Dr RH Patil, calm, self-effacing, determined and a true visionary who set up the National Stock Exchange battling immense skepticism and hostility passes away

Dr R H Patil, founder-managing director of the National Stock Exchange (NSE) and chairman, Clearing Corporation of India (CCIL) passed away in Mumbai, today. He was 74 and has been suffering from lung cancer.

Dr Patil ought to be remembered as having revolutionised the way stocks are traded. Today we take the smooth automated trading, glitch-free settlement, compulsory dematerialisation of shares for granted. But as Dr RH Patil had said once, “Indian capital market around the early 1990s was akin to the Stone Age.” They were inefficient, one of the riskiest in the world, an exclusive club of brokers who ran the exchange largely for themselves. Indeed, listed companies and investors were largely pawns in their game.

It is Dr Patil who changed this. From an era when manipulation was the way of life and exchanges were open for only two hours a day for only 150-200 days in a year, Dr RH Patil, took the Indian stock to market to a modern era in less than two years by combining the best features of the global markets: aspects of New York Stock Exchange (NYSE) which dealt mainly in large stocks; nationwide network of trading terminals like NASDAQ; computerised order-driven trading system of the Paris bourse or Vancouver (largely free from manipulation of the market makers or specialists); and settlement guarantee system of the Chicago’s futures exchanges. He still needed a communication technology that would help connect trading terminals across the country. Dr Patil chose VSAT, the system that linked Wal+Mart. With this configuration, NSE’s trading volumes grew exponentially a few years after its launch in November 1994 and it soon broke the back of century-old BSE. With NSE also came the concept of a settlement guarantee and a separate clearing corporation for the settlement of trades and real time limits of each trading members’ exposure. Dr Patil then founded a share depository (National Stock Depositry Ltd), which went live in November 1996, just two years after NSE. In all this, Dr Patil was helped by GV Ramakrishna, the toughest Sebi chief ever, who was cracked the whip and made brokers fall in line. A few years ago Dr Patil narrated the fascinating story of his life, especially the challenges in setting up NSE, for the first time, to Moneylife. He was one of our Pathbreakers. You can read a part of that captivating story here:

http://www.moneylife.in/article/i-have-tried-to-create-a-world-to-protect-others-risks-ndash-that-too-through-systems-and-design/4983.html