CIO: How is technology changing the way BSE works?
Ashish Chauhan:Worldwide, exchanges want to shorten turnaround or response time (the time from when an order is placed to when it's executed). In this business, speed is of the essence. The runner-up doesn't get anything in the stock market. Going forward, speed and the cost of doing business will be important as automated trading may account for as much as 90-95 percent of volumes. With this end in view, we now have the fastest trading platform in the country. The system, called BOLT Plus, has made BSE the fastest domestic equity-trading venue by slashing trade time for its members by 98 percent, from 10 milliseconds to an astounding 200 microseconds. This is 50 times faster than we used to be. In the next three years, we want to reduce it further to 20 microseconds. Then we will be 500 times faster than we were. NSE's response time is in the range of milliseconds. A better response time could help us attract a sophisticated class of traders involved in high frequency trade. We now have a technology that is significantly superior and has never been seen in India. It's 50 times larger in terms of throughput, and costs only one-third. Transactions through algorithms require larger throughput. Today, 90 percent of transactions come from algorithms. We are well-equipped to handle this. Three to four years ago, the largest number of orders in a day was a crore. Today, we get 17-18 crore orders a day. In two years, we will get 200 crore orders a day. That kind of scalability and throughput — with speeds of less than 200 microseconds — has not been seen in India. We can handle 5 lakh orders in one second with a response time of 200 microseconds. We have also changed the network. That's a fact that many of my own customers are not aware of because it's taken place seamlessly. Not a single minute has been lost in trade. These are the tectonic shifts on BSE's technology front. This transformation is reflected in our new tag line: Experience the New. In which other areas are you making changes? There were three areas that needed transformation: The network, products, and distribution. Our network was largely Bombay-centric, the products were old-style, and the distribution network was limited. In three years, we have a significantly large number of members trading from outside Mumbai. On the product front, we were only an equities market. Today, we have a significant market share in equity derivatives. We are trying to shore up our product range. In the currencies market, which we launched three years ago, we have over 25 percent market share. In the SME exchange, we have over 95 percent market share. We are now a full-service exchange with a breadth of products including interest rate futures, debt trading, currency futures, SMEs, E-IPO, debt distribution, mutual fund distribution, and interest rate derivatives. In new product categories, we are able to grab more market share because of our technological superiority. And, in categories where there are entrenched players, we are able to conquer the market fast because of our technology. Our distribution network was weak. Today, we are present in 2,000 cities.
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