Management rejig likely at united stock exchange

Palak Shah & Ashish Rukhaiyar
Mumbai, 2 November 2011

With the exit of T S Narayanaswami and Saurav Arora, the exchange is scouting for currency specialists.

Just a year after launching operations, the United Stock Exchange (USE) is looking at a makeover of its management team. The exchange has lost significant market share in the recent past and two of its key officials have also quit. People familiar with the development say the exchange is considering getting persons with proven expertise in the currency derivatives segment.

While chairman and managing director T S Narayanaswami resigned from the exchange in early October, Saurav Arora — designated as president in-charge of business development & marketing — has also moved out of the currency bourse, which marked its entry with record volumes in September last year.

USE was launched on September 20, 2010, with an opening-day volume of 9.88 million contracts, a world record for first-day trading at any new exchange.

The resignations have come as a body blow to the exchange, known to leverage on the expertise and reach of both the officials. Saurav Arora is the son of Gaurav Arora, owner of Jaypee Capital, one of the founder promoters and the largest volume generator at USE. After the de-mutualisation of the exchange, Jaypee currently holds five per cent stake in USE.

When contacted, both T S Narayanaswami and Saurav Arora declined comment. Meanwhile, a source close to Jaypee Capital said the entity would not be selling its stake in USE and further elaborated that Saurav’s appointment at USE was for a “limited period”. Arora, an alumni of Harvard and Delhi University, was “looking for other opportunities”, it added.

Meanwhile, USE has seen its fortunes dwindle in the recent past, especially after reports of it coming under the regulatory scanner for concentration of volumes. Further, the exchange, that pitched itself as ‘India’s newest stock exchange’, saw the volumes fall at a time when its rivals — MCX Stock Exchange (MCX-SX) and National Stock Exchange (NSE) — managed to hold on to their respective market shares.

According to data compiled by the BS Research Bureau, in October, USE’s share in the total currency futures segment fell to under 13 per cent, which, at its peak, hovered around 30 per cent. The daily average volume in the month shrunk to Rs 3,541 crore, from Rs 7,994 crore the previous month.

The month of August saw USE commanding an average daily turnover of Rs 15,597 crore, marginally lower than those of MCX-SX and NSE. Incidentally, in May, USE’s share in the currency segment was nearly 30 per cent, with an average daily volume of nearly Rs 14,000 crore. The exchange currently operates in the currency derivatives space and offers currency futures in all the four currency pairs permitted by the Securities and Exchange Board of India. Also, it is only one of the two stock exchanges in the country to offer currency options in the dollar-rupee pair.

USE was in the news recently on account of a regulatory probe for alleged concentration of trades by a single member. Reportedly, only a few brokers accounted for the majority of volumes registered on the exchange. More importantly, Gaurav Arora-owned Jaypee Capital, also a shareholder in USE, accounted for nearly 80 per cent of the entire turnover.