“EGR can be a big thing because that is something which is eminently feasible, and it should get policy support,” Injeti told CNBC-TV18 after NSE’s listing on the BSE.
Injeti said NSE is working on a three-year framework for EGR, but some issues, including GST and building the required ecosystem, still need to be resolved.
“We look at, optimistically, a three-year framework where it becomes significant,” he said.
EGR could make gold productive
Injeti said the model being considered for EGR could make gold productive by allowing it to be used within the financial system. He said it could also support gold loan schemes and allow gold to be recycled.
“If EGR, the way we are conceiving it, if that happens, gold becomes productive,” Injeti said.
He said the exchange still needs to address several issues before the product can reach its potential.
“There is a GST issue, there are a few other issues. Building the ecosystem is an issue,” he said.
NSE sees scope in technology and data
Injeti also highlighted technology and data monetisation as longer-term opportunities for NSE.
He said mature exchanges globally have become less dependent on transaction fees as their markets have plateaued. In India, however, data monetisation remains subject to regulatory considerations over the possibility of creating information asymmetry.
“In India, with our regulatory system, that space for data monetisation has not been ceded by the regulator, because they feel that it may create information asymmetry, which is not good,” Injeti said.
He said NSE needs to explore ways of monetising its capabilities without creating information asymmetry or barriers.
Injeti described NSE as “essentially a technology company” and pointed to its 32 years of tick-by-tick data as one area with potential.
“We have 32 years of tick-by-tick data with us. Nobody has that much data as NSE has,” he said.
NSE to add new products
NSE Managing Director and CEO Ashishkumar Chauhan said the exchange would continue to generate trading-based revenue while also developing new products and exploring non-transaction opportunities.
Chauhan pointed to electricity futures and EGR as products that could add to NSE’s transaction-based business. He also said the exchange has a data framework in place and is working on opportunities in data and analytics.
NSE says market share loss has ‘run its course’
Chauhan also said NSE’s recent loss of market share in equity options appears to have stabilised.
“Our market share loss has now run its course,” he said, adding that NSE could potentially gain some share.
He said NSE’s revenue is already diversified, with around ₹42 out of every ₹100 coming from weekly options and ₹58 from non-weekly options.
Chauhan said NSE had earlier expected regulatory changes around weekly options to reduce volumes by 40-50%, after the number of weekly expiries was reduced from five to one.
Instead, the decline was around 2-3%, which he described as “a pleasant surprise”.
He said that if India continues to grow well, NSE should continue to have some correlation with the country’s growth story.
Regulatory measures and closing auction
On regulatory interventions, Injeti said they should not be viewed through the lens of their impact on revenue.
“Regulatory interventions are not seen through the lens of revenue implications,” he said.
He said such measures are aimed at ensuring robust mechanisms for price discovery and that market participants have to adjust to them.
“Whatever regulatory measures are there, you have to live with it,” Injeti said.
On the debate around the closing auction session, Chauhan questioned the practice of using derivatives to trade on a potential closing price while that price is still being formed.
He said the focus should also be on how market participants use the closing auction rather than simply changing the mechanism.