National Stock Exchange’s MD & CEO Ashish Chauhan says that trading in derivatives should only be done by the informed investors who can manage risk and understand the market.
NSE is the world’s largest derivatives exchange in terms of trading volumes (contract), according to the data from the Futures Industry Association (FIA) for the calendar year. However, Chauhan warned that only informed investors should get into the derivatives market.
Chauhan said derivative has a utility but if someone is not fully understanding or losing money, he should not go for derivatives trading. Those with risk appetite and understanding should be given opportunit
In July 2023, a report by the Department of Economic Policy and Analysis of SEBI revealed that nine out of 10 individual traders were making losses in the F&O (Future and Options) segment. They recorded an average loss of Rs 1.1 lakh during the financial year 2022. Around 90 per cent of active traders witnessed an average loss of Ra 1.25 lakh.
According to SEBI, samples from the top 10 brokers showed that the number of unique individual traders in the F&O segment increased to 45.2 lakh in FY22 compared to only 7.1 lakh in FY19.
Talking about the NSE’s IPO plans, Chauhan said they are awaiting a signal from the markets regulator Securities and Exchange Board of India (SEBI) to begin the Initial Public Offering (IPO) process.
“The SEBI has to give approval for the IPO. We will file a revised Draft Red Herring Prospectus (DRHP), once they give the approval,” Chauhan said on Thursday.
In December 2023, the regulator asked the NSE to remain glitch-free for at least one year and improve its technological infrastructure, and corporate governance, and resolve pending legal matters.
NSE made its first attempt to launch the IPO in December 2016 but the plan was delayed after the exchange got embroiled in the co-location scam. Its former CEO Chitra Ramkrishna was allegedly involved in the 2015 co-location scam.
In 2016, NSE was reportedly aiming to raise around Rs 10,000 crore. Existing shareholders of NSE including American Investor, Tiger Global Management, Aranda Investments, SAIF Partners, Norwest Venture Partners, Citigroup Strategic Holdings, Goldman Sachs, State Bank of India, and others were expected to offload a 23 per cent stake in the bourse through an offer for sale (OFS).
NSE’s rival BSE, formerly Bombay Stock Exchange, launched its IPO in September 2016 and is currently listed on both Exchanges. Chauhan was the CEO of BSE at the time of its listing. He is among the founding members of NSE and this is its second stint with the bourse.
Apart from the co-location scam, the NSE witnessed a trading suspension for several hours when its mainframe and disaster recovery sites experienced malfunctions, attracting scrutiny from the regulator.
In the December 2023 quarter, NSE reported an 8 per cent year-on-year increase in net profit to Rs 1,975 crore. Consolidated revenue from operations jumped 25 per cent to Rs 3,513 crore in the reported period.
