Regulations
The Buck Really Stops at SEBI and Not the NSE
The panic triggered by the malfunction of the National Stock Exchange (NSE) on 10th July, when its prices were not updating and the Exchange was forced to remain shut for nearly three hours was, by no means, a ‘black swan’ event, as chairman Ashok Chawla described it. His statement not only trivialises the meaning of ‘black swan’ but also suggests that the NSE has been working flawlessly since its inception over 23 years ago. This is not true either of the NSE or any of the top exchanges in the world; even the Bombay Stock Exchange (BSE) faced an issue in 2014. Stock market glitches, that bring trading to a halt, have occurred at many top exchanges around the world. In the past five years, there have been issues at NASDAQ (in July 2017 and 2013); New York Stock Exchange (in 2016, 2015 and 2012); Intercontinental Stock Exchange (2015); Singapore Stock Exchange (2014); Chicago Mercantile Exchange and Tokyo Stock Exchange in 2012 and others. There is nothing ‘black swan’ here. 
 
The fact is, in the past, the NSE has always used its enormous clout with the finance ministry, under P Chidambaram, to bypass the rules, bury issues or ram through solutions that were even contrary to the laid down policy of the Securities and Exchange Board of India (SEBI). Its advertising muscle and haughty attitude towards the media ensured that there was very little discussion in the public domain until 2015, after Moneylife broke the algo scam and the NSE’s attempt to gag us through a defamation suit failed. This time, with a new board of directors, the NSE has done well to show humility and ‘deeply apologise’ for the breakdown. 
 
Contrast this with May 2012, when a wrong order punched by a dealer of Emkay Global, caused a 900-point drop in the NSE Nifty (16%). The NSE tried to whitewash the episode by blaming brokers; it was never openly asked to explain why its market-wide circuit filters failed. Instead, such was NSE’s clout that it could have SEBI’s April 2012 guidelines set aside and reopen the cash market without the mandatory cooling period; the derivatives segment wasn’t closed at all. SEBI also ordered the BSE to fall in line. The NSE got away with a mere warning.
 
At the time of writing this column, we understand that SEBI’s surveillance department as well as its technical advisory committee (TAC) will be looking into the issue of 10th July. Tata Consultancy Ltd, which provided the trading software, has been asked for an explanation. There will also be some inquiry into other rumours floating around, including cyber-attack (already overruled by SEBI), internal sabotage, problems with Chinese equipment (according to a newspaper report, the home ministry is looking into this possibility), etc. 
 
NSE’s malfunction on 10th July, although quickly contained, is really a red-alert for the government. Media reports say that SEBI plans to review trading systems, back-up arrangements and disaster recovery plans of all stock exchanges, including vulnerability to cyber, or ransomware, attacks. That is all very well; but the regulator needs to show some speed in ending management uncertainty at the NSE first. 
 
SEBI, even under chairman Ajay Tyagi, seems to imagine that its slow approach in asking NSE to conduct its own internal investigation and pin responsibility for the algo-trading scam is less destabilising for the bourse. In fact, it is causing more harm. What is the point in piling pressure on the same set of executives for the 10th July glitch, without fixing their role in the algo-trading scam first? Here are some issues that SEBI needs to address, and quickly. 
 
Several senior executives, who have been served a show-cause notice by SEBI in May 2017 for the algo scam, continue to run the bourse from critical technical positions. One of them, Ravi Varanasi, chief of business development, was the spokesperson for the Exchange on 10th July. SEBI is now questioning him and others for the 10th July malfunction as well. This only leads to confusion over reporting and accountability in an institution of national importance.
 
That NSE is headless at the time of a technical crisis is also at SEBI’s door. After Chitra Ramakrishna controversially quit as NSE’s managing director on 2 December 2016 (her close associate, group operation officer Subramanian Anand also quit in October 2016), SEBI has been in no hurry to push the NSE to fill up the vacancy, or to ensure a proper management clean up and succession plan. Vikram Limaye was selected as NSE’s managing director in February 2017, but SEBI did not clear his appointment for several months. He is expected to take charge sometime next month after completing his assignment with the Board of Cricket Control of India (BCCI). Were there really no suitable candidates available to take charge of the crisis-hit NSE immediately? What does it say about the selection committee that SEBI put together to decide this important appointment?
 
