Ashish Chauhan cleared to be the next chief of NSE

Late last week, the Securities and Exchange Board of India (SEBI) cleared the name of Ashish Chauhan for the post of MD and CEO of the National Stock Exchange (NSE). However, this decision will still have to be ratified by the shareholders of NSE, although that is normally more of a formality. The appointment became urgent after the former MD and CEO of NSE, Vikram Limaye, demitted office after completion of  his five-year term. Incidentally, Ashish Chauhan has already complete 2 five-year terms as the MD and CEO of the BSE.

Vikram Limaye took charge of NSE in 2017 at a time when the entire stock exchange was in a state of flux. The algo and dark fibre case had pointed fingers at former honchos of NSE like Ravi Narain and Chitra Ramakrishnan. In the last five year, Vikram Limaye has been surely instrumental in reviving the image of the institution, although the algo case is yet to see a logical conclusion. Incidentally, Vikram Limaye was eligible for another five-year term at NSE, but he decided to opt out of the role after completion of five years.

How will the affairs of the NSE be managed in the absence of the MD and CEO. The governing body of NSE constituted an internal executive committee to run the affairs of NSE till the new MD and CEO took charge. This committee comprises Yatrik Wing (Group CFO and Head Corporate Affairs), Priya Subramaniam (Chief Regulatory Officer), Somasundaram KS (Chief enterprise risk and information security officer) and Shiv Bhasin (Chief technology officer). This committee will be dissolved once the new MD and CEO assumes office.

Chauhan brings formidable credentials to the board. He is an alumnus of IIT and IIM and during his sting at the helm of BSE helped the BSE become the world's fastest exchange with 6 microseconds response time. During his tenure, BSE completed its IPO, he revived revenues, diversified in new areas including currency, commodities and equity derivatives etc. Under his leadership, BSE also created the perfect ecosystem for SMEs, start-ups, mutual funds and insurance distribution. That is evident in the stock price of BSE.

Having said that, Ashish Chauhan is no stranger to NSE. He had moved to NSE from IDBI Bank along with the original team of NSE and worked with the NSE between 1992 and 2000. Incidentally, at NSE Chauhan was instrumental in setting up India’s first fully automated screen-based trading system and first commercial satellite communications network. He had also been a major driver of the derivatives segment on the NSE, which today contributes to a lion’s share of the daily volumes on the National Stock Exchange.

Under the extant SEBI norms, the MD and CEO of any stock exchange must apply for the top job and then compete with other candidates for the top job post the completion of the five-year term. Limaye had been appointed in July 2017 as the MD and CEO of NSE following the exit of Chitra Ramkrishna amid the probe into the co-location scam. Clearly, Chauhan will have his task cut out. He must focus on implementing fair and ethical governance practices at the NSE, which will eventually pave the way for its proposed IPO, which is hanging fire.

Among the various allegations against Ravi Narain and Chitra Ramkrishna are the alleged lapses in corporate governance during the appointment of its Anand Subramanian as the group operating officer, which many feel he was not qualified to hold. Eventually, it emanated that the NSE had given preferential access to a handful of brokers who managed to game the system and gain priority access to trade execution. The journey back to redemption for the stock exchange may be hard and unwinding and will be on top of the agenda list for Ashish Chauhan, once his name is also approved by the NSE shareholders.