To those who only watch television, it may seem as if the Bombay Stock Exchange (BSE) took a lot of flak for triggering a controversy with its decision to extend trading time by a token 10 minutes. But appearances can be deceptive. In fact, the broking community is delighted at the BSE's new aggression; although the National Stock Exchange’s (NSE) near monopoly ensures that nobody wants to go public with their view yet. While the support will count only when it translates into increased volumes, the BSE already has a lot going for it because almost all the brokers that matter now hold shares in the bourse. As the head of one major brokerage firm said, "We want the BSE on top again; after all, we hold shares in the BSE, not the NSE.” Another leading brokerage firm with a long history with the BSE is also advising team-Kannan on how to take on the competition and prepare for its listing.
Hindi Chini bhai-bhai
We learn that the BSE extended trading time by 10 minutes only after consulting its members and explaining to them the strategy of creating a little buzz for its new derivatives trading by this gesture. This apparently included a rousing little speech and a lot of cheering by the members and references to how the days of "Hindi-Chini bhai bhai" (alluding to the infamous slogan of the Nehru era that lulled India into believing that China was a close friend and ally until it declared war on an unprepared nation). Of course, all this was forgotten under the onslaught of the vicious media attack, when NSE decided to extend trading by an hour and forced the BSE to revise its plan.
The new team at the BSE, led by Madhu Kannan, is also doing things differently. While the top four have come with formidable global or technical experience, they have quickly given up their rarefied offices with spectacular views on the 25th floor of the JeejeebhoyTowers. Instead, they have opted for smaller office spaces on the 13th floor, in order to be in the middle of all the action. They also work long hours, often coming into office before 8.30am.
Another major plus for the BSE is the new profile it presents to the regulator as well as the public. In SEBI meetings, the entire BSE team is knowledgeable and articulate and the NSE (National Stock Exchange) is no longer able to dominate discussions or be the only one able to provide background and inputs. Their willingness to take on the NSE, directly and publicly, is like a breath of fresh air. James Shapiro, a key member of Madhu Kannan's team and his former boss at the NYSE (New York Stock Exchange) set the cat among the pigeons by openly discussing NSE's little trick of rejecting applications for algorithm trading. The NSE is clearly caught by surprise. It has always operated through quiet, informal and off-the-record interactions and in its recent, 'master of the universe' phase, even refused to respond to queries on its anti-competition strategies, especially with regard to MCX. But all of a sudden, NSE's managing director Ravi Narain is more accessible, at least to what is perceived as friendly media. The bourse itself is seen struggling to change its DNA and be more friendly with brokers and other intermediaries.
James Shapiro is a veteran of such battles. He is calm, extremely articulate and fluent in Japanese and Chinese. We can surely expect a lot more frank-speaking from him in the coming days.
For those of us who have covered the media for decades, the capital market space had turned extremely dull with NSE's near monopoly. With BSE indicating that it can pose a serious threat and the MCX group waiting to enter the equity space, the war of the bourses is promising to provide plenty of media fodder. Things will intensify when BSE and MCX get listed, because the analyst community will start tracking the exchange space. Although the NSE has no plans for listing just yet, it is bound to face pressure from its shareholders. One thing seems certain, it can no longer operate with the same secrecy that it did for the first 15 years of its existence. — Sucheta Dalal