NSE CEO urges FM Sitharaman, SEBI, to reduce stock exchange transaction and compliance costs

Vikram Limaye, MD and CEO, NSE, had requested the Finance Minister and SEBI to reduce the overall transaction costs including taxes, margins and compliance costs to improve competitiveness of Indian markets.

Speaking at an event celebrating the 25th anniversary of NSE, Limaye said this would also facilitate an increase in our weightage in global indices which would attract more foreign capital.

Limaye said that the spread of equity trading is very low in India in comparison with its peers.

"Less than 5 percent of the population participates in India's equity markets, whereas the comparable numbers for emerging markets are in the range of 12 to 15 percent and as high as 35-40 percent for the developed markets. "

Limaye said that this is despite the strong growth in the asset management industry over the last 3-5 years. "It is therefore imperative that we  redouble our efforts in further democratizing our markets," he said.

He said that deep and liquid secondary markets are important to facilitate primary capital raising and that there is a need to improve the breadth and depth of our secondary markets.

Limaye also spoke of the need for strengthening the corporate bond market

"Our equity market structure is robust with wide ranging participation from an entire spectrum of investors and offers great lessons for building a vibrant government and corporate bond market. It is critical for all stakeholders to work towards expediting the development of bond markets to fund the growth aspirations of the country," he said.

"It is imperative that markets take the load off banks in providing long term debt to all types of enterprises ranging from large corporates to SMEs. Government and regulators have been paving the way for this transformation through a series of initiatives. A detailed set of recommendations to develop debt markets have been submitted by various stakeholders, including NSE."

He also called for the better integration of the corporate bond market with the government’s bond market

"Better integration of the government and corporate bond market is essential. The development of the fixed income derivatives market is also critical to enable hedging of interest rate risk and credit risk," he said.

"NSE and its team is committed to partner with the government and the regulators to speed up market development and contribute to India's ambition to take its rightful place in the world's leading economies," he said.

Acknowledging that the real estate sector is in deep trouble, FM Nirmala Sitharaman on November 5 said that though the government has taken  measures, more needs to be done to help the sector recover from the downturn.

"The sluggishness in the real estate sector needs to be addressed. Core industries and home buyers will benefit if real estate sector revives. I am glad to say that a lot of funds have approached us as they wish to do something in the real estate sector provided they receive our help,” said Sitharaman.

She also said that several homebuyers are looking at the government for solution to revive the sector, and that government is working towards measures on the same.

Sitharaman also said that India needs a vibrant stock market.

"The interest being shown by the many sovereign funds and pension funds [in our markets] is not only because of our earnings, but because of their trust in the manner which we have organised ourselves," said Sithraman.

Sithraman said that banks alone cannot service all of the country's credit or debt requirements.

Sitharaman also acknowledged the NSE’s inclination to use technology to democratise the access to the stock markets and take it to the people.

"One can see the tangible benefits due to the use of technology. Camps to inform retail investors about the stock market have been setup in close to 600 districts, 4,500 courses are held on a calendar year-to-year basis to get more people to become players in the stock market.”

She also noted that after the setup of the NSE in 1990s, it has covered nearly 2,000 cities and setup 2 lakh servers to improve access to stock market activity.

Also present at the event was Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi, who said that though India has seen an exciting and challenging journey in the development of its capital markets, its market cap to GDP ratio is still very low as compared to some developed market.

"Stock exchanges have emerged as the most imp capital market infrastructure. Exchanges need to follow the regulations better than what they preach to companies.” Tyagi also said that exchanges need to refrain from putting an exorbitant fee structure.