Mapping a course for India’s first global exchange
By Sunitha Natti | Express News Service | Published: 13th August 2017 07:51 AM |
MUMBAI: Highs and lows are an everyday affair in stock markets. But for men helping the exchanges like V Balasubramaniam, there’s no low point.
The managing director and chief executive officer of India Inx — the country’s first international exchange and a wholly-owned subsidiary of BSE — is used to irrational market ways, where tense moments and turbo-charged enthusiasm appear and disappear at speed. Bala, as he is otherwise known, survived trying times — back in 2011, when BSE had to shut down due to an algo trade error — or the sleepless nights he spent getting India Inx off the ground.
Yet, he likens the exchange to a cricket pitch. “There’s plenty of ground around the pitch, but exchange is where the action happens.”
Bala is now at the centre with India Inx the anchor tenant of GIFT City — Prime Minister Narendra Modi’s brain child. His task is clearly cut out. Indian traders dominate international exchanges, be it Hong Kong, New York or Korea. In Dubai, Indians virtually run the markets. “We have the human capital. If we create infrastructure, we can become larger,” he reasons. When this happens, capital raising — the holy grail of exchanges — comes by default.
It could also partly help fulfil Modi’s vision of Indian markets being the price setters. It’s with this single-minded determination that Bala and his team navigate the regulatory maze. Though India Inx became operational in mid-January, momentum picked up from April. From over $1 million a day, the average trade volume is now about $65 million. Its product basket too expanded to 108 single-stock, two indices, three cross country currencies and commodities like gold and aluminium.
Going by the speed with which compliances are smoothened out, one would imagine growth to be straight-forward. But it isn’t. Currency product is the life blood of any international exchange, but back home, rupee-dollar trading is strictly a no-go zone. Reason: RBI, is apprehensive that India isn’t ready for full capital account convertibility.
“But if I (India Inx) have to compete with Dubai or Singapore, I have to have the same rules.”
He has a point. There are six international exchanges trading in rupee-dollar, Dubai being the largest. On Brexit day alone, trading volume in Dubai for rupee-dollar was 6-7 times more than what Indian markets witnessed. This was partly because Indian exchanges were closed when others were open. Plugging this, India Inx, operates 22 hours from 4.30 am to 2.30 am.
From a venture perspective, it has a world-class trading system, and is now the fastest exchange with a response time of 4 micro seconds. “One second has 1 million micro seconds. One second has 1,000 milli seconds, 1 milli second is 1,000 micro seconds. We have 4 micro seconds, that’s very very fast.”
The exchange has traditional foreign investors, but Bala is working on participant diversity. For instance, the Percy Mistry report suggested foreign, local investors, including retail, to be allowed. But, India restricts domestic retailers and first time brokers. “We requested Sebi to relax this,” says Bala, whose exchange journey began in 1993, as NSE’s first professional team member. After an 8-year-stint, he joined Reliance Industries, but for someone who pioneered the professional exchange culture in India, markets didn’t leave him. While at Reliance, he ran a broking firm and also set up a technology firm that BSE acquired.
“Luckily I started my career in 1991 — just when the financial sector opened up. In some sense, I grew up with that,” he recalls. Life has thrown him another opportunity and Bala is certain of making it count. “I’m at the right time, right place,” he signs off.
Moments later, our paths cross in the elevator. It’s an hour after close. But Bala, was out to attend a seminar. Much like his bourse’s round-the-clock operations, Bala’s second shift had just began.