NSE IPO uncertain; detailed KYC only for shareholding over 2%: Vikram Limaye

Among India’s pride, the National Stock Exchange (NSE) has been in the thick of controversy over misgovernance and suspected political patronage, which resulted in a change of guard in 2017. Since taking over as MD and CEO, Vikram Limaye surely had not had it easy trying to manage expectations of stakeholders. As he comes close to completing five years, he answers questions related to legacy issues, and talks about the transformation efforts he and his team have undertaken. 

When you took over as the CEO of NSE, what was the brief given to you?

There was no brief given to me, per se. I was aware of the situation. Colo investigation had begun. It was a crisis situation. So my task was to take into account the relationship with all stakeholders -- regulators, members, media, shareholders – each one had different issues, which had to be addressed. Equally important was transformation at NSE -- governance, technology, processes, business as well as culture transformation. Now, we are at a good point. The issues of the past are largely behind us.

During your tenure, was there any internal audit done beyond the specific points raised in the Colo case to detect any possible internal frauds?

If you look at the Colo order, it exonerated all employees. The Colo order said the technology, that is, TCP/IP which was based on sequential access, was prone to providing preferential access. But that technology changed to multi-cast model in 2015 so the root-cause was addressed. Other review audits specified by Sebi (Securities and Exchange Board of India), like the governance audit, were conducted for independent validation. But nothing beyond that.

Was there any specific investigation/internal audit on the areas of influence that Anand Subramanian had being the group operating officer?

We did one comprehensive review of all aspects of the organisation. Was there anything specific pertaining to decisions taken by Subramanian? No, no such thing was done. Business, technology, regulatory did not report into him. Only HR, admin, premises were reporting into him, which was covered under the organisation-wide process and controls review anyway.

There were issues with respect to client-code modification that Sebi had raised. Has NSE conducted any audit of those transactions to check if there was any intentional wrongdoing?

The client-code modification issues have been fixed in discussions with CBDT when we applied for the commodities licence. We have not gone back to re-open client code modifications of the past.

Have any of the investigating agencies/regulator asked for this sort of data relating to transactions related to client-code modifications?

No.

How big a priority is it for NSE to go public?

NSE was not raising money for capital needs. The IPO was planned to offer liquidity to shareholders, so it does not affect NSE’s growth plans. 

Foreign investors have offloaded shares over the past two years. Have you been able to give them a roadmap?

We are in regular contact with shareholders. They have also been engaging separately with the regulator and the government to get clarity on the listing. But there is no clarity yet.  

What is the public listing contingent on? 

We have no idea. Sebi or the ministry have not provided any definitive clarity on when we can go public.

SAT ruled that you could withdraw the Rs 6,000 crore Colo revenue that was disgorged by Sebi. Has that money now flown back to NSE?

Rs 6,000 crore was not the disgorged amount. At one point in time, it was agreed with Sebi that NSE will put all Colo revenues into a separate bank account; this was not required which is why we had represented saying that we have already transferred the penalty and interest on account of Colo, which was north of Rs 1,000 crore. SAT accepted this, and the money has now flown back to NSE.

What level of KYC is done by NSE on investors?

Now the Sebi rule says that you had to do detailed KYC for “fit and proper” when the shareholding is more than 2%. For others, there is no detailed diligence done.