch of SX40 will ride on such encouraging structural changes in the capital markets.

We recently launched EBP (Electronic Book Building Provider) services and this mechanism is available on our exchange platform for issuance of Debt Instruments for corporates. We will now be able to attract new debt issues and their subsequent trading.
 
What are your plans for strengthening the turnover in the FX segment?
As we had envisaged after regulators increased the daily trading limit, the market has broadened. The enhanced limit is helping users to take part more actively than earlier in ETCD (Exchange Traded Currency Derivatives) since the documentation requirements are eased to the extent of such limit. Hence, the users who were hesitant to participate earlier in ETCD due to lower limits are now incentivized by the larger limits.
 
There have been reports of a whistle-blower complaining to SEBI. Kindly share details and the action taken by exchange management.
When the new management team took over the reins, it had the unenviable job of establishing a new performance driven culture. Over the past couple of years, we have been able to successfully do almost everything that is in the interest of our investors, employees and market participants. The process of bringing about a positive change entailed adopting a zero-tolerance policy towards underperformers and unprofessional employees. Those who are disgruntled made baseless allegations.
To put this issue to rest the Governing Board / PID's (Public Interest Director) have proactively appointed one of the big four consulting firms to conduct an independent forensic audit of the matter. We are confident that the exchange will rise much stronger and cleaner to concentrate all energies on robust business trajectory.

What are the changes in the management and leadership team reported  last month?
As mentioned above, to ensure complete transparency and neutrality, the MD has proceeded on leave. We are confident that the exchange will rise much stronger and cleaner to concentrate all energies on robust business trajectory.

Having said that, business is in full force. Our talent strategy team under the able guidance of the Management team and the board has been instrumental in re-defining roles to ensure alignment with the changing business needs, macros and new-age consumer thinking. We recently inducted promising new faces in key enterprise functions. The activity shall continue for further strengthening.

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