What challenges await Ashish Chauhan as he takes over at NSE?

Over 21-year after leaving the National Stock Exchange, Ashish Kumar Chahuan is set to return to the bourse. A member of the founding team of NSE in the 1990s, Chauhan was there for seven years before taking up another assignment.

An alumnus of IIT Bombay, Chauhan went on to head the Bombay Stock Exchange. During his stint, he took the exchange public, which was pending for over 10 years.

As the head of BSE, Chauhan introduced several market leading products including the first of a kind BSE SME and BSE STAR-MF platforms. Till now, 383 small and medium enterprises have been listed on the BSE SME platform, of which 148 have recorded strong growth and migrated to the main exchange. The Star MF handles almost 20 million transactions in a month.

Chauhan put to rest the perception that BSE was not keeping up with changing times by making it the fastest exchange in the world with less than six microseconds response time. Currently, the median response time is four microseconds for a trade. Under Chahuan, BSE has relatively handled the business without any hiccups on the technological front.  

Now, as the term of incumbent Vikram Limaye draws to a close, the Securities and Exchange Board of India (Sebi) has handed over the responsibility to head NSE to the IIM Calcutta alumnus.

Growing from the solid foundations, NSE has come a long way since Chauhan left. Currently, it is the world’s largest derivatives trading platform by volume and is ranked fourth in cash equities by number of trades as per the World Federation of Exchanges 2021 statistics. In FY22, NSE's revenue grew 59% to Rs 8,500 crore, while net profit rose to Rs 5,198 crore

But Chauhan’s appointment comes at a time when NSE is plagued by many corporate governance and legacy issues. The exchange is entangled in the co-location case, allegations of illegal phone tapping during the tenure of former NSE chief Chitra Ramkrishna. In February 2021, the exchange had to be shut down due to glitches in the servers and the bourse had seen similar technical glitch in March this year. It all has undermined the reputation of the NSE among market participants.

Deven Choksey, Managing Director, KRChoksey Holdings says one of the biggest challenges is to revamp technology at the exchange. Chauhan will have to deal with a lot of legacy issues at the bourse. He could do well do shore up the cash market volumes under his tenure. Chauhan’s vast experience with tech could help keep NSE in good stead.

In his previous stint at NSE, Chauhan played a key role in establishing the technological foundation for derivatives trading. Even at BSE, Chauhan was at the heart of the exchange's automation and technological innovation. Now, back at NSE, restoring governance trust in the platform would be one of the biggest challenges for Chauhan. Last but not least, Chahuan’s key challenge lies in taking the NSE public, which has been on hold due to regulatory troubles. Market participants, especially institutional and foreign investors, long wanted the exchange to list to unleash their investment value.

Deven Choksey, Managing Director, KRChoksey Holdings says Chauhan is cool-headed, balanced and extremely articulate.  He is good at maintaining relationships at various levels and can carry people along with him. Chauhan by and large remained non-controversial. His great understanding of technology and commercial aspects of business could prove to be a miracle.

Going by his previous tenures, experts say Ashish Chauhan is a visionary when it comes to taking decisions and has a wealth of experience to lead NSE to the next level. His technological prowess, coupled with his collaborative style of working with the stakeholders could come in handy at the bourse which is in need of a makeover