More Stories

Informist, Wednesday, Sept. 17, 2025

 

--BSE MD:Grew index F&O mkt shr to nearly 30% from almost nothing 2 yrs back

--CONTEXT: BSE MD Ramamurthy's comments to Informist in an email interview 

--BSE MD: Reached out to all key stakeholders through voice of the customer

--BSE MD: Traction in equity F&O shows mkt players trust our tech, approach

--BSE MD: Competition crucial for avoiding concentration risk

--BSE MD: Monopoly leads to weak corp governance in stock exchanges

--BSE MD: Retail investor protection key to democratising capital mkt access

By Rajesh Gajra

 

NEW DELHI - Sundararaman Ramamurthy will complete three years in January as the managing director and chief executive officer of BSE Ltd., India's second-largest stock exchange. Taking charge of the country's oldest stock exchange with a history of over 150 years in January 2023, Ramamurthy, who ironically was a senior management official at the National Stock Exchange of India when it started operations in 1994, faced the daunting task of addressing BSE's marginal market share in the equity derivatives market. He has been instrumental in the exchange gaining ground.

 

BSE's market share in index equity derivatives "has grown from almost nothing around two years ago to nearly 30% as of latest count", Ramamurthy told Informist in an email interview. The BSE MD and CEO said in January 2023, when he took charge, his primary objective was to revitalise the exchange to serve its primary, secondary and tertiary role of capital formation, and have a meaningful presence in all products and services.

 

"BSE was making operational losses for seven of the 10 years prior to my joining, (had) steadily lost market share to reach 5% in the equity cash segment, and could not even build any meaningful liquidity in the equity derivatives segment despite spending more than Rs 500 crore (INR 5 billion) as liquidity incentives," Ramamurthy said. According to him, he brought a purpose and vision to BSE with courage, risk-taking ability, and agility to find gaps to serve the market. "Voice of the customer was through which I reached out to all key stakeholders – market institutions, brokers, investors and other market participants – to get their feedback on how BSE can serve them," he said.

 

This has borne good fruit for the exchange. Although NSE still has a larger market share in equity derivatives, BSE has grown and seen its market share rise significantly. In the first full financial year under Ramamurthy's tenure as MD and CEO, BSE's market share in notional turnover of the equity derivatives segment rose to 9.1% in FY24 from 0.1% in FY23, according to data from Securities and Exchange Board of India's annual report for FY24. In FY25, when SEBI tightened rules for equity derivatives trading leading to NSE and BSE restricting weekly expiry index options to just Nifty 50 and Sensex, BSE's market share in notional turnover of the equity derivatives segment moved up further to 26%, according to data from SEBI's annual report for FY25.

 

"The fact that our equity derivatives segment is gaining traction shows that market participants trust our cost efficiency, technology, and investor-centric approach," Ramamurthy said. He, however, skipped a question on the impact SEBI's recent tentative proposal on doing away with weekly expiries altogether would have on exchanges in general and BSE in particular. 

 

The BSE MD believes competition is crucial to avoid concentration risk, foster efficiency and innovation, and ensure overall market health, and that various studies indicate that monopoly leads to deterioration of corporate governance and the voice of customers getting stifled. "The stock market and capital market space are no aliens to this concept, especially when we are seeing surge in investor participation from households," he said.

 

He is, however, careful to differentiate competition from confrontation. "While competition is inevitable and healthy, we do not believe in aggressive confrontation," he said. BSE's goal is to strengthen the ecosystem responsibly, ensuring that investors have confidence and choice without compromising systemic safety, he said.

 

This philosophy was underscored in the recent interchange of weekly expiry days between the two stock exchanges. The BSE had moved the expiry day for its weekly Sensex options to Tuesday from Friday with effect from Jan. 1. But on Mar. 4, NSE announced it would be shifting the expiry day of its weekly Nifty options contracts to Monday from Thursday.

 

SEBI intervened and stayed NSE's move till further instructions. Later, SEBI issued directions that expiry days of all equity derivatives contracts of a stock exchange would be uniformly limited to either Tuesday or Thursday in order to space out expiry days between exchanges and to avoid fixing of the first or last day of the week as expiry day. Given SEBI's directive, the NSE could not pick Monday as the expiry day, but according to media reports, it gave the regulator its preference of expiry day as Tuesday. The BSE, which already had Tuesday as the expiry day for its Sensex and other derivatives contracts, shifted its expiry day to Thursday, apparently to accommodate NSE's request.

 

According to Ramamurthy, the BSE has been a strong advocate of collaboration and resilience in the financial system. "For example, in systemic outages, the ability for one exchange to seamlessly absorb settlement obligations of another can dramatically mitigate systemic risk. We have not only advocated but also wholeheartedly participated to reduce the risk in the system while giving the best available solution and service for the ecosystem," he said.

 

He points to a few examples. Before SEBI mandated that stock exchanges introduce the Investor Risk Reduction Access platform, BSE had collaborated with NSE and other stock exchanges to build it. The purpose is to provide investors an opportunity to use the platform to square off or close their open positions and cancel pending orders in case of technical glitches or unforeseen outages that render any broker's site inaccessible, according to BSE.

 

Ramamurthy said BSE's subsidiary Indian Clearing Corp. Ltd. has partnered with NSE's clearing subsidiary to redefine resilience in clearing operations by developing "a solution to ensure uninterrupted clearing for market participants, no matter what". Called SaaS, short for softwaare as a service, it is a two-way portability model that "leverages the strengths of both clearing corporations and the infrastructure to create a robust and resilient system", according to the BSE MD. SaaS can be useful in case of primary system failure of an impacted clearing corporation.

 

Under Ramamurthy, BSE has successfully secured regulatory approval for a common contract note, which mostly helped foreign portfolio investors. "Historically, investors trading across multiple exchanges received separate contract notes for each exchange, each reflecting a distinct volume weighted average price, (which) complicated price calculations and increased operational overheads," he said. The common contract note, which was launched in June, consolidates trade details into a single, standardised document, regardless of the number of exchanges involved, he said. It provides a unified volume weighted average price.

 

To a question on BSE's crucial role in investor protection and fraud prevention, as well as in monitoring adequacy and timelines of disclosures by listed companies, Ramamurthy said, "Retail investor protection is paramount to our mission of democratising capital market access across India." BSE has found the cash market segment a tough nut to crack in terms of market share growth. While the turnover has risen in absolute terms, BSE's market share continues to hover in the 6-7% range, as it was over two years back.

 

BSE, along with its MD, has been keenly expending significant efforts to get more institutional investors on board the BSE cash market and derivatives platform. "We started with no meaningful collocation racks," Ramamurthy said. "Today, we are having around 300 racks (and) in the next six months, we will add probably 100 more and probably in the next six months further down, we will have another 100 more so that we come to the number of 500." He also said that under his tenure, the number of FPIs active on BSE trading platforms have risen 250 from nearly none when he joined. The BSE aims to have 500 FPIs on board "over a period of time", he said.  End

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.