Remember, Mr Limaye neither has experience of running a complex, technology-intensive bourse, nor has he ever been in a regulatory function (since the NSE is also a first-level regulator). We don’t know if the selection committee considered this factor or decided that experience was not relevant for the managing director’s post, even though Mr Limaye will be taking over in very difficult circumstances. After all, the three previous incumbents were all part of NSE’s founding team, had helped build the Exchange from scratch and were around for 23 years. Since NSE’s tech team is already under a cloud, does it have plans for lateral appointments with experience in technology, surveillance, etc?
 
After a series of whistleblowers’ letters pointed to the complete breakdown in NSE’s human resources (HR) and recruitment policies, irregular senior appointments with lavish perks, misreporting to SEBI, lack of transparency as well as the power enjoyed by ‘consultants’ close to the top management, the NSE had assured SEBI of a clean-up by absorbing those who were eligible and letting others go. This has been implemented only partly. Meanwhile, the HR head has also been asked to leave.
 
NSE’s original capital came from a set of government-owned entities—banks, insurance companies and development finance institutions. Over the years, it has sold shares to foreign institutional investors (FIIs), two venture capital funds, corporate bodies, individuals and foreign direct investors, at steep valuations. The process has been opaque; but even they have been pushing the NSE to list the bourse. These investors are also left in limbo by SEBI’s failure to get the Exchange back on its feet. 
 
Two letters by a whistleblower, who claims to be an ex-employee (and calls himself Jamie Jones), have levelled some serious charges about conflict of interest between top employees of the NSE, consultants and firms who signed up for algo trading. These charges have been the subject of open speculation among market players. SEBI has the ability to call for information, check documents and establish whether any of these allegations is true and act on them. Key issues raised by the letters are about NSE’s consultants having profit-sharing consultancy agreements with brokerage firms that benefited from the algo scam and royalty paid on the NSE indices to some academics/consultants. Has SEBI bothered to investigate?
 
Meanwhile, following SEBI’s last board meeting, chairman Ajay Tyagi described NSE’s co-location issue as a ‘serious matter’. He said that it was for the bourse to decide whether they need to file a revised prospectus for the initial public offering (IPO). Now that there is another investigation into the technical glitch on 10th July, the IPO begins to look even more distant. Clearly, this state of limbo cannot continue. The onus on ensuring a full and proper investigation and swift action is on SEBI. In fact, it is the regulator who is on test here.

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COMMENTS

R Balakrishnan

1 week ago

NSE is in the clutches of a mafia type gang from within the govt cadre. The present appointment is part of that crony club. Otherwise there is no reason to explain why this gentleman should have been chosen. And everyone will do their best to keep things buried and carry on with what they feel like.

Nifty, Sensex in consolidation mode – Weekly closing report

We had mentioned in last Friday’s closing report that Nifty, Sensex closed on a flat note. Indian shares entered into consolidation mode after a four-day rally that took benchmark indices to record highs. The trends of the major indices in the course of the week’s trading are given in the table below:

Positive global cues and buying in banking, IT (information technology) and capital goods stocks pushed the Indian equity markets to fresh highs during the mid-afternoon trade session on Monday. Equity benchmarks started-off on a strong note with both equity benchmark indices hitting record highs. Global cues and buying support aided in the markets' rise, pointed out market analysts.

 

Full-fledged trading resumed on the National Stock Exchange of India (NSE) during the mid-afternoon session on Monday after a technical glitch impacted trading during an early-morning session. The stock exchange said that the technical glitch impacted trading on its Cash and Future and Option (F&O) segment during the early-morning trade session, and that the glitch has been resolved. The NSE said that all its market segments were operational as of 12.30 p.m.

