Earlier, gold and silver contracts were physical delivery-based contracts. The government is now discouraging investment in gold in the physical form because it creates current account deficits and leads to higher amount of imports. So we needed to convert the physical holding to a financial form. Keeping that need in mind, we launched a financial version of gold and silver contracts. The contract is a month-and-a-half old now but it brings in almost Rs 200 crore a day. This shows that there was an appetite for this kind of a contract. Therefore, designing products that are customized to suit different segments of the market was one of my focus areas.
CIO: What other innovations did you introduce?
Samir Shah: 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. It's 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 people's 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 weren't 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: 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.
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