Online and internet trading mechanism in india


Online Trading Infrastructure A successful trading architecture. Online exchanges facilitate faster transactions by providing online trading portals and brokerage houses ease and flexibility. As promised by technology visionaries and forecast groups over the last decade, the Internet has indeed opened up new avenues for conducting business.

Stock exchanges worldwide now conduct a bulk of its business online through its brokers and partners, a major shift from the traditional method. In developed countries, almost all exchange transactions are conducted online. Indian exchanges and brokering houses have been slow to move their transactions online.

This has been mainly due to Government regulations. Connectivity was perhaps the most important technological factor. The cost of leased lines and VSAT links has been traditionally very high and the reliability of the links has been low.

It also took a long time to commission online and internet trading mechanism in india links as one had to make an application and wait for a few weeks for the link to be up and running.

Other issues like security, and backup and recovery procedural costs were also deterrents. Thankfully, along with the resolution of regulatory issues, India no longer has any pressing connectivity and bandwidth issues. With, the entry of private players into the broadband scenario and the government opening up the telecom sector, these issues are almost non-existent.

Security solutions and services available in the market have matured and it doesn't cost online and internet trading mechanism in india pretty packet anymore to put a simple backup solution in place. Online and internet trading mechanism in india trading involves large volumes of data being transacted everyday.

Added to this there are stringent RBI regulations that online and internet trading mechanism in india it mandatory for companies to store at least 7 years of transactional and financial data. It claims to be able to support up to 2 million trades a day. They handle very large daily trading volumes, support large amounts of data traffic, and have a very large nationwide network. The trading volume figures in both the exchanges are huge.

The average daily turnover in the capital markets segment at NSE is around Rs crore and in the derivatives segment, around Rs crore. The average daily traffic volume is around one million trades per day in the capital markets segment and around 50, trades per day in the derivatives segment. There are around 13, registered users in both segments and an average of around users are logged in at a time.

Network design Needless to say, any online exchange needs to be always-on, secure, redundant, and have adequate backup and recovery processes. An important aspect was to provide connectivity to our trading members as soon as possible. Back inthe technology was maturing and was costly. Leased lines cost almost ten times as much as it does today. Satellite technology was a boon since it allowed quicker deployment than leased lines.

Network elements A look at the massive online and internet trading mechanism in india volumes and traffic bulk is enough proof of the critical nature of systems. It makes one shudder to think of the expected losses in case of a ten minute downtime when daily trade crosses Rs crore.

Network elements like storage, security, backup and recovery processes, availability, and the different applications online and internet trading mechanism in india be carefully planned and commissioned. Then one has to follow stringent RBI regulations to store at least 7 years of transactional and financial data. Security This should be a vital and integral part of the design architecture. The hardware and software elements should be built around a layered security architecture.

And it should be held in place with a well-documented security policy. Shenoy says "Security is the most crucial element in the network. All applications have been built with a conscious approach towards security.

The security policies are tightly integrated and regularly scrutinized to leave no room for compromise. All the applications and OSs are hardened periodically for safety.

Backup and recovery This has emerged as one of the vital aspects of business continuity. When online exchanges were designed a few years ago, perhaps a lot of emphasis was not placed on this aspect, as it is today. However it's not difficult to add business online and internet trading mechanism in india processes to an existing network. Shenoy says, "As a backup to our VSAT network, a terrestrial-based trading network was deployed online and internet trading mechanism in india the middle of We have more than leased lines connecting our nationwide locations.

We are the only stock exchange in the country to have a fully-redundant business continuity site in Chennai.

Availability Ideally online exchanges should have 'five-nines' availability. Exchanges usually prefer to host its infrastructure in-house and not use the services of an external data center. NSE claims to achieve uptime greater than Applications It's difficult to deploy out-of-the-box applications at exchanges as each has a unique architecture based on factors like operations flow, trading volumes, number of members, number of users, and number of locations.

The applications like trading, clearing, risk-management, surveillance, index computation, listing, membership, and accounts may be developed in-house or by external software developers. The 'big two' architectures NSE and BSE, the 'big two' exchanges believe in updating and upgrading its technology systems to keep delivering according to commitments and promises made to its members, partners, and customers.

NEAT stores all trading information in an in-memory database at the server end to achieve minimum response time and maximum system availability for users. The telecommunications network uses the X. Each trading member trades on the NSE with other members through a PC located in the trading member's office.

These leased lines are multiplexed using dedicated 2 MB optical-fiber links. The WDM participants connect to the trading system through dial-up links. The systems claim to handle up to two million trades a day. BOLT has a two-tier architecture. The trader workstations are connected directly to the backend server which acts as a communication server and a Central Trading Engine CTE.

Other services like information dissemination, index computation, and position monitoring are also provided by the system. A transaction monitoring facility in the Tandem architecture helps keep data integrity through non-stop SQL.

Access to market related information through the trader workstations is essential for the market participants to act on real-time basis and take instantaneous decisions. Market information is fed to news agencies in real time. The exchange plans to enhance the capabilities further to have an integrated two-way information flow. Online trading portals Online trading is the investment activity that takes place over the Internet without the physical inclusion of the broker. An end user investor has to register with an online trading portal like ICICdirect.

The investor thus gets into an agreement with the firm to trade in different securities according to the terms and conditions listed down on the agreement. Since the servers of the online trading portal are connected all the time to the stock online and internet trading mechanism in india and designated banks, order processing is done in real time. Investors can also get updates on the trading and check the status of their orders either through e-mail or through the interface.

Portal design Harish Malhotra, Chief Technology Officer, Motilal Oswal Securities Limited, says "the portal should be simple to navigate, full of useful and relevant information which is available with the lowest number of clicks, and should be personalized. Users are usually given options to link their bank accounts, Demat accounts, and brokerage accounts into a single interface. There is also a single window for all exchanges and a single screen for the complete order routing mechanism.

The hardware used comprises Web and application servers, switches, routers, firewalls and security devices, and specialized appliances. The systems have been customized by its in-house team. The trading applications are outsourced.

Portal success The success of a trade portal will definitely depend on its bouquet of services for an end-user. Most portals charge a small registration fee and brokerage based on various conditions. However it's important for the organization to keep focussed on customer-centric services and delivery models to actually enjoy the most attention. Soutiman Das Gupta can be reached at soutimand networkmagazineindia.

Indian Express Group Mumbai, India. All rights reserved throughout the online and internet trading mechanism in india. Site managed by BPD. Issue of November Anatomy of an online exchange. Design Needs to be always-on, secure, redundant, and have adequate backup and recovery processes. Security Security is a vital and integral part of the design architecture. The hardware and software elements should be built around a layered security architecture and should be held in place with a well-documented security policy.

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