 

India's steel consumption grew by 4.6% to nearly 21 million tonne in the first quarter of the current fiscal over the same period in 2016, while the country's steel exports jumped by nearly 66% in the April-June period, a Ministry report said. "India's consumption of total finished steel saw a growth of 4.6% in April-June 2017 at 20.999 mt (million tonne) over same period of last year, under the influence of a rising production for sale," the report said. The Ministry's study also pointed out overall consumption at 7.204 mt in June was down by four per cent over the previous month (May 2017) and was up by 5.3% over corresponding month (June 2016) last year. "Export of total finished steel was up by 65.9% in April-June 2017 at 1.387 mt over same period of last year. Overall exports in June 2017 at 0.648 mt was up by 0.9% over May 2017 but was up by 20.2 per cent over June 2016," said the report of Joint Plant Committee. However, the import of total finished steel at 1.715 mt in June quarter declined by 6.4% over same period in 2016. Overall imports at 0.653 mt in June was up by 17% over May and increased year-on-year by 3.2% over same month last year (June 2016). India was a net exporter of total finished steel in April-June 2017, the report said.

 

After a huge fall in sugar production 2016-17, that forced the import of 500,000 tonnes, official and industry circles expect the upcoming "sugar year" to be sweeter, thanks to a good monsoon and signals of better yield from the field. According to the officials in the Agriculture Ministry and organisations representing private and cooperative sugar factories, output in 2017-18 (the "sugar year" starts from October) is to cross 25 million tonnes, almost 25% higher than in 2016-17.

 

The major indices of the Indian stock markets were range-bound on Tuesday and closed with minor gains over Monday’s close. Positive global cues and buying in automobile, capital goods and IT (information technology) stocks pushed the Indian equity markets to fresh highs during the mid-afternoon trade session on Tuesday. Equity benchmarks extended Monday's gain and is trading positive due to global market. Sugar stocks made gains on the back of government's decision to increase import duty in sugar, pointed out market analysts. State Bank of India shares gained more than 1% intraday after the central board of directors approved dilution of bank's stake in its life insurance subsidiary.

 

The major indices of the Indian stock markets were range-bound on Wednesday and closed with small gains over Tuesday’s close. Expectations of robust quarterly results, along with buying in energy sector stocks pushed the Indian equity markets higher on Wednesday. According to market observers, gains were capped due to investors' reluctance to further invest in expensive market conditions and caution over the upcoming macro-economic inflation and industrial production data points.

 

The major indices of the Indian stock markets rallied on Thursday and closed with gains over Wednesday’s close. The key domestic equity indices S&P BSE Sensex and NSE Nifty on Thursday scaled record highs on the back of positive global cues and hopes of an easing of the monetary policy. Global equities traded higher after US Federal Reserve Chair Janet Yellen, hinted at more gradual tapering programme at her testimony before the US Congress, pointed out market analysts. India's retail inflation hit a record low of 1.54% in June, lowest since 1999, raising hopes of an interest rate cut by RBI (Reserve Bank of India) ahead of monetary policy next month (in August).

 

After lowering the Immediate Payment Service (IMPS) charges, the State Bank of India (SBI) on Thursday reduced charges for National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) transactions up to 75% effective July 15. The reduced charges will be applicable on the transactions done through internet banking and mobile banking services offered by the bank, the bank said in an official statement here on Thursday.

 

With the retail inflation easing to a record low of 1.54% in June, the government's Chief Economic Adviser Arvind Subramanian on Wednesday said it reflects a paradigm shift in the process to low levels of inflation, which has been missed in the large systematic inflation forecasts made. As per the Central Statistics Office (CSO) data on Consumer Price Index (CPI), retail inflation was dragged lower to 1.54% in June due to a sharp fall in the prices of food items like pulses, vegetables, and other perishables. The current inflation rate is the lowest since the series began in 2012. With low inflation, interest rates are likely to soften, giving a boost to business and stock markets in India.

