Saturday, 29th July 2017, the students of PGPB6 had an opportunity to meet a person of immense stature in the finance industry. Mr. Neeraj Kulshrestha; he is current COO of Bombay Stock exchange, popularly known as BSE. With over 20 years of experience in the financial services industry ranging from General operations to Stock Exchange operations, Mr. Kulshrestha provided us with some knowledgeable insights on the recent IPO of BSE, Ltd. which analysts predict was seeking to raise as much as ₹1,243.40 Crore. He began his session by giving us a little backdrop of BSE. “In a country with so many states, everyone wanted access to resources – so at one point almost every state in India had its own Stock Exchange. This made brokers prone to manipulation,” said Mr. Kulshrestha in retrospect. BSE is a 142-year-old stock exchange which happens to be the world’s fastest trading platform, with a median trade speed of six microseconds. He also gave insights on
the tremendous volume of transactions at BSE on a daily basis; with about 230-250 million orders each day, approximately 15 million converts to transactions. He further explained that in order to overcome certain inefficiencies of the BSE, National Stock Exchange (NSE) was set up in 1992 as the first demutualized electronic exchange which revolutionized trading by introducing a modern, fully automated screen-based electronic trading system. Together, BSE and NSE are the main stock trading platforms in India.
Another interesting concept Mr. Kulshrestha touched base upon was the four important factors in the world of stock trading today – People, Technology, Distribution, and Products. While trading is mostly analytical, people play a major role in this field – especially the ‘right’ kind of people, who ensure transparency. On the topic of technology, he elaborates,
“Change in technology is the toughest decision to be made as there are too many stakeholders involved.”
In terms of distribution, he mentioned the need to expand and to have a collaborative future for stock exchanges across the globe. Finally, on the factor of products, he mentioned an intriguing theory of ‘Red Ocean/Blue Ocean’ – the Red Ocean refers to existing products in the market which makes the competition tough as there is a market leader already present, and Blue Ocean, refers to a new area or a green field which is untouched and has plenty of scope. BSE has thoroughly adopted the Blue Ocean strategy. On the topic of the IPO, he mentioned it was a necessary step to be taken after demutualization, as stock brokers had to sell down. To ensure no erroneous activities took place, and since a stock exchange cannot regulate itself, a decision was taken to go public on NSE, on January 23rd, 2017. He also mentioned that insider trading is being curbed by timely regulations through important institutes like SEBI and NSE.
To sum up, Mr. Kulshrestha gave the students of PGPB6 a delightful opportunity to learn more about Asia’s largest stock exchange. He left us with food for thought –
“If you are a leader anywhere, make sure you don’t focus only on the market share. Governance of the company is equally important.”
Written by – Devika Poduval and Miloni Shah | Post Graduate Program in Business Class 2019