Babus vs Bytes: The Brotherhood That Controls India’s Trillion-Dollar Markets
The Appointment That Revealed the SystemWhen the National Stock Exchange announced the appointment of Sanjay Shorey as Executive Director overseeing regulation, compliance, risk management and investor grievances earlier this month, the press release used the word "governance" seven times. What it didn't use, not even once, was the word "markets." That omission is instructive.
When India’s markets are going quantum, the country's most powerful exchange is still obsessed with filing just the Annual Compliance Reports (ACRs).
Financial markets are no longer governed by human instinct and balance-sheet arithmetic alone. They are now shaped by algorithmic execution engines, high-frequency trading systems, expiry-day options structures and machine-driven strategies operating at speeds that most policymakers cannot physically comprehend. In this environment, surveillance is no longer a purely regulatory function. It is a technical discipline. Oversight requires not only administrative authority but deep familiarity with how modern markets behave when capital, leverage, technology and incentives collide in milliseconds.
Yet India’s financial institutions continue to exhibit an unmistakable pattern: the system repeatedly turns not to market practitioners and their talent but to the administrative establishment -- Bureaucrats and Babus who are still looking for plum postings after retirement.
Comfort Over Competence: The Real Threat to Retail India’s Money
Shorey’s appointment is significant not because he lacks credentials. By the standards of the Indian state, his résumé is formidable. He has served across the Ministry of Corporate Affairs in senior legal and administrative capacities, worked through multiple ministries and spent decades inside the architecture of government. But that is precisely the point. India’s most consequential financial institutions increasingly appear to be governed as extensions of the administrative state rather than as highly specialised market ecosystems requiring specialised market expertise.
The reported compensation attached to the role — around ₹5 crore annually — merely intensifies the symbolism. The country’s most sophisticated market infrastructure institutions have become extraordinarily comfortable destinations for retired or transitioning members of the regulatory and bureaucratic ecosystem. The appointments are formally approved, procedurally valid and institutionally defended. But over time, the pattern itself begins to raise larger questions.
Those questions did not begin with Shorey. They have been building quietly for more than two decades.
Long before the co-location scandal exploded into public view, long before the Anand Subramanian episode turned NSE into a case study in governance dysfunction, India’s exchanges had already begun evolving into a peculiar ecosystem where former regulators, bureaucrats, policymakers and administrators circulated through the same institutional corridors with remarkable continuity.
In 2013, seven months after retiring as deputy governor of the Reserve Bank of India, Shyamala Gopinath joined the board of NSE. Technically, nothing prohibited the appointment. There was no rule preventing it, no explicit conflict under the framework then governing financial regulators. But the appointment triggered a serious debate inside financial circles because Gopinath had not merely been a senior central banker. As RBI deputy governor, she had also served as the central bank’s nominee on the SEBI board — effectively part of the regulatory structure overseeing exchanges themselves.
At the time, defenders of the appointment argued that RBI was not the direct regulator of stock exchanges and that expertise should not be artificially excluded from institutions after retirement. Critics asked a more uncomfortable question: if regulators know lucrative exchange board positions await them almost immediately after public office, does the institutional distance necessary for hard oversight begin to weaken long before retirement actually arrives?
That debate was never resolved. Instead, the system absorbed it and moved on.
Over time, the pattern deepened.
Former finance secretaries, former SEBI officials, former RBI executives and retired bureaucrats steadily populated the boards of exchanges, depositories and market infrastructure institutions. Some arrived after cooling-off periods. Others arrived almost immediately. The appointments were always individually defensible. Collectively, however, they began constructing something larger — an elite regulatory ecosystem whose members moved between oversight and institution-building with increasingly blurred boundaries.
The issue was never legality. The issue was concentration.
And nowhere did the consequences of that concentration become more visible than at NSE itself.
The Anand Subramanian Scandal Wasn’t an Outlier — It Was the Culture
The Anand Subramanian affair is often remembered for its surreal elements — the “Himalayan yogi,” the emails, the bizarre internal power structures. But the real institutional lesson lay elsewhere. The scandal exposed how deeply insulated India’s most powerful exchange had become from meaningful scrutiny. Extraordinary appointments were normalised. Compensation structures escaped challenge. Governance procedures weakened gradually behind the shield of institutional prestige.
The problem was not simply one individual or one management team. It was the culture surrounding the institution — a culture in which proximity to power, administrative familiarity and internal networks often appeared more influential than transparent processes or specialised competence.
That broader ecosystem surfaced repeatedly in other episodes as well.
Questions around NSE’s shareholder structures, Mauritius-linked investment vehicles and later the handling of IPO advisory arrangements revealed a recurring institutional tendency: major decisions emerged from opaque internal processes, public scrutiny arrived later and recalibration often occurred quietly rather than transparently. The system rarely collapsed dramatically. It adjusted discreetly under pressure while preserving the underlying architecture.
The episode surrounding NSE’s engagement of Rothschild & Co during its IPO process offered another glimpse into how sensitive these institutional decisions had become to public scrutiny. Questions raised at the time about the opacity and rationale surrounding the advisory structure were never fully answered publicly, yet Rothschild’s role appeared to undergo a quiet recalibration thereafter — reinforcing the impression that sensitive institutional decisions were often revised discreetly rather than transparently defended.
What makes the present moment significant is that the architecture itself now appears to be returning with renewed confidence.
ALSO READ:
Who Gave Rothschild The Front Seat At NSE?
