The National Stock Exchange (NSE), which is once again in the eye of a storm due to the co-location scandal, has said it has taken several transformational steps in the past few years on the regulatory, technological, and surveillance fronts to help improve stakeholder experience and to protect investors.
Senior officials of the exchange briefed the media over the steps the exchange has taken on various fronts following changes at the helm with former managing director and chief executive officer Chitra Ramkrishna’s ouster in December 2016.
"Over the last few years, we have been looking to modernise and transform the entire value chain of technology.
"All the way from connectivity, trading, clearing, settlement and surveillance,” said Vikram Limaye, MD & CEO, NSE.
Limaye, who took charge in July 2017, said the exchange has taken several efforts to improve engagement with all the stakeholders.
To prevent the misuse of investors’ assets, the exchange said it has worked with the Securities and Exchange Board of India (Sebi) on the new share pledge mechanism and also stepped up monitoring of investors’ funds that lie with brokers.
The NSE said it has started analysing audit reports and balance sheets of its trading members (brokers) more frequently, following a spate of defaults.
In case of any deficiencies in the quality of internal audit reports submitted by brokers, the exchange has filed with the regulator Institute of Chartered Accountants of India (ICAI).
The exchange said it has also streamlined the reporting process for brokers with the use of technology to eliminate risk of reporting errors.
To prevent market abuse, NSE said it has deployed artificial intelligence (AI) tools that identify manipulative practices such as layering and reversal of transactions.
It said it is also stepping up its educational campaigns to inform investors about various malpractices such as schemes assuring fixed returns.
The exchange said it is deploying undercover operatives to nab entities offering such schemes.
NSE said it is even scouring WhatsApp and Telegram chat rooms to detect any unauthorised or illegal activity.
Besides providing a trading platform, stock exchanges also have to act as first-level regulators.
The NSE said it has also set up a dedicated ‘listing Investigation’ department to examine possible diversion or misappropriation of funds, forging of financial statements and related-party transactions.
This department analyses corporate filings for adequacy and accuracy and reports to market regulator Sebi.
NSE said it is making huge investments in technology to be future ready.
The exchange said its systems are now ready to process 300,000 order messages per second, which is a threefold increase in the past two years, and has helped it handle the sharp increase in order flows since the Covid-19 outbreak.
The exchange has set a target of processing 1 million orders per second in order to be future ready.
NSE said the number of unique investors on its platform has increased to nearly 90 million from barely 35 million two years ago and the order traffic has risen fivefold since the Covid outbreak.
