Mumbai: Bombay Stock Exchange Ltd (BSE), Asia’s oldest bourse, has hired headhunting firm Egon Zehnder International Pvt. Ltd to scout for its chief executive officer—a post that has been lying vacant for seven months since previous chief executive officer Rajnikant Patel left without citing any reasons. BSE’s board had passed a resolution on Egon Zehnder’s appointment on 10 January.
According to two persons familiar with the development, BSE has identified four persons and one of them could be picked up for the top job at the 133-year-old bourse, which has been seeing a steady erosion in market share ever since its younger rival National Stock Exchange of India Ltd (NSE) came into being in the early 1990s.
Not all these four persons have been identified by the headhunting agency. A few board members have also suggested some of these names, one person told Mint.
The list of candidates includes Ravi Apte, chief technology officer of rival NSE; Madhu Kannan, managing director (global strategy) at Bank of America Merrill Lynch; and Ashish Chauhan, chief information officer of Reliance Industries Ltd and chief executive officer of Mumbai Indians, one of the teams in the domestic cricket tournament, Indian Premier League.
Besides, M.L. Soneji, the current chief operating officer of the exchange and acting chief executive officer, is also in the fray.
BSE didn’t respond to an email seeking its comment for this story.
Mint could not reach out to all four of the probables, but those who were contacted declined comment.
BSE’s human resource and remuneration committee will interview these candidates and once the right person is identified, it will approach the board seeking ratification of the appointment, said one of the people quoted above. This committee is headed by its chairman Jagdish Capoor.
Typically, the ministry of finance and the capital markets regulator, Securities and Exchange Board of India, too, would have a say in such appointments.
“This is a very informal shortlist and the exchange has sounded out three outsiders,” the person added.
All four candidates have proven track records in the exchange space.
Apte, for instance, was previously the chief technology officer of the erstwhile American Stock Exchange. He is widely credited to have revived the exchange after the events of 9 September 2001, when terrorists attacked New York City.
Kannan had worked as head (Emerging Asia, Middle East and North Africa) at the New York Stock Exchange’s Euronext segment before his current assignment at Bank of America Merrill Lynch.
Chauhan was part of the team that set up NSE, which today has almost a monopoly in share futures and options.
Soneji, too, has worked previously with NSE.
For BSE, it is a very critical appointment as apart from NSE, it will have to fight it out with two more stock exchanges—MCX Stock Exchange (MCX-SX) and the United Stock Exchange of India.
MCX-SX, jointly floated by India’s largest commodity exchange Multi Commodity Exchange of India Ltd (MCX), and Financial Technologies (India) Ltd, has already launched trading in currency futures and sought the regulator’s approval for starting trading in equities. The United Stock Exchange has got approval for starting trade in currency futures.
After spurning an alliance offer from the United Stock Exchange, BSE is now considering a proposal of the MCX group to work together in the derivatives segment.
BSE has been losing ground to NSE ever since the latter opened some 15 years ago.
Daily trading turnover in the cash market for equities in 1999-2000, for instance, was Rs2,724 crore for BSE and Rs3,303 crore for NSE. Since then, BSE’s turnover has inched ahead to Rs4,700 crore a day while NSE’s has trebled to Rs11,700 crore.
The difference between these two financial exchanges is even more sharp in the case of equity derivatives and currency derivatives.
BSE has an insignificant market share in these two growing market segments, despite taking on board stakeholders such as Deutsche Boerse AG, the Frankfurt-based exchange, and Singapore Exchange Ltd.
In equity futures and options, which are derivatives, between April 2008 and January 2009, BSE had average daily volumes of less than Rs10 crore; NSE had a daily turnover of Rs44,700 crore.