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Message from MD & CEO, Vikram Limaye

FICCI’s 18th Capital Markets Conference - ‘CAPAM 2021’


Message from MD & CEO, Vikram Limaye

As we enter the 75th year of India’s Independence, it is a good time take stock of our efforts to democratize Indian Capital Markets. In the early 90s Indian capital markets were amongst the least developed markets in the world with archaic procedures, limited transparency and huge transaction costs.

The transformation started with the establishment of SEBI in 1992 and gathered pace once NSE commenced operations in 1994.

There has been a paradigm shift in how markets function today with electronic trading, demutualized structure, nationwide presence, dematerialization, transparent procedures, assured settlements etc. NSE is now the world’s largest derivatives exchange and the 4th largest cash equity exchange globally in terms of number of trades.

We have added close to 1.5 crore new investors from March 2020 to date. 79% of these new investors are from other than tier 1 cities. There has been a phenomenal adoption of technology by retail participants with over 22% and 41% of non-prop / non-institutional trading activity coming through internet and mobile. The new class of investors are relying heavily on digital media for their data, information, analytical and execution tools.

stock market trading graph

We believe penetration and digital adoption will continue on an accelerated trajectory in the coming years. NSE is undertaking a detailed market survey of these investors to understand their needs / aspirations so as to decide appropriate interventions in terms of knowledge, product / process awareness, tools etc. which would empower these investors and help them in managing their financial goals efficiently. We are working on a series of interventions which would be rolled out over the next one year in this direction. We have been collaborating with leading academic institutions such as IIMs, ISB etc. We have set up a financial markets laboratory at ISB, investor awareness programme with IIM Bangalore and a behavioral sciences laboratory at IIM Ahmedabad. The idea is to build strong empirical basis for some of the interventions that we are planning in empowering investors.

India has a rich tradition of capital raising from the markets. An evolved ecosystem exists across the country that supports the market structure to meet the growing capital needs of corporate India. Primary market structure and processes have evolved over the years to reach a stage where good quality issues routinely get more than 25 lakh applications. Entire process from issue closure to listing is being completed in 6 days. SEBI is working with MIIs and market intermediaries to reduce time to listing further. We believe that the time gap could be reduced to 2-3 days with the existing secondary market infrastructure. There is a strong pipeline of IPOs including that of LIC and a large number of well-known new age tech companies besides other strong companies. This will further increase penetration and participation of domestic retail and institutional investors.

Innovation in product, process and distribution will play a critical role in enhancing penetration and servicing an expanding investor base. All of us have to apply our minds to bring in products that span the entire risk spectrum allowing investors to choose products that match their risk profile. We also need to find innovative marketing and distribution methods to enhance the awareness and adoption of products like ETFs, bonds, REITs and INVITs. Rebuilding the economy would require significant infrastructure investment. Funds for which could be mobilized through market interventions using products such as INVITs.

Digitization and Cybersecurity

While market based debt raising has increased over the years with approximately Rs 6.9 lakh crores raised over the last financial year despite the pandemic, we believe markets will play a crucial role in providing debt capital to Indian corporates over the next few years. Building deep and vibrant secondary market for debt would go a long way in achieving this objective. We have seen some traction in this regard with volumes on the RFQ platform seeing improved traction. We believe a liquid tri-party repo platform would help in building liquidity in secondary markets for bonds. We have been working with SEBI on all these fronts and believe that the corporate bond market has made good progress to develop further.

SMEs are the growth engines of the economy

The pandemic has hit the SME sector very hard. We have seen good traction for SME fund raising between 2016 and 2019. As we come out of the pandemic, capital requirements of SMEs have to be met. We believe that the NSE EMERGE platform will play an important role in raising equity capital in the post pandemic world. RXIL, our TREDS JV with SIDBI is facilitating quick and cost effective working capital requirements of SMEs and a more broad based adoption of the platform could help alleviate the working capital crunch which most SMEs face.


