What are your expansion plans in terms of reach?
We expanded our reach to 400 cities by the end of 2000. NSE believes in the enormous power of the retail investor, which needs to be combined with institutional investors trading on the exchange to boost volumes. Being an exchange which has reached out to retail investors outside Mumbai, NSE now wants to cover 500 cities covering all major investor clusters, and stabilise at that level for some time for consolidation.

Volume-wise and turnover-wise, we have continued to double the figures during the last couple of years and hope to continue the trend in 2001. In the new year, we are expecting an average daily turnover of Rs 13,000 crore against Rs 6,500 crore on a volume of 8.5 lakh trades in 2000.

As part of bracing up for meeting the requirements during the pre- and post-Budget (2001) periods, NSE is planning to double its trade-handling capacity from one million trades per day. On December 15, 2000, the exchange posted a record volume of 1.013 million trades.

You launched Internet-based trading in February 2000. How is it doing? And what are the future plans?
Internet trading has cornered a market share of about 1 per cent or over Rs 1,300 crore per month of the total capital market turnover (November 2000). Out of about 1,000 brokers, only about 25 are utilising this means of trading now. Once the number of brokers using the Internet reaches 150, it will get a real boost. About 35 brokers have already enrolled themselves under the Brokers' Plaza, a common trading platform for NSE brokers, launched last month. NSE has also completely redone its web site, which it wants to use as a medium of communication with its constituents, including brokers.

Having entered the international arena by launching S&P CNX Nifty futures on the Singapore Exchange Ltd, what are NSE's global ambitions?
NSE has undertaken an internal review of changes in the international capital market, and how to place itself in the global arena. There are some early acts of consolidation by various exchanges, e.g., London and Frankfurt exchanges, and Paris and Belgium stock exchanges. But there is no clarity on on the form and structure of the new organisation and the manner of operations.

NSE has tied-up with London and Singapore exchanges, with which it has prepared technical interfaces as well, so that cross-trading of shares listed on these exchanges in India and vice-versa can be kicked off when full convertibility of rupee becomes a reality. The exchange is also in talks with some exchanges in the US for such tie-ups.

Setting up of offshore trading terminals is already allowed by the Securities and Exchange Board of India (Sebi). But till the advent of Internet, this remained a dream as the costs of leased lines was very high. Initiatives are being taken by some of our members to set up terminals using Internet in West Asia to start with, to be followed by Singapore and Hong Kong. This move is basically to cater to non-resident Indians (NRIs) to enable them to enjoy facilities on a par with domestic investors. Operations in this respect are likely to be kicked off during 2001.

What about the domestic perspective?
There is a paradigm shift taking place in the domestic financial services sector. The companies used to rely on different distribution channels for distributing various financial products, like primary market, secondary market, mutual fund products, insurance, fixed deposit products etc., till recently. Now, the trend is witnessing a shift to utilising the available distribution channels to distribute different products instead of developing a new channel altogether. We are preparing to tap this opportunity. Even among the stock exchanges this trend is visible. Though there are many SEs in the country, consolidation is happening at the order book position.

NSE, having capital market and debt market segments, has recently initiated marketing primary issues through its network of brokers and mutual fund units of Zurich Mutual Fund. Four MFs are in talks with us in this regard and distribution of insurance products is on the cards. Launch of retail debt market activities is also on the anvil. NSE's debt market segment has an average daily turnover of Rs 1,200 crore per day.

Having many subsidiaries/ divisions encompassing securities and debt trading, clearing corporation and infotech areas and plans to have presence in every area of the financial services sector as a distributor, how do you define the future NSE?
World over the face of stock exchanges is changing. Technology is becoming a part and parcel of their operations and growth. In line with the changing trends across the world, NSE is being seen as a market infrastructure provider for the financial services sector with focus on securities market. Leveraging on market infrastructure will be a common thread for all NSE initiatives in future.

What is the present status of futures trading and what are the reasons for low volumes? What measures can improve the situation?
The present average daily turnover is Rs 15 crore, and it has the potential to reach Rs 500 crore in a year or two. Going by international experience, the futures market is likely to witness robust activity in 2001. Four emerging markets - Hungary, Greece, Poland and South Africa - have started futures trading a couple of years back. They saw intense activity only after 12 to 15 months of the launch.

NSE's main thrust to boost volumes in derivatives is to train members, staff of institutional players and investors. We are planning to organise 50 seminars per year across the country, apart from providing course material and exam mode on Internet. Index-based options trading is scheduled to be launched by January-end.

What are your capital expenditure (capex) plans in the next three years? When will your office building being constructed at the Bandra-Kurla Complex (Mumbai) be ready for occupation?
The Rs 80 crore building is expected to be ready by March-end next. About Rs 60 to 80 crore per annum would be spent on our capex plans during the next three years. Most of our future capex will go into technology upgradation, including hardware, software and telecom infrastructure. ALBM (Automated Lending Borrowing Mechanism), CNS (Continuous Net Settlement), derivatives, in that futures followed by options trading, changes required for risk management systems etc, call for investment in systems infrastructure. The list goes on with every change in the portfolio of products in the market.

What will be the role of NSE.IT, your IT arm?
It will be a crucial player in pursuing NSE's plans to become a market infrastructure provider, particularly in services requiring application service provider solutions. It has already launched back-end and front-end applications for market intermediaries. NSE.IT will also play a pivotal role in keeping the exchange ahead of others in terms of reaping the benefits of technology.