Navigating Liquidity Challenges: Insights From Industry Leaders At Global Fintech Fest 2024

At the Global Fintech Fest 2024, a session on "Managing Liquidity: The Dynamics of Pledging and Re-pledging Securities" featured insights from industry leaders Sundararaman Ramamurthy, MD & CEO of BSE Ltd; Nithin Kamath, Founder and CEO of Zerodha; and Harsh Jain, Co-Founder & COO of Groww. Sundararaman Ramamurthy emphasized the significant rise in trading volumes in India, attributing part of this increase to regulatory changes that have doubled the collateral deposits since 2020. He noted that these changes have enhanced market liquidity, benefiting participants significantly. Nithin Kamath acknowledged the accompanying risks, citing the necessity for continuous monitoring due to potential fluctuations in stock prices affecting collateral. He highlighted the concentration risk when multiple investors pledge the same stock, which could impact market stability during a downturn. Despite the increase in trading volumes, he pointed out that only a small percentage—10%—is attributed to collateral trading.