Currency derivatives markets have stagnated over the last couple of years because of significantly tight position limits imposed on the market participants. Exchange traded FX derivatives have brought in transparency and enabled even smaller corporates to manage FX risk at market determined prices in a transparent way. A review of the position limits would go a long way in revitalizing the FX derivatives markets.

Commodities markets have also plateaued over the years. India is amongst the largest producers and consumers of many commodities. However, the underlying markets are fragmented leading to stunted growth of derivatives markets. Some level of institutionalization of commodities markets with the establishment of large number of FPOs is currently underway. This coupled with entry of institutions such as mutual funds into the market would create a vibrant market ecosystem. There are several agri-tech companies that are bringing in innovative products that range from information dissemination of weather, cropping patterns, input sourcing, financing, harvesting, assaying, warehousing and other logistics and marketing. This is knitting the market together in ways which were not possible till recently. These efforts combined with e-NAM and commodity derivatives markets could create a national market system for agricultural products over the next few years that could significantly benefit farmers in our country.

We are excited about the forthcoming spot exchanges for gold onshore as well as in GIFT City. We think that establishment of these spot exchanges would organize the bullion markets on modern lines, bring in much needed transparency and pave the way to a national market for gold with ‘one nation one price’ as envisaged by the Honorable Prime Minister. We are confident that the kind of paradigm shift we were able to effect in the 1990s in equity markets can be repeated in the bullion markets with the establishment of domestic and international spot exchanges.

Once successful, the template adopted for bullion markets can be replicated for other precious metals, base metals, energy etc. building vibrant national market ecosystems for each of these commodities positioning India in a position of strength in international markets in setting prices as one of the leading producers and consumers of various commodity products.

The world has been experiencing frequent unexpected environmental issues such as intense heat waves, erratic rainfall, flooding etc. The rising temperatures across the world because of industrialization / greenhouse gas emissions etc. is being addressed through the Paris Agreement. We need to work towards bringing innovative market based solutions that would address environmental impact concerns.

To focus investors’ attention on environmental issues, NSE Indices presently maintains three ESG indices –Nifty100 ESG Sector Leaders Index, Nifty100 ESG, and Nifty100 ESG Enhanced Index. These indices are designed to track the performance of companies with low ESG risk and high ESG compliance.

ESG commitment and sustainable investment

As is evident, a lot has been achieved over the last two decades but a lot remains to be done to better intermediate savings and for markets to play a larger role in capital formation, efficient capital allocation and financial inclusion and well being. NSE is committed to disciplined market development and enhancing trust in markets. A lot of structural and regulatory changes have been implemented by SEBI, NSE and other MIIs over the last couple of years to strengthen governance and investor protection and this will be an ongoing effort to continuously improve controls to ensure disciplined market development and to prevent and / or facilitate early detection of wrongdoing.

Through the pandemic, our markets have functioned seamlessly and that is a testament to the robust technology infrastructure that is in place. NSE has invested a substantial amount in technology and has undertaken several transformational projects over the last few years. The volumes in the market have doubled in the last 3 – 4 years and we now process more than 5 billion orders a day which has increased more than 5 times in the last 4 years.

In an increasingly connected world, there is an urgent need for enhanced and robust cybersecurity systems. We at NSE are focusing on augmenting resiliency, technology management, and cybersecurity capabilities by deploying best-in-class technology and security infrastructure to ensure smooth operations. We have implemented a zero-trust model with multi-layered checks and balances to ensure that the cybersecurity controls remain robust enhancing data and process security.

We are committed and focused on collaborating and co-creating unique solutions that are delivered through an amalgamation of our years of experience, market insight, and keen understanding of emerging technologies. We continue to build intellectual capital towards fostering a vibrant, inclusive, ethical, and digitally empowered marketplace. It is important for all of us to focus on market development and create an environment of trust and collaboration amongst regulators, MIIs and market participants to expedite market development to enable our country to meet its growth aspirations.

I congratulate FICCI for refocusing attention on Accelerating growth through Capital Markets at the cusp of 75 years of India’s independence. I believe the deliberations over the next two days will result in innovative ideas for making the markets central in our economy. I wish the conference the very best.

Updated on: 28/07/2021
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