With only small single digits of retail savings coming into the stock market, there’s a great scope for better retail participation in the market. “In case of the developed countries, the retail savings going into the stock market is 20-30 per cent. Here it’s in the low single digits. Thus, there’s a greater scope for attracting small savings to the stock market,” said Chitra Ramakrishna, managing director & CEO, National Stock Exchange of India Ltd, in her valedictory address at the fourth India Finance Conference at IIM Bangalore on Friday.
Technology would play a defining role to achieve this. Describing technology’s role in providing information and penetration to retail investors as ‘game-changing’, she said: “Technology can add breadth and depth to markets, lower cost of doing business and build resilience in risk management systems.”
While stating it had been a good story for two decades for the NSE in India, she pointed out that there was still some distance to be covered. “We must grow retail savings in equity markets, we must grow the number of corporates that we serve, we must provide a platform for SMEs to raise capital and we must develop a diverse set of instruments that allow investors to invest and issuers to raise money. Liquidity, breadth and depth in our equity market are a work in progress,” she said.
Markets in evolution offer tremendous opportunities. But, the opportunity could pass us by if we fail to architect our systems and processes based on the felt needs, she cautioned, observing the need for high levels of governance in companies that seek to raise capital.
Drawing attention to the fact that investment horizons had shortened, where not just day traders but even long haul investors reviewed their positions every day, she said: “All investors, including retail investors, need access to market news so that they can respond accordingly. We need a well-oiled, preemptive risk management system – not just at the exchanges – but also at the investor level to mitigate risk.”
The NSE, she said, over the next few years would increase its investment in technology and focus on working towards removing the artificial arbitrages that exist between the issuers and products.
