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Rooting for reform: Samir Shah, NCDEX:Samir Shah, MD & CEO

Sneha Jha | April 16, 2014
When Shah took over the Exchange in the summer of 2013, markets were down and growth prospects bleak. .

CIO: What other innovations did you introduce?

Samir Shah, MD & CEO:NCDEX has been a pioneer in warehouse infrastructure. We created COMTRACK, an electronic Web-based system which facilitates electronic accounting of commodities deposited in the warehouses approved by the Exchange. It connects the Exchange, warehouses, assayers, members, investors, and clients.

However, the warehouse mechanism in India is fairly underdeveloped. Its barely 10 years old and a lot needs to change. So I embarked on a strategy that I call logistics version 2.0 to create a new set of standards in warehousing. We are in the process of implementing that. Also, after the NSEL crisis peoples confidence in stocks stored at warehouses got shattered. It was extremely important to come out as a leader to show to the market that we believe in the warehousing way of participating in the commodities market.

Then I focused on customer centricity. We werent perceived as a customer focused Exchange. So, for the first time in the history of commodity Exchanges, I ran a customer satisfaction survey — conducted by an agency called Grass Roots. The findings of the survey stated that customers wanted us to make a step change in customer orientation. Based on that, I restructured the front office of my company.

I made two groups in the company:One is the business development group and the other is a relationship management group.

Another key aspect is technology. I re-prioritized a technology project that was languishing for three years. We indigenously developed what is called a Spread Engine. Worldwide, commodity markets are driven by spread trades. Our spread engine helps participants place spread orders. This facility enables spread trading using day-limit orders. Today, 25 percent of all our trade comes through this spread tool.

CIO: The true barometer of an Exchange is a healthy open interest. How does IT help you achieve that?

Samir Shah, MD & CEO: Open Interest (OI) is an extremely important metric that shows the health and effectiveness of an Exchange. We have the best volume to open interest ratio in the country. We may be the second largest Exchange in the country in terms of volume but our volume to open interest ratio is much better than MCX.

This shows that people trust us. Open interest indicates that the true end user is actually participating at the Exchange. Our OI is actually higher than our volume which is a fantastic foundation to have for any Exchange and we have always focused on it. We achieve that focus by keeping the end user in mind. We have a special team of product specialists who engage with end users, explain to them the meaning of hedging and get them connected on to the platform. At the same time, we like to connect our mandi participants and farmers with our platform and technology has a very critical role to play in that.

 

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