Tag: BSE

(Disclosure:I am market making in the shares of BSE)

Emphasising that “speed and execution” were the essence of stock exchange business, Ashishkumar Chauhan, managing director and CEO of Bombay Stock Exchange (BSE) on Friday said BSE under him has become 10 times faster than it’s rival the National Stock Exchange. In the next three years, BSE plans to become 10,000 times faster.

“Speed is the essence of stock exchange business… During the last 20 years, BSE was slower than the NSE… Five years back when I joined the BSE, we were 30 times slower than the NSE. BSE used to give a response time of 300 milliseconds, while NSE had a response time of 10 milliseconds. So we were slower in giving information and execution. If your response and execution time is slower who will come to you. So between 1994 and 2014, people slowly moved over to the NSE, because if you stayed at BSE you will not make profits. The other guy who is getting faster information and execution will corner the profits,” said Chauhan while retracing the history of BSE while speaking on the topic of “Indian Capital Market Evolution & Path Forward,” he said while delivering a lecture at Nirma University in Ahmedabad

Addressing an audience largely consisting of students from the University, the CEO of BSE said that in the last few years, the Bombay-based exchange has overcome a number of hurdles including absence of a pan-India distribution network and dealing with a manpower that was not “IT-savvy”. “We worked hard for three years to upgrade from 300 milliseconds to 10 milliseconds. By that time, NSE went from 10 milliseconds to two milliseconds, so again we were slower by five times (compared to NSE),” he said.

“We then changed our technology which was not easy…. and today BSE is 10 times faster than NSE, i.e from 2014 onwards. So, 10 milliseconds we went to 200 micro-seconds, while NSE remained at two milliseconds. So we are now faster in getting and giving information. In next three years, we will give you a response time of one-tenth of what it is today. So from 200 micro-seconds, we will go to 20 micro-seconds and that will make us 10,000 times faster than our current speed,” Chauhan said about BSE that had entered into a strategic technology alliance with Eurex in March 2013 and deployed a new generation trading system.

“Earlier, our capacity was 5000 orders in a second. Today it is 5 lakh orders in a second and a response time of 200 micro seconds. Just to give you a scale, if IRCTC does 5 lakh railway bookings in a day, it is considered to be a great day for them. At present there is no such system in the country today (like the one we have),” he said adding that BSE’s technology was “scalable” and can easily move up to 50 lakh orders in a week’s notice by “adding a few Intel boxes”.-from FE

 

Disclosure:I am market making in the shares of BSE

The Bombay Stock Exchange plans to start its own commodity exchange by next fiscal year, BSE’s Chief Executive Officer and Managing Director Ashishkumar Chauhan has said.

He said that the Securities and Exchange Board of India (SEBI) has already permitted BSE’s foray into commodity trading through its own exchange. Since commodity trading in India is regulated by the Forward Markets Commission (FMC), BSE is now awaiting the Commission’s nod.

“BSE plans to set up a commodity exchange for which SEBI has already given us its permission. Now, we are awaiting FMC’s clearance as we have already applied for the licence. We are hopeful about starting the exchange by the next fiscal after getting FMC clearance,” Chauhan said during his interaction with reporters here recently.

Commenting on BSE’s future road map, Chauhan hinted at transforming the exchange into a more “society friendly” institution rather than merely focussing on making money through commissions.

He said that BSE could become irrelevant if it failed to focus on what society needed, that is, capital formation and new investment, rather than mere trading.

“Exchanges focus on trading, since they get 70 per cent to 80 per cent of their income from commissions. However, society is not interested merely in trading. Exchanges may become irrelevant if they don’t focus on what society and country needs, which is capital formation, new initial public offers (IPOs) etc,” Chauhan said. –from BS

(Disclosure:I am market making in the shares of Bombay Stock Exchange)

Will BSE Ltd’s plan to enter the commodity segment bear much fruit?

Taking up such challenges isn’t new to the exchange. About three years ago, when BSE started competing in the equity derivatives space, it had started from scratch. Its traded volumes in this segment are far more healthy now, although this is aided by market making incentives to trading members.

Similarly, it has managed decent volumes in the currency derivatives segment, despite a rather late launch. Again, it helped that it didn’t charge for transactions for quite a few months since its launch. While transaction charges are expected to commence from next month, they will be at a fraction of what its competitors charge. In sum, BSE has done well in garnering volumes in two market segments by lowering costs for traders. Of course, it remains to be seen if volumes will be sustainable once it starts charging fees at cost-plus rates.