CIO: BSE's legacy is something to be proud of, but it can also cause inertia.
Ashish Chauhan:We try to reconcile the past with the present and then move forward. There are huge benefits of having a legacy but there are also pestering issues that come with it. Being a 139-year-old institution, BSE was a low tech, floor-based bourse. It set up BOLT, its national trading platform, only in 1997. In contrast, NSE, which was established in the mid-90's was armed with superior, screen-based technology. NSE became the first exchange in the world with fully, electronic screen-based training. It generated good traction with investors because it created a transparent trading platform. In less than a decade, NSE entered the ranks of largest exchanges globally in terms of volumes. Its technological prowess challenged the might of BSE and weaned away trade. NSE got this advantage because it was a new institution, a blank canvas, and because it was open to experimentation and risk taking. It could afford to adopt new systems without disrupting routine trades.
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.
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