Nuts & bolts man to take market charge

Bhave is will take charge when Sebi?s current chairman, Meleveetil Damodaran, retires on February 17.

Bhave, who has been involved with the capital market for many years?first as regulator and then as a key participant?will come back to the institution he joined in the rather turbulent early nineties, under the stewardship of the redoubtable, cigar-chomping GV Ramakrishna.

When Bhave came to Sebi in 1992, heading the secondary markets, times were very, very different. Brokers, long used to being a closed club, were in no mood to comply with a new regulator who would lay down tough rules. What followed were stormy years, culminating in a ban on badla?the home-grown carryforward trading system?which was then seen as the root cause of all that was wrong with the markets.

Today, Bhave will have a very different market to regulate. Trading has moved online, securities transfer is paperless (thanks mainly to Bhave and his National Securities Depository Ltd, the country?s first and largest depository, which he helped build from scratch), and the Indian market is the toast of the world for being well-regulated and smooth.

In a sense, Bhave?s appointment is also a sign of the changing times. He will be the youngest chairman, and a rare one?in that he has been through the rough and tumble of the markets.

Though in charge of the secondary markets, Bhave also was at the helm of affairs in the primary markets department as senior executive director, before quitting Sebi in 1996 to take up his new passion; NSDL.

As chief of the premier depository, Bhave had the tough task of changing the investor mindset in changing over from a paper-based trading system to a paperless one; several sections wrote off the depository system initially. Clearly, Bhave?s credentials in the capital market would have been a key factor that weighed with the selectors in the hunt for a successor to Damodaran.

Concurs a former colleague of Bhave who has seen him at work closely: ?Bhave?s appointment is very good news for the markets. He has an excellent understanding of the markets, and is forward-looking. He has been associated with the markets for close to two decades. At the same time, he is a tough regulator.?

Agrees S Mukherji, MD and CEO at ICICI Securities: ?He has been through the ups and downs of the market and has worked closely in it. He has years of experience and is familiar with the capital market and its functioning. This can only be positive.?

Bhave?s reputation as a tough regulator is also being seen by many as a good sign, when the markets have become global, and yet volatile. ?A tough regulator is good news for those who play by the rules. For the others, they better get the message,? says an investment banker. That Bhave means business was also amply proved when he took on Sebi itself after NSDL was censured by the regulator in the IPO scam, and moved the Securities Appellate Tribunal (SAT). The appellate authority then set aside the Sebi order.

The stint at NSDL will aid Bhave at Sebi. As the depository boss, Bhave had to deal with investors at the micro level, and clean up the cobwebs of the former paper-based trading system. Today, despite the massive volumes clocked by the bourses, share transfers are smooth and, barring the IPO scam hiccup, things have generally worked out well during the depository regime.

For a man who loves new challenges, Bhave will, of course, have quite a few at Sebi. New products are on the anvil, the market is yo-yoing like never before, capital flows continue to be a concern and the IPO market is in the throes of a crisis, with people pointing to aggressive pricing being the cause. All this will test Bhave?s acumen. Something which the tall, dapper new Sebi chief will, doubtless, enjoy to the hilt.