Why NSE needs to become more transparent

Vikram Limaye takes over the National Stock Exchange as MD & CEO at a crucial moment. The country's premier stock exchange has been getting bad press in recent months. Its mounting troubles have been discussed threadbare in the national media. The row over co-location servers, in particular, that allegedly gave a select few preferential access to NSE's trading system has tarnished the reputation of the exchange.

In many ways it's unfamiliar terrain for mandarins at the NSE, long used to being the darling of the media. Its media policy, shaped by former chief Ravi Narain during his reign appeared to have served the exchange well. Narain believed that the press should be kept at an arm's length. This was, perhaps, largely a result of his experiences in dealing with the media during the Ketan Parekh scam in 2001. The Bombay Stock Exchange (BSE) officials courted journalists at the time to get adequate mileage for their side of the story.

It ensured that the BSE got more coverage than the NSE then. But an unintended consequence was that the scam was more closely associated with the actions of the BSE top brass. An astute observer, Narain realised that easy access to the press came with its fair share of problems. The NSE then adopted a policy of limited access to the media. Narain himself was out of bounds for scribes and seldom gave interviews.

What has changed now? Just that NSE has had its fair share of controversies recently, putting the spotlight on the exchange -- from the spat with Jignesh Shah to the dispute over co-location servers. It made it virtually impossible for the media to ignore the rumblings at the exchange even though officials kept a low profile.

SEBI is now clearly keen to set things right at NSE. And the onus is on the media to do balanced reporting of the developments at the exchange. Its only possible if the NSE becomes more transparent and accessible to journalists without going overboard.
The NSE is now, by far, the predominant stock exchange in the country and its time to act and preserve its legacy. It's important to remember that screen based trading introduced by the exchange in the nineties changed the face of the stock markets in India. It paved the way for some far reaching reforms -- removing Badla, introduction of rolling settlements and futures and options.
The ball is now in Limaye's court.