 

Indian shares entered into consolidation mode after a four-day rally that took benchmark indices to record highs. The S&P BSE Sensex index fell almost 90 points from the highest point of the day but managed to hold on to the 32,000 mark, ending at 30,020. The NSE Nifty-50 index recovered nearly 40 points from the lowest point of the day to end at 9,886, a shade lower than the record closing high of 9,891 which it posted on Thursday.

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Living amidst Gujaratis in Mumbai
Mumbai, as we know, is a cosmopolitan city. Gujaratis comprise a rather large section, with some pockets of Mumbai characterised by a sizeable presence of Gujaratis. A major part of my childhood was spent in a locality with many Gujarati families. 
 
I continue to be amazed by their entrepreneurial spirit and a strong value system. Many people consider Gujaratis to be shrewd in their approach but one thing that cannot be denied is that the Gujaratis are a very cohesive community. They have the ability to endear themselves to others and have superlative persuasion skills. 
 
My home was close to a Jain temple and it was remarkable to see many of our neighbours visiting the temple early in the morning in traditional clothes, carrying a a small metal box. In the evenings, women would spend time telling stories to children or playing indoor games. As an outsider, I never ever had an opportunity to enter the precincts of the Jain temple, though it was a landmark to find our house. Whenever a relative got lost we just had to rattle off the directions, adding, “It is the fourth building from the Jain temple”. Occasionally the aroma of puris and shrikhand would waft in the air when I rushed to college in the morning. 
 
I am extremely fond of Gujarati dishes like thepla, papdi, dhokla, and undhiyo and I attribute this to the inherent bond that I developed with the Gujarati community right from my childhood. Some of the Gujarati dishes are calorie rich and I feel that when it comes to matters of food, the Gujaratis are the gourmets of Western India, like Punjabis in the North.
 
I think one has to appreciate the way Gujaratis maintain their home. I have visited the homes of a few people in the neighbourhood – though with different purposes though. A cup of adrak (ginger) tea was almost guaranteed in every home. Their hospitality is legendary. Many families lived in one-room tenements, but the way they maintained their homes was amazing. Everything would be so neatly stacked and arranged. 
 
My mother used to send me for errands like buying homemade pickle or papads from a woman in our neighbourhood. Whenever I visited the house of the woman who used to sell them, I was dumbstruck with the impeccable manner in which things were laid out even though the area was so small.
 
Let me add here that I was often pained by the lower prices shopkeepers paid to these women who supplied them with snacks like dhokla, kachori, and thepla while charging a premium from consumers for selling the same items. 
 
Many of the lower middle class Gujarati women supplemented their family income by making homemade pickles, theplas and papads and their hard work is worthy of emulation. Some of these women sold milk in the mornings while some assisted their husbands who were tailors. 
 
Some of these women also sold sarees at reasonable prices. There were women who used to fill in for their baniya husbands when the latter had to go sourcing merchandise for the kirana store. It is admirable that despite having minimal education, these women realised the need to be financially independent. 
 
The mention of Lijjat Papad evokes memories of many empowered Gujarati women. Movies like Shyam Benegal’s Manthan (1976) and Ketan Mehta’s Mirch Masala (1987) portrayed Gujarati women who were strong and independent – intrepid and rich in character. 
 
Today many of these women from the middle class also double up as beauticians. Come summer and these women were always busy drying papads, preparing mango pickles and homemade masalas. Navratri festival was celebrated with gusto in our locality and the garba dance was a treat to watch. 
 
Now it is a different story. There was a time when the songs that played out during garba were immortal songs like – “Main toh arti utaroon re santoshi mata ki” (Jai Santoshi Maa, 1975) or “Main toh bhool gayi babul ka des” (Saraswatichandra, 1968). In fact, Saraswatichandra was based on a Gujarati novel and was regularly telecast in Mumbai Doordarshan.
Once things like ‘disco dandiya’ started gaining attention and traction, melody took a back seat. Today the less said about the songs played out during garba or dandiya the better. Readers may recall that the movie “Kai Po Che” (2013) (based on a novel by the prolific Chetan Bhagat) revealed the dark side of the Navratri festival. 
 
