The NSE’s first investor meet in almost three decades occurs shortly after Ashish Chauhan, a former BSE executive, was appointed managing director of the privately controlled exchange in August.
Investors and analysts questioned NSE’s management, which consists of six senior professionals, about everything from the co-location fraud to a projected date for going public and providing an exit to some of its early investors.
“We are starting a quarterly teleconference like this one, which we will do going ahead. We want to keep becoming better, so please give us feedback. We want to have a stronger connection with all stakeholders moving ahead, and I can tell you that any comment will be taken carefully,” Chauhan told investors, according to an audio recording of the conversation seen by Mint.
“There are cases in numerous courts related to the co-location matter. I thus won’t remark on that. Regarding corporate governance, that is a thing of the past. In general, much of that occurred before to 2017. There hasn’t been a problem like that since. However, there is a downside to it, and we are all well aware of it, Chauhan added.
Allegations that NSE authorities gave some high-frequency traders unfair access using co-location servers installed at the exchange site to speed up trading are the subject of the co-location lawsuit.
The problem of co-location frauds and the behaviour of NSE’s former managers, Ravi Narain and Chitra Ramkrishna, are at the core of the corporate governance problems the company is experiencing. An anonymous former NSE employee was reported for “bizarre behaviour” earlier this year by the Securities and Exchange Board of India after the regulator claimed in a court document that the former executive had divulged sensitive information to a supposed yogi in the Himalayas.
A shift of leadership at NSE coincides with Madhabi Puri Buch becoming the organization’s first female chair.
According to a note from Mumbai-based investment firm DAM Capital, NSE also informed investors that it intended to sell several of its non-core businesses, including the talent management company and the cloud computing business.
According to NSE’s 2022–23 annual report, CXIO Technologies Pvt. Ltd., a step-down company that is majority owned by the exchange, is responsible for the exchange’s cloud computing operations. CXIO Technologies recorded a revenue of ₹59.36 crore for the year that ended on March 31.
The NSE-owned ed-tech company TalentSpring Pvt. Ltd. provides training in deep tech and artificial intelligence. With ₹72.16 crore in sales, Talent Spring closed off the previous year.
Sales at NSE increased 12.3% sequentially and by 63% from a year earlier to ₹3,157.5 crore in the months of July through September. At the conclusion of the most recent quarter, profit increased 5% sequentially and by 62% from a year earlier to ₹1,773.9 crore.
Some commended NSE for choosing to meet with its investors.
This engagement with stakeholders is a very positive move when seen from where NSE has come, “said a representative of a family office with interests in the NSE situated in Bengaluru. “The exchange is also informing the regulator of its intention to become publicly traded.”
NSE first submitted an IPO application in December 2016 with the goal of going public in the first half of the following year. Due to the co-location case controversy, it was unable to obtain Sebi approval.
Building trust is a cornerstone of Chauhan’s strategy, and during the hour-long conversation, he said: “The stricter the laws, the more people come into the markets because they have greater faith in the market.”
As of September 30, public shareholders held 55.67% of NSE, while trading members and their affiliates held the remaining shares. Almost one third of NSE is owned by foreign investors. Key investors in the exchange include Canada Pension Plan Investment Board and Tiger Global.
A few billionaires who have investments in NSE include Radhakishan Damani, who owns 1.58%, N.R. Narayana Murthy (via Catamaran Ventures), and Azim Premji, who has a 3% holding through his family company Premji Invest. The largest of its 3,858 shareholders is LIC, which holds around 10.7% of the company.