The System That Regulates Itself
Today, NSE’s board once again reflects the overwhelming influence of the administrative establishment. Its chairperson, Srinivas Injeti, is a seasoned bureaucrat with decades of government experience across multiple sectors, including finance, pharmaceuticals and sports administration. His predecessor, Girish Chandra Chaturvedi, emerged from the same broad ecosystem. Around them sits a governance structure that increasingly resembles the older institutional culture NSE was once forced to defend after successive controversies exposed its vulnerabilities.
The resemblance may be unintentional. But it is difficult to ignore.
What is unfolding is not merely a story about individuals. It is a story about institutional reflexes.
India’s financial governance architecture appears deeply conditioned to trust administrative continuity over domain specialisation. The system repeatedly returns to people it understands culturally and bureaucratically rather than to practitioners shaped inside markets themselves.
That instinct may once have been manageable. It is becoming harder to justify now.
Because modern markets punish institutional ignorance with extraordinary speed.
The Jane Street episode offered a glimpse into the complexity regulators are now confronting. According to SEBI’s findings, sophisticated trading structures allegedly manipulated expiry dynamics inside Bank Nifty-linked instruments while generating enormous profits through offsetting derivatives positions. Whether one agrees with every aspect of the order or not, the case underscored a reality India can no longer avoid: market manipulation today is not conducted through crude operator rings alone. It occurs through highly sophisticated strategies built on liquidity behaviour, volatility positioning, order-flow dynamics and microstructural asymmetries.
And it is not accidental that one of the most technically sophisticated enforcement actions in recent memory emerged under Ananth Narayan — one of the few senior regulators in recent years with deep frontline market experience across global banking and capital markets.
Narayan understood derivatives not as abstractions inside policy files but as functioning systems. Markets this complex cannot be supervised entirely by officials learning them from the outside. He understood how traders construct positions, how arbitrage desks think, how options books behave during expiry and how manipulation can hide inside apparently legitimate flows.
His departure, and the continuing preference for administrative appointments across the regulatory ecosystem, raises an uncomfortable question that India’s markets can no longer indefinitely postpone: are the institutions supervising modern financial markets being governed by people trained to understand those markets at their deepest operational level?
That question becomes even sharper when one looks at the composition of the wider regulatory ecosystem.
From North Block to NSE Board: The Same Faces, Different Chairs
Across SEBI, exchanges and market infrastructure institutions, the same networks recur with remarkable persistence. Retired officials move onto boards. Former regulators reappear inside institutions they once supervised. Government veterans dominate governance structures while market practitioners often remain advisers rather than decision-makers. The system increasingly validates itself internally.
Many of the individuals who came to shape India’s modern financial regulatory architecture over the past two decades emerged from overlapping administrative and policy circles within North Block and the financial regulatory establishment. The ecosystem that evolved around influential bureaucrats such as K P Krishnan produced not merely policy frameworks but an enduring institutional culture — one where the same administrative networks continued to reappear across SEBI, exchanges, regulatory committees and financial infrastructure boards long after specific governments and crises had passed. The continuity is striking not because it proves coordination, but because it reveals how concentrated the governance architecture of India’s markets gradually became.
Seen through that lens, the recurrence of familiar administrative figures across successive phases of NSE’s governance begins to look less incidental and more structural.
This is not necessarily a conspiracy. In some ways, it is more powerful than conspiracy because it does not require coordination. It functions through familiarity, comfort and institutional habit.
That is what makes it durable.
K P Krishnan became emblematic in many market conversations of a broader administrative influence network that extended across the Finance Ministry, SEBI and key financial institutions during critical phases of India’s market evolution. Whether in policy architecture, board influence or regulatory positioning, a small administrative fraternity came to exercise disproportionate influence over institutions that were originally designed to operate with independent and professionally diversified governance structures.
The irony is difficult to miss.
NSE itself was originally conceived as a break from the old broker-dominated exchange culture of Bombay. It was supposed to represent technocratic transparency, institutional modernity and governance reform. Instead, over time, it evolved into something else entirely: a market institution where the influence of administrative elites became so deeply embedded that the line between regulator, overseer and institution often appeared blurred.
And that is the deeper story behind the Shorey appointment.
Not the salary alone. Not the individual alone. But what the appointment represents institutionally.
India’s financial markets are now among the largest and fastest-growing in the world. Millions of first-time retail investors are entering increasingly complex derivatives markets against some of the most sophisticated trading firms on the planet. Artificial intelligence, quantitative execution and machine-speed liquidity are transforming the character of trading itself.
Yet the governance architecture overseeing this transformation still appears heavily anchored in a bureaucratic culture that values administrative seniority over specialised market understanding.
A market this technologically complex cannot indefinitely be supervised through institutional familiarity alone.
Eventually, the competence gap begins to matter.
And when that happens, the danger is not merely regulatory embarrassment. The danger is that institutions designed to protect market integrity become too socially and structurally intertwined with themselves to recognise their own blind spots in time.
India’s markets today are among the most technologically sophisticated trading ecosystems in the world. But the institutions governing them increasingly appear shaped by an older administrative instinct — one that still mistakes bureaucratic continuity for technical competence. That gap may remain invisible in normal times. It becomes dangerous during crises, manipulation events and systemic stress, when regulators are forced to confront markets evolving faster than the institutions meant to police them.
NSE was created to modernise Indian finance and break the old club-driven architecture of BSE. The uncomfortable question now is whether a different kind of club simply replaced it.
ALSO READ:
THE MAURITIUS FILES: SHADOWS THAT HIJACKED INDIA'S ₹5 LAKH CR. EMPIRE
Pages:
[1]