The Securities and Exchange Board of India (Sebi) has cleared Ashish Kumar Chauhan’s candidature for the post of managing director (MD) and chief executive officer (CEO) of the National Stock Exchange (NSE). He is currently the MD & CEO of the BSE.
Vikram Limaye demitted the office of MD & CEO of the NSE on Saturday. The NSE had submitted the names of two candidates for the top job to Sebi. According a statement by the NSE, Sebi has given go-ahead to the bourse to appoint 54-year-old Chauhan. The NSE will now have to obtain shareholders’ approval before Chauhan can take charge.
The exchange has set up a four-member internal panel to oversee the responsibilities of MD & CEO until the new person takes charge.
The members of the committee include Chief Financial Officer of the NSE Yatrik Vin, Chief Regulatory Officer Priya Subbaraman, Chief Technology & Operations Officer Shiv Kumar Bhasin, and Chief Enterprise Risk Officer K S Somsundaram.
Chauhan’s second five-year tenure at the BSE ends in November. It, too, has started the process to select a new chief. Sources said Sebi is in the process of clearing the name for the BSE’s top job, as well.
It remains to be seen if Chauhan joins the NSE immediately or after the completion of his full tenure at the BSE. Chauhan is likely to get an initial tenure of five years at the NSE.
For Chauhan, an IIT and IIM alumnus, this will be a homecoming of sorts, as he was part of the team that set up the NSE. He started his career at IDBI Bank, before moving to the NSE. Between 1993 and 2000, Chauhan worked extensively in developing the derivatives segment at the NSE, which currently is the exchange’s main volume driver.
Chauhan also has experience outside the financial sphere. He had worked as CEO of Mukesh Ambani-led IPL cricket team Mumbai Indians in its formative years and also worked as president and CIO of Reliance group between 2000 and 2009.
Chauhan is joining the NSE at a time when the exchange is in the eye of a storm over allegations of illegal phone tapping during the reign of former top bosses Chitra Ramkrishna and Ravi Narain. Also, the exchange is under various regulatory probes in connection with the colocation scandal and misuse of its trading architecture by brokers.
Chauhan’s key challenge would be to not get too bogged down by the legacy regulatory issues and to ensure that NSE maintains its dominance, say industry players.
The NSE has nearly a monopoly in the equity derivatives segment, while in the cash segment, it has more than 90 per cent market share. The BSE has lost market share in the equity cash segment to the NSE from 17 per cent in FY17 to below 8 per cent in FY22. Since the Covid pandemic, trading volumes, revenue growth, and profitability at the NSE have sky-rocketed due to the surge in the markets and a spurt in new investors.
During Limaye’s tenure, the NSE’s revenue grew at a compound annual growth rate (CAGR) of 26 per cent to Rs 8,500 crore between FY17 and FY22, while net profit jumped at 29 per cent CAGR to Rs 4,400 crore. Maintaining this growth rate will be a tall ask, more so if the current market downturn continues.
Chauhan will also have to oversee the launch of the proposed ‘connect’ between the NSE and the SGX to ensure all the Nifty trades happening on the Singapore bourse get routed through the GIFT City IFSC.
A feather in Chauhan’s cap will be if the NSE is able to push through with its initial public offering (IPO), which has been stuck due to the exchange’s regulatory troubles.
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