NSE pitches for new investment products, bullish on ETFs

Tailor-made instruments required for different kinds of people and 'one vanila' cannot serve all

Pitching for new products to attract more investors to stock markets, leading exchange NSE has said there is a need for tailor-made instruments for different kinds of people and 'one vanila' cannot serve all.

Bullish on different kinds of ETFs (Exchange Traded Funds), as also on products like REITs (Real Estate Investment Trusts), National Stock Exchange's MD and CEO Chitra Ramkrishna said that the country has a huge pool of untapped savings and the market needs right investment vehicles to tap the same.

NSE, which Ramkrishna said itself is on its path to get listed, is one of the two major stock exchanges in the country and was incorporated in 1992 -- the other being over 140-year-old BSE.

Besides trading in shares of listed firms, two exchanges offer a host of other products including various derivatives. However, just about 3 per cent of population is estimated to be present in equity markets and a need is being felt including by the regulators, policymakers and market players, for newer product classes.

"Efforts have been always made for how to take the equity markets to retail savers. We have always believed that passive investment vehicles like ETFs are the right way to do it," Ramkrishna told PTI in an interview here.

Terming the government decision to allow EPFO (Employees Provident Fund Organisation) money in the stock market as a 'game-changer initiative' in this regard, she said, "You will find that over the medium-term, the people's awareness of putting some portion of savings in equities will increase.

"Then you will see the positive side effect of the people putting in parts of savings into mutual funds and ETFs. Then over a curve, you will see people putting money in IPOs and then coming to the secondary markets."

She also pitched for a greater push towards the habit of SIPs (Systematic Investment Plans) in broad-based products like ETFs and mutual funds.

"If we parallely proceed on these two tracks, definitely our coverage will improve," said Ramkrishna who has been with NSE since its inception.

Ramkrishna further said, "Savings is never a constraint in this country. With the right product vehicles, we will be able to tap that."

Terming REITs as promising products, she said there is need to experiment with different kinds of structures to tap the savings pool.

"One vanilla will never be able to serve the purpose. So what we are going to see in the next few years is different product structures -- one which will catch institutional interest, one which will catch retail interest, so you tailor the product right and you will get the money from the market from the different parties.