The fund trading platforms of the NSE and the BSE are still not popular. Will they ever...
A major change of guard is underway at the country's oldest stock exchange as it pulls out all the stops to transform itself into a well-oiled trading platform
The Bombay Stock Exchange (BSE) is in the midst of a major overhaul of its management and personnel to bring the rest of the bourse in line with the systems and operating style of its internationally experienced top management team. Over the past couple of months the BSE has been getting rid of the "deadwood", says an old-time broker. Replacing them are highly qualified people who are all set to drag the 130-year-old exchange into an efficient and highly-competitive entity that can take on the National Stock Exchange (NSE), which dominates the cash market and has a near monopoly in the equity derivatives segment.
The key areas where the BSE is working on changes is-first, to establish a strong pan-Indian presence with offices that handle training, investor outreach and certification at all major cities. It is understood to have engaged a global realty consultant to do the job.
Second, the exchange is on a hiring spree. Some key departments such as administration, listing, security (both physical security and IT security), communication and training already have fresh faces or will soon see them. The changes are not merely about cleaning out the "deadwood" and getting new people-it is a paradigm change in the manner in which the BSE has been staffed for its entire existence.
For instance, consider this. The BSE's administration, IT security and investor issues will be handled by G Lakshman, who is on a sabbatical from the Kerala government. He has a highly impressive academic background-an engineer from IIT Kanpur, a management degree from IIM Bangalore and a 1997 batch IPS officer, who has been with the Kerala government as managing director of Matsyafed, the State fisheries undertaking, in his previous posting. We learn that Mr Lakshman has already started overhauling BSE's laidback administration and is
overhauling the IT security, under the watchful eye of the BSE's new chairman S Ramadorai.
There is another new face handling listing and compliance in Nehal Vora, a former SEBI hand, who has apparently been a colleague of the BSE CEO Madhu Kannan at the regulatory body. It is no secret that the BSE is stuck with the legacy of several thousand listed companies, with low floating stock and poor liquidity. This makes their stocks extremely easy to manipulate, when the listing compliance department is lethargic, disinterested or worse. Sources say that one will see a lot of action in cleaning up this section too. As things stand, however, Moneylife has been routinely reporting the most brazen manipulation which goes unchecked.
Two other departments where the BSE is expected to see fresh faces and major change is training and communication. However, not much is available on these fronts as yet. Meanwhile, several senior employees have either been asked to go or have put in their papers. Among these is Atul Tirodkar, once the executive director and former whistleblower, who has apparently been most irregular at work after his triumphant return to the bourse, following the Joint Parliamentary Committee report. BSE's corporate communications head, Kalyan Bose, has also moved on and the BSE Training Department is expected to see some big departures.
A senior-level employee confirmed that old faces were indeed making way for new ones. He said, "Exits are part and parcel of any corporate entity. The reasons for these sudden departures are best known to the company itself." He also made it clear that given a better opportunity, he too would head for the exit.
While the BSE is cleaning up its act in a big way, it has continued to lose turnover and market share. The bourse is now pinning its hopes on the Bimal Jalan Committee submitting its report quickly so that it is permitted to go public. The Jalan Committee, it may be recalled, was set up by SEBI, to take yet another look at the listing of stock exchanges, although SEBI's own primary and secondary market advisory committees had already examined the issue at length and their suggestions were further revised by a one-person committee headed by a former whole-time member, Mr Ananthraman. It is an open and widespread belief that the Jalan Committee was only constituted to help the NSE which is not keen on listing, but also wants to avoid pressure from its international investors to list itself.
Well, the BSE may work hard at becoming sharp, efficient and profitable, but ultimately, its fate rests in the hands of the regulator's willingness to level the playing field by clearing a fair system for algorithm trading and the listing of the bourse.
The BSE, in a response to Moneylife's query stated, "The BSE assesses its talent requirement on a continuous basis at all levels and recruits suitable resources based on these requirements."
The biggest reason for retaining cabotage laws reserving coastal Indian domestic trade for Indian flag shipping is simply this—given a level playing field, nobody else can do it cheaper or better, anywhere in the world, than Indians
Imagine a scenario where a trucking company from, say, Mongolia, was allowed to operate trucks for domestic business in India, in direct competition with Indian truckers. Fair enough, some proponents of liberalisation and free trade may argue, after all it is all about market forces. To some extent, they may be correct, if it provides better competitiveness to the customer—then why not? It is assumed, of course, that the operators will abide by the laws and rules of India, while in India. Sounds fair, doesn’t it?
Now take another scenario—this Mongolian truck operator is exempted from all taxes, permit fees, insurance rules, labour rules, safety mandates, tolls, national security considerations, environmental adherences, maintenance schedules, and so on and so forth. In addition, they are not to be fined for overloading or speeding, and they will, in addition, get preferential treatment for everything else, will not be subject to Indian laws in case of mishaps, and will instead get all benefits including subsidies from their own government.
Great for a small segment of people, maybe, but a disaster for the rest of us in India. And next, imagine all this in the hands of trucks and truck drivers from an enemy country? The Union Carbide mishap in Bhopal would be nothing in front of such a scenario. And for absolutely no tangible benefit to anybody. Other than the select few who push this ridiculous proposition forward.
Something like that describes the real scenario behind demands by sections of the government—including the shipping ministry—and some shippers in India, in context with shrill cries asking for change of cabotage laws to favour foreign shipping lines to get free run of coastal shipping trade between Indian ports and removal of ‘cabotage’ laws traditionally protecting all coastal and inland shipping for Indian flag vessels. Hang national security, ignore the fact that countries like the USA and China also use cabotage and do not permit foreign flag ships to carry coastal cargo—here in India the reality that there is even debate on the subject is enough. To get those who would sell the country for a few coins to jump on to the bandwagon again.
And it is not only about national pride and self-respect —next we may see demands for the Indian Navy and Coast Guard ships to be farmed out to the lowest bidder—it is also about the simple fact that worldwide elements from Indian shipping are proving without doubt that Indians are at the top of providing efficient shipping solutions. But here in India, it is our own shipping ministry which chooses to propose and then bulldoze this change in cabotage laws, regardless.
Coastal shipping in India has been the neglected stepchild for far too long—mainly because there weren’t enough ports, and likewise, there wasn’t too much cargo generated. Now that both these issues are resolved—it is not just about the demands that are being made to let outsiders into the party. It is more about simply making things fair for Indian shipping on the Indian coast. It is also about increasing competition in coastal shipping, sure, but by letting in more Indian flag ships.
Currently, the difficulties faced by Indian flag ships on India’s coast are probably worse than even the worst that could have been thought of by the British when they were trying to destroy India’s trade. Taxes, customs duties and regulations which are not imposed on foreign ships visiting Indian ports are routinely imposed on Indian flag ships, by the same entities who wish to promote foreign flag ships along India's coast, needless to state— without the benefit of pari-passu benefits to Indian ships visiting the countries to which the foreign flag ships belong—because those foreign flag ships are largely from ‘Flag of Convenience’ tax shelters with hardly any trade, like Liberia, Panama, Sierra Leone, Mongolia, Marshall Islands and others.
The biggest reason, however, for retaining cabotage laws reserving coastal Indian domestic trade for Indian flag shipping is simply this—given a level playing field, nobody else can do it cheaper or better, anywhere in the world, than Indians. That, however, does not seem to impress those in the Indian shipping ministry.