Zerodha CEO Nithin Kamath says a third viable stock exchange likely in next 5-10 years. Here's why

The Indian stock market has long been dominated by two major players—the National Stock Exchange (NSE) and the BSE. However, Nithin Kamath, the co-founder and chief executive officer (CEO) of discount broking platform Zerodha, believes there might be space for a third, viable stock exchange in the country.

In a recent conversation with CNBC TV-18, Kamath shared his views on the potential for another significant exchange to tap the underserved segments.

Filling the gap

While both NSE and BSE witness strong trading volumes in the equity segment, there are other areas like debt and mutual funds that they are not entirely focused on.

Kamath believes that while NSE and BSE lead the market, there are certain segments — particularly debt instruments and mutual funds —that remain under-served. “Both existing exchanges aren’t really focused on these areas, maybe because it’s not very lucrative,” he explained.

This gap, he believes, presents an opportunity for a new exchange willing to take on the challenge of building liquidity in these segments.

"Hopefully, in the next 5–10 years, we’ll have a third viable exchange," Kamath said. His comments came during a conversation about the Metropolitan Stock Exchange (MSE), wherein Zerodha's Rainmatter Investments has a stake. While there are other exchanges apart from BSE and NSE, they don't enjoy such high trading volumes.

While Kamath is confident about a third viable exchange, he said the outcome will depend on a lot of factors and how the other exchanges react. But India definitely has the opportunity to support three exchanges, he opined.

Zeordha IPO plans

When asked about Zerodha's IPO plans, Nithin Kamath denied any possibility of going public.

"The core problem remains, we already have enough cash to do whatever we want. I feel that being listed is tough for a company like ours. What’s right for investors is not always what’s right for customers," he added.

This dilemma, Kamath said, is why they are keeping private.

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