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National Stock Exchange CEO Chitra Ramkrishna quits ahead of IPO

02 December, 2016

Chitra Ramkrishna has resigned as managing director and chief executive officer of National Stock Exchange (NSE), India’s largest bourse.

Ramkrishna tendered her resignation due to “personal reasons and expressed her desire to step down with immediate effect,” NSE said in a statement.

A report by The Economic Times said Ramkrishna had quit due to differences with the board. The bourse, however, denied the report.

The stock exchange, which is on course to list in 2017, has appointed group president J Ravichandra as interim CEO, an NSE spokesperson said. It has also set up a selection committee to find a new CEO immediately, the spokesperson said.  

Will NSE’s public issue be delayed?  

NSE got Securities and Exchange Board of India (SEBI)’s approval for an initial public offering (IPO), which will be an offer for sale for investors.

It is on track to file its draft red herring prospectus for the IPO by January, the spokesperson said.

The lead merchant banks did not immediately respond to a request for comments on whether the abrupt change in management is likely to delay the listing process.  

However, a merchant banker, who did not wish to be named, said he is not sure how this would impact the IPO, thought he said there should not be a delay. 

The bourse’s future course can be ascertained only after the new CEO takes charge, said another merchant banker, requesting anonymity.

The NSE also has to seek SEBI’s approval as a matter of procedure on the interim CEO and the subsequent appointment of a new CEO.   

“The interim CEO has been associated with NSE for long and brings with him a full understanding and functioning of the organisation,” said the NSE spokesperson. 

The NSE had hired Citibank, JM Financial, Kotak Mahindra and Morgan Stanley as lead investment banks for the IPO.

It later hired other banks including IDFC Bank and HDFC Bank. Cyril Amarchand Mangaldas has been appointed as legal adviser for the IPO while PwC is the statutory auditor. 

The public issue will be in the form of an offer for sale by shareholders. NSE plans to get listed in India as well as abroad. It will file IPO papers with market regulator SEBI for the domestic public issue by January 2017 while the same will be done for the overseas listing by April next year.

NSE was valued at around $ 2.7 billion in July 2016, when a shareholder pared down its holding.

In September, its smaller rival Bombay Stock Exchange (BSE) also filed for an IPO.  

Chitra Ramkrishna was part of the team that set up NSE in 1992 and rose up the ranks swiftly to earn the distinction of being the first woman chief of an Indian stock exchange in April 2013. 

She also spent a few years at SEBI and IDBI. A 2013 Forbes profile of Ramkrishna said she was handpicked by the then IDBI chairman SS Nadkarni to help start NSE as a rival to BSE.

Last month, Ramkrishna was named chairperson of World Federation of Exchanges (WFE), a global body of more than 200 market infrastructure providers, including exchanges.

“The board, while accepting her request, appreciated her sterling contribution to the growth of the organisation over the long years that she had been associated with it,” NSE said.

However, Ramkrishna’s exit has come at an inopportune time for NSE which is fending off allegations that there was a collusion among officials giving some brokers an undue advantage.

NSE has appointed consulting firm Deloitte India to probe allegations that several brokers got unfair access to NSE’s co-location servers for algorithm trading, according to an October 24 Mint report. 

Co-location refers to bourses allowing members to set up automated trading systems on their premises to reduce the time required for orders to flow between the exchange and the broker’s trading system.

The Deloitte report on whether brokers gained undue advantage is expected to be published soon.  

Moneylife first reported in 2015 that brokers were gaining unfair access to the NSE trading platforms, after a whistleblower contacted the publication.

On 8 July 2015, Moneylife’s Sucheta Dalal published an article alleging that some NSE staffers were leaking sensitive data related to high-frequency trading or co-location to a set of market participants so that they could trade faster than competitors.   

The published article was based on an alleged complaint made by an official of a Singapore-based hedge fund to SEBI in January 2015.  

In response to the Moneylife article, NSE filed a defamation suit claiming damages of Rs 100 crore in the Bombay high court.  

The court dismissed the case late last year, asking the stock exchange to pay Rs 1.5 lakh each to journalists Debashis Basu and Sucheta Dalal. In addition, the court imposed a penalty of Rs 47 lakh on NSE to be paid in the form of a donation to Masina Hospital and Tata Memorial Hospital in Mumbai.   

Ramakrishna’s resignation comes only a month after NSE’s group operating officer Subramanian Anand resigned, citing personal reasons. The Times of India previously reported, citing sources, that Anand’s resignation may have been prompted due to an NSE probe on his remuneration.

Chitra Ramkrishna did not immediately respond to phone calls and text messages.

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National Stock Exchange CEO Chitra Ramkrishna quits ahead of IPO

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