Two qualities of Gujaratis deserve mention here. If you develop a bond with them, they will respect the bond all their lives. Secondly, Gujaratis are persevering and demonstrate a never-say-die attitude and undying optimism. Let me recount a real life instance from the mid-70s.
 
in those days, we lived in a one-room tenement that faced an industrial colony. As a child, I was a keen observer. There were railings in the balcony. It is funny to recount how my father installed a grill on the balcony.
 
One morning my father was leaving for his office, located in Apeejay House. This meant an arduous train journey lasting more than an hour, followed by a walk of close to 20 minutes to reach office. He saw me waving to him from the balcony. The balcony had no grill. My father was alarmed. He returned home immediately and applied for half-day’s leave so that he could contact the fabricator. By evening, the grill was fixed. 
 
The balcony had an opening at the floor level with railings on it. For a child of 5-6 years, it was possible to sit on the railings and observe the world outside (in this case, it was the industrial colony opposite our home). I would merrily dangle my legs outside the grill. It was a blessing for my mother as she could concentrate on the kitchen.
I attribute my modest creative abilities to this childhood experience of mine – something that children today are deprived of. There were no gadgets or smart phones or video games then. A swing that my father had purchased was a luxury for us and that was something that I loved as a child.
 
We lived on the second floor and diagonally opposite our flat was a Gujarati family that lived on the first floor of the industrial colony. The family comprised the husband, wife, two daughters and a son who was polio stricken. It was a perfect family picture - save for the fact that the son (may be 3-4 years) was handicapped. 
 
I have vivid memories of discreetly watching how both the mother and father took turns to caress the child and massage his legs with oil. This was a regular affair for a few years and I remember seeing the couple along with their daughters and son going for an evening walk after the husband returned from office. The couple would carry the son in their arms. The couple made a lovely pair and their images are still etched in my memory. The camaraderie between them was amazing. 
 
After we shifted to a new place in 1976, I lost track of this Gujarati family. I believe that they too shifted to their own pad. The industrial colonies then did not have a toilet within the home. Families had to share common toilets housed on every floor. I did hear from some of my friends who lived in these colonies that families took special efforts to maintain them and keep them spic and span. 
 
I was delighted to get a fleeting appearance of this couple in 1980. The son had grown up and was also able to walk on his own. It was a real miracle and I recall coming home and excitedly telling my mother that I had seen them and that the son had recovered from his ailment. I was so glad that the son had got cured! I can only imagine the anxiety that the parents would have faced; yet it is remarkable that they took some action rather than simply brood over the problem.  
 
Today many of these colonies and older buildings have vanished, thanks to the redevelopment spree that has gripped Mumbai in the last few years. But the memories can never fade away. I visited Ahmedabad for an official visit in 2010 and I could see that the city was no different from Mumbai. It felt like home. The culture was so familiar. 
 
 
For five years, I lived in Mulund West (the most happening suburb in Mumbai today), a predominantly Gujarati locality, in a building that housed many Gujarati families. The way they celebrated Holi, Diwali, Navratri and New Year together deserves special mention. 
 
Neighbours behaved like one big family. Women used to organise Gayatri mantra chanting sessions. I remember the occasions when the women used to celebrate Jalaram Bappa Day to commemorate the saint’s birthday. My impression about Gujaratis got reinforced during these five years that I lived amidst them. I found them so enterprising on all counts. They are definitely a gregarious lot.
 
A neighbourhood kirana store that I used to frequent suddenly sold a portion of their shop. This happened in the ‘90’s when I had begun working. When I asked him the reason, the shop owner replied, “My son wanted to pursue further studies in the US. I had to fund his higher education. There was no other option”. 
 
