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Chitra Ramkrishna: The measured market maker

LiveMint logoLiveMint 01-06-2014 Aparna Piramal Raje

This is one of the rare occasions for Head Office when I learn more about a person from what I don’t see than from what I do see. The person in question is Chitra Ramkrishna, the 51-year-old chief executive officer (CEO) of the Mumbai-based National Stock Exchange of India Ltd (NSE).

She preferred to meet me in her designated meeting room in the corporate executive suite rather than in her cabin. It is a trademark measured move on Ramkrishna’s part—just enough to have a fruitful dialogue, yet not too intrusive for someone known to guard her privacy.

Classic elegance

The National Stock Exchange headquarters in MumbaiThe meeting room resembles a gracious living room, with an eight-seater dining table, a set of sofas and armchairs, and a cabinet stacked with books and artefacts. It is a work setting that is found in several corporate executive suites, well-suited for individual or small group meetings, especially with external visitors whom CEOs would prefer not to meet in their private workspace, and more conducive to conversation than a conference room.

Ramkrishna first used the room jointly with her predecessor Ravi Narain, now she tends to use it herself.

The objects in the cabinet are indicative of a rarefied set of interests: 19th century English literary classics; books on wildlife; religious artefacts, including an intriguing Ganpati whose trunk seems to be balanced in thin air; team photographs; and official citations. The facing walls have historical photographs of Mumbai. “A little bit of art and literature is always preferred,” says Ramkrishna, adding that Narain “was fond of the photographs too.”

Outside, gleaming high-rise office towers make up the Bandra-Kurla Complex’s iconic skyline. “This was marshland when we first moved in here 14 years ago,” says Ramkrishna, attributing the NSE’s decision to invest in its own building to R.H. Patil, the exchange’s first chief executive. “Dr Patil came from an institutional mindset. For him, if you were an established institution, you would need a building of your own, and this is what we could afford at the time,” she explains.

Pioneering a new platform

A decorative pot (left); and religious artefacts like this Ganpati figurine dot the spaceThe company’s Exchange Plaza headquarters is a physical reflection of its status as a groundbreaking exchange. From its inception in the early 1990s, when Ramkrishna joined the company as part of the founding team, the NSE pioneered screen-based trading in India, enabling a new generation of stock market professionals to take part in securities trading. Today, over 80% of all trading in derivatives and cash takes place on its platforms, and the company has been valued at over $3 billion (around `18,000 crore).

At a time when stock markets are so volatile, I am keen to ask Ramkrishna what it takes to successfully run an exchange.

The answer, it turns out, has three parts to it.

Classics by authors like Thomas Hardy and Jane Austen are indicative of a wide range of interestsFirst, adopting a measured approach to growth. As an exchange, the NSE is necessarily market-led, responsive to customers. Equally, it is responsible to the regulatory authorities. So while deciding to pursue any new initiative, “we have to look at all the constituencies, from the small broker to the large broker, from the issuer to potential investors, and to the regulator,” Ramkrishna explains. “We can’t stop ourselves from doing things because it brings risks. The best thing to do is to mitigate those risks. It’s our job to continuously move the envelope on greater risk mitigation and our regulatory framework is more mindful of risks and compliance, than many other markets.”

A measured approach can only be achieved by clearly defining certain boundaries (such as her decision to protect the privacy of her cabin). She is similarly categorical and clear-cut about whether the NSE might like to issue an initial public offering: “The board has always said at the right time we can look at it.” She declines to elaborate further.

Second, managing an exchange requires three different kinds of domain expertise—an understanding of business, regulation and technology. The latter is especially relevant as increasingly markets are being affected by new approaches to trading, such as “high-frequency trading” or “algorithmic trading” driven by computers rather than human beings which some perceive as potentially detrimental to the market.

“The one thing that has happened in the last two decades is that the exchange business is inevitably and irretrievably intertwined with technology,” says Ramkrishna. She points out that an understanding of products and technology needs to be woven together to serve customers. It cannot be one at the expense of the other.

Teamwork between the three functions—at both the senior leadership team and operating team levels—is critical, she says. “Our biggest strength is we have a steady team, and all of them understand the nuances of the three pillars (business, technology and regulation) very well,” Ramkrishna says.

Apart from built-in interdependencies in job functions, the performance management mechanism rewards teams for collaboration, says Ramkrishna. Teamwork has certainly featured in this conversation more than it has with most chief executives for this column.

Catalysts for growth

Wall art like this 1899 picture of Elphinstone College indicates a wide range of interestFinally, managing an exchange is about playing a catalysing role in the ecosystem, providing the platform for the market to grow. “This business is dependent on everyone else. Sure, we’re running it, but the value has to be perceived by everyone—institutions, retail, brokers, companies, all of them,” Ramkrishna says. Financial inclusion remains an important goal; Ramkrishna acknowledges that the participation of retail investors in the market is low.

The NSE is a particularly interesting institution, since it must be market-responsive, customer-led and technology-driven, yet it is essentially a state-sponsored creation.

In my experience, there is a certain breed of professionals, like Ramkrishna, that is attracted to this sort of institutional role: those who are understated and restrained, able to shape public policy, committed to the public realm, and with a market-facing mindset. They are artful balancers, like the seemingly precarious Ganpati in her meeting room, a metaphor for staying still and upright. Such professionals usually also have a long-term view and a respect for history, captured by the historical photographs and novels in Ramkrishna’s meeting room.

Her workplace in the landmark NSE building offers two lessons for anyone concerned with growing the Indian economy. First, it highlights how platforms like the NSE enable the growth of the ecosystem. Without a catalytic enabler like the NSE, the markets might not have grown. Second, it signifies how such platforms are themselves sources of tremendous value creation to their stakeholders, whether public or private.

Aparna Piramal Raje meets heads of organizations every month to investigate the connections between their workspace design and working styles.

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