Rebuilding trust in NSE

Limaye said he would look at opportunities to expand NSE's business footprint through new products

In a span of 10 days, Vikram Limaye, managing director and CEO of IDFC, got two high-profile appointments. On Wednesday, the National Stock Exchange named him its next managing director and CEO after the sudden departure of Chitra Ramkrishna two months ago.

NSE has been facing regulatory heat after accusations surfaced that the exchange gave preferential treatment to certain brokerages on the matter of co-location of servers in order to facilitate high-speed trading.

Limaye was selected by a four-member panel set up to look for the next MD that included Anand Mahindra and former RBI deputy governor Usha Thorat as external members. The panel also included NSE’s independent directors, TV Mohandas Pai and Dinesh Kanabar. His appointment is now due for approval from the Securities and Exchange Board of India.

The NSE announcement followed the Supreme Court late last month appointing Limaye on the four-member committee which is now the administrator to the Board of Control for Cricket in India (BCCI). The committee is headed by Vinod Rai, former Comptroller and Auditor General of India. Rai is also a fellow board member of Limaye at IDFC, the holding company for the financial group that forayed into banking last year.

The Supreme Court had to appoint new officials to look after the day-to-day-affairs of BCCI after it removed its president, Anurag Thakur, and secretary, Ajay Shirke, from their posts. The Supreme Court took this decision after BCCI failed to implement all the recommendations suggested by the Lodha Committee which was appointed to suggest reforms in the workings of the board following allegations of corruption.

With two appointments at key institutions that are faced with serious challenges, it would not be unfair to say that Limaye is capable of invoking confidence for rebuilding trust; at least the Supreme Court and the search panel at NSE thought so.

“Being in the business of financing infrastructure, which is a highly regulated sector, Limaye could certainly use his experience in dealing with regulators,” says one of Limaye’s colleagues at IDFC.

He has already shown his skills at the International Cricket Council (ICC) meeting last week where he was representing BCCI.  He took up a collaborative approach instead of being confrontational with other member nations. India has earlier been seen as taking a high-handed approach, given its financial contribution to world cricket.

Another colleague at IDFC says, “He is seen as someone having clarity on operational matters and who can deal with regulatory issues in a collaborative manner.”

When IDFC Bank was separated from parent IDFC, Limaye became MD and CEO of IDFC. While Limaye was part of the core team that built the foundation of the bank, at IDFC, his role became somewhat limited, as IDFC became a holding entity with no major operational business.

Limaye started his professional career with accountancy firm Arthur Andersen in Mumbai in 1987 while pursuing his chartered accountancy. He worked in the audit and business advisory services groups of Arthur Andersen, Ernst & Young and the consumer banking group of Citibank before going to the US in 1994 to pursue an MBA in finance and multinational management from the Wharton School of the University of Pennsylvania.

After completing his MBA, he worked at Wall Street for eight years with Credit Suisse First Boston in a variety of roles in investment banking, capital markets, structured finance and credit portfolio management before returning to Mumbai, where he joined IDFC and rose to the rank of MD and CEO.

Speaking to TV channels, Limaye said that he would look at opportunities to expand NSE’s business footprint through new products and geographies. Though the bourse is the market leader in its space, he believes market development is critical for funding India’s growth. As future growth cannot be funded only via banks, especially after new RBI regulations limiting banks’ exposure to corporate, it is an important part of NSE’s mandate to develop markets and it would be central to his role. Limaye will need to be collaborative with the regulators to achieve his goals. But he will have to first hit the ground running as the long-awaited initial public offering of the bourse is already under way.