 
There are several such examples that I can narrate when many of these shopkeepers who were managing the ‘mom-and-pop’ stores or kirana stores were particular about educating their children. Some of them became chartered accountants, engineers and doctors. But there is a distinct change in the trend today. 
 
Earlier – especially during the ‘70s and ‘80s – it was a common practice in Gujarati families to get the daughters married off passing out from school. But today many Gujarati families are realising the need for educating their daughters too and marriage is considered only after the daughters secure a job or after they complete their higher education. 
 
Way back in the ‘80s, when satellite television had not entered our dining rooms and Doordarshan reigned supreme, it was not uncommon to watch Gujarati families going for a leisurely dinner after watching the Sunday evening Hindi movie telecast on Doordarshan. The neighbouring Ratna and Sadguru restaurants served delectable fares that would be lapped by these families.
My father’s friend who ran a ration shop in our neighbourhood used to often remark, “What are we earning for? We need to spend too as we have to enjoy life”. His statement is characteristic of a Gujarati family’s value system and philosophy about living a well lived life.  
 
 
Even now, if you visit Mumbai and happen to walk on the streets where  there are Gujarati households, you cannot miss the energy and enthusiasm with which these women do their chores – whether it is washing clothes and drying them, buying milk in the morning, cooking, haggling with the vegetable sellers or gossiping with neighbours.
 
What cannot be denied is that business is in their blood. 
 
(Venkatesh Ganapathy is at present pursuing his doctoral research in supply chain management from Alliance University, Bangalore. He is a freelance writer and an avid blogger. In this column, he shares the memories of his childhood in the ‘70s.)
 

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COMMENTS

Ezhilmathi

1 day ago

The article is very interesting. I enjoyed reading it. The childhood memories were nicely expressed.

Deepa Mandal

2 days ago

Superbly expressed!!

Mohd Shamsheer

3 days ago

Sir, it is a wonderful article to read about the culture of the different cities in 90s. thank u for posting it :)

Shony Cyriac

3 days ago

Nicely written sir, being someone born in the 90's i really enjoyed this piece of yours i have heard a lot about the 70's from my parents but those were are all about southern India, I am glad that you shared your memories, i really enjoyed the read. :)

francis sebastian

3 days ago

A very well framed article touching upon the various incidents that leave a picture behind in our mind. Surprisingly, I grew up in Gujarat til i was about 6 years old . The Navrathri season , the kite festival are still some once in a life time experiences we should'nt miss..
thanks for sharing sir it does bring back some beautiful memories..: )

Ritu Chopra

4 days ago

That's a great article Sir... very well written like always!! Love reading your write-ups. I could picture your writing. Would love to read more 😀

Mubarak mallapur

4 days ago

Wonderful blog sir.
This will give an overview of Gujrati Families and there food habits which I wasn't know. You have beautiful childhood memories sir.
Thank you for sharing

Muhzin k

4 days ago

Good blog sir
The memmories you shared was awesome. I also start thinking about my childhood

sreenidhi sree

4 days ago

Hi sir,
well it was very good to read the culture practice and traditional of Gujarat was found to be awesome, and the memories you shared about your childhood was good. you also mentioned about Saraswatichandra novel one of the best story to read written by GovardhanRam later this was made serial. Hoping for more blogs in coming days.

Kandukur Srinidhi
GroupM Maxus
#29, 4th Floor, Mahalakshmi Chambers
MG Road Bangalore - India 560001
Tel: 080 – 42593356 | 604

Muhammed Irfan

4 days ago

Well explained your childhood sir, I started thinking about my childhood sir. Very good blog

Gaurav Muley

1 week ago

delightful article about your childhood. I liked it

Shabeeb Mohammed

2 weeks ago

Very nice blog sir
Your write up draged me to my child hood memories......

Muhammad Rameez .k.p

2 weeks ago

Sir, I applaud the column of your wonderful blog on memories of your child hood. It's a good reminder to look back to our child hood from today’s daily challenging life. An excellent read sir…

Vivek Naik

2 weeks ago

an excellent read

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