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Appointments since assuming office

What really
happened was that we had a deployment of a staff for administration.
Our staff just swapped places. The manager for admin took over from the
other department while the guy in that department moved over to admin.
So there was no appointment as such of a new admin manager. They just
swapped places and that was all.

I read in the
press that a new manager was appointed or has been recruited. There was
nothing like that. No recruitment or appointment has been done since I
took over.

Information dissemination

To ensure that the
public stop rumour mongering, we are working out a communication plan
which is one of the short term objectives of this administration. We
are going to have a communication plan to let the market know what is
going on so that people can take informed decision as and when it’s
necessary. So I can assure you that there will be consistency and
information flow.

Plan for the market

My agendas of
uplifting what I met on ground to a higher level are three for now.
One, I’m going to ensure I put in place a credible communication plan.
I’ll also ensure that I follow up to make sure that the executive
selection is properly carried out and that we have a credible process
that is auditable so that whoever emerges as the new director general
of the NSE is the right person for the position. Finally, I’ll work
with the forensic auditors to ensure that we come out with the true
position of things so that there are no longer speculations as to the
financial situation of the Exchange. Those are the three things I am
concentrating on for now.

Purchase of a new trading platform

We are forging
ahead with the process of purchasing a new trading platform that will
be comparable in all material aspects to those used in other exchanges
such as the New York Stock Exchange and the London Stock Exchange.

The Exchange’s
current trading platform is very effective and efficient. What we are
only trying to do is to upgrade it to a higher level because, as we all
know, technology is moving and we cannot lag behind. Even the London
Stock Exchange is upgrading. You can have the best technology today and
by tomorrow it’s no more current. You must make sure you play within
the international market because that is the only way you can attract
international investors.

A trading platform
is built over a number of months; in most cases it doesn’t take less
than 18 months, from the commissioning to the final completion. This is
why we have to start the process now.

The cost of the new trading platform is not known yet. We are still in the process.

Presentations are
being made by the owners of the London Stock Exchange and the New York
Stock Exchange to the NSE council and management. I guess it is after
all these have been done and the selection of the new Exchange’s head
has been concluded that the cost element will be looked into. And as we
progress, this information will be disclosed.

On the current unstable market trend

The trend is a
hallmark of a dynamic stock market which cannot remain static. I wish
to re-affirm that our market fundamentals are strong and the current
trend is a phase that would pass away.

Markets across the
globe are also experiencing a downswing as institutional investors
express concerns on the stability of the world economy. This global
trend confirms the thinking that the stock market is a barometer for
the economy. We need to appreciate this in our analysis of transactions
on the market because the quoted companies cannot operate in isolation
from the economy.

Lessons for investors

One of the lessons
that investors through the Exchange need to learn from the global
meltdown is the essence of portfolio diversification. Many investors
had hitherto concentrated on equity at the gross neglect of other asset
classes, especially fixed income securities. Today, awareness is
gradually rising regarding investments in bond as many state
governments and corporate entities have applied to raise funds on the
market via bonds. It must be noted that investment in bonds guarantees
a fixed income. Until the late eighties, the bulk of investment through
the Exchange was in debt securities, before equity investments took the
centre stage.

As part of the
Exchange’s commitment toward encouraging more investments in government
bonds, in January, 2010, the council reduced transactional charges for
bonds.

We expect more
companies to take advantage of this gesture by considering the bond
option in their capital raising planning. Investors should also take
advantage of the fee reductions to include fixed income securities in
their portfolios. It is heartwarming to say that the Exchange’s trading
platform is effectively configured for trading bonds. Listing bonds on
the market would not only increase its depth but enhance the rating by
the international agencies that prefer quoted securities in rating
stock exchanges.

Our goal is to
build investors’ confidence through regular and professional provision
of accurate information and dissemination of such information, given
the sensitive nature of the capital markets.