National Stock Exchange

National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted by leading Financial Institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure, market practices and trading volumes. NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has written for itself the mandate to create World-class Stock Exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE is set up on a demutualised model wherein the ownership, management and trading rights are in the hands of three different sets of people. This has completely eliminated any conflict of interest.NSE was set up with the objectives of:Establishing nationwide trading facility for all types of securities Ensuring equal access to investors all over the country through an appropriate telecommunication network Providing fair, efficient & transparent securities market using electronic trading system Enabling shorter settlement cycles and book entry settlements Meeting International benchmarks and standards Within a very short span of time, NSE has been able to achieve its objectives for which it was set up. Indian Capital Markets are a far cry from what they were 12 years back in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service. To ensure continuity of business, NSE has built a full fledged BCP site operational for last 7 years. NSE's marketsNSE provides a fully automated screen-based trading system with national reach in the following major market segments:-Equity OR Capital Markets {NSE's market share is over 65%} Futures & Options OR Derivatives Market {NSE's market share over 99.5%} Wholesale Debt Market (WDM) Mutual Funds (MF) Initial Public Offerings (IPO) What are the IT initiatives of NSE in the last one year?NSE believes that technology shall continue to provide necessary impetus for any organisation to retain its competitive edge, ensure timeliness & satisfaction in customer service. Being fully dependant on Information Technology, NSE has stressed on innovation and sustained investment in technology on a continual basis to ensure customer satisfaction, improvement in services which automatically helps in sustaining business and remain ahead of competition. As a policy, NSE looks to improve the quality of Services to its customers. Projects are not initiated based on a business model to reap profits but from a strategic perspective of better productivity, Value-adds & features, improving efficiency, reducing operational costs, compliance, operational transparency etc for the customers, investors and to the entire Indian Securities Industry. Some of the projects taken by NSE last year are as follows:-Trading System Capacity enhancement Re-engineering of Online Position Monitoring (OPMS) Augmentation of Data Warehouse (DWH) STP Central HubWhat was the objective, business benefits that the company derived and beneficiaries of the implementation of Trading System Capacity enhancement?Project ObjectiveNSE's Capital Market Trading system was operational on two machine split architecture using Fault Tolerant mainframes and geared to handle 3 million trades. However, the CM segment had started to experience trades nearing 3 Million trades which form a threshold. Based on the trends & expected volumes, growth in the medium term is more than thrice the current trading volume, i.e. about 10 Million transactions per day. However with the then existing 2-machine split architecture, it was required to improve the trading system transaction handling capacity. The 3-machine split architecture project was thus taken up to enhance the load handling capacity of the system by introducing a 3-way split Hardware, Application optimisation and improving the processes for achieving market volume of around 6 million transactions per day.Project was completed as per schedule & is currently operational since last 1 year.Business BenefitsSystem scaled on 3 machines with distribution of users and securities with complete transparency to market participants. System witnessed 3 million trades with faster response time to members at significantly lower system resource utilisation level. Scalability to handle higher volumes (3 million to 6 million transactions per day).BeneficiariesTrading Members have experienced a faster response time. The trading system is able to handle higher volume of transactions which translates into higher turnover. It therefore directly translates into more opportunities and growth for the Entire Indian Securities market.What was the objective, business benefits that the company derived and beneficiaries of the implementation of re-engineering of Online Position Monitoring (OPMS)?Project ObjectiveOPMS is On-line Position Monitoring and Risk Management system for the Capital Market segment of the National Stock Exchange of India Limited. It tracks positions of trading members from Turnover and Exposure limits with a view of identifying and preventing potential settlement related issues. The positions are monitored on an on-line basis and the system provides for auto disablement of the violating member on the trading system. Based on the volumes, it is expected that the current trading levels of about 3 million trades per day may rise to the new heights of 10 million trades per day in the near future. It was therefore necessary to initiate was to reengineer OPMS system without imposing any major cost associated with architectural overhauling. Another key objective was to scale the violation detection mechanism by a mammoth factor from around 300 violation checks per second to handle more than 4000 violations per second.Other major objectives and the goals include:Real-time position computation and violation detection Ability to handle high load of over one million client positions Management of information for positions & risk values about each trading member Information structure based on a tree of security, settlement, trading member Handle on-line collateral and securities early pay-in Total fault tolerance with minimum downtime Achieve 4000 violation checks per second Business BenefitsEffective and efficient Risk Management- Violation turnover reduced from few seconds to few milliseconds & 99.96% trades processed for Risk Management within a second of occurrence. Better utilisation of Resources- Peak capacity of trades handling capacity enhanced to 10 million trades & Average CPU utilisation reduced from 70% to 20%. Linearly scalableBeneficiariesTrading Members risk management has significantly improved. Trading members have benefited due to this initiative.What was the objective, business benefits that the company derived and beneficiaries of the implementation Augmentation of Data Warehouse (DWH)?Project ObjectiveNSE has a matured data warehouse application extensively used for analysis, reporting and investigative purposes. The project was to enhance and upgrade existing data warehouse infrastructure in terms of:-Migrating to a higher capacity server and storage hardware Migrating database from Oracle 8 to Oracle 9i Upgrade existing ETL solution consisting of a separate extraction solution and transformation cum loading solution into a complete and unified ETL toolBusiness BenefitsResponse time & query performance improved dramatically by about 100%. Extraction and loading time has reduced by almost 8-9 times. Timely, efficient reporting. Reduced lead time in providing data to Regulator. New features of Oracle 9i like Ranking, enhanced analytic functions have contributed enormously to efficiency aspect of the data warehouse usage.BeneficiariesBenefit accrued to NSE as an organisation due to the extensive usage of DWH. What was the objective, business benefits that the company derived and beneficiaries of the implementation STP Central Hub?Project ObjectiveDuring a typical day at an institutional fund house, details of trade confirmations executed in the day are sent out to the Custodian for effecting trade settlements. The Custodian also receives details of the executed trade from the broker of the fund house, for cross-verification of the trade data. Upon verification, if it is found that the trade details do not match the instruction documents sent across by the fund house and the broker there is a delay in effecting such settlements. This is a global phenomenon that is a concern for all the major financial institutions. Studies have shown that around 15% of global trade failures result from unmatched trade data, which in monetary terms is upwards of Billions of Dollars, a steep price pay for the lack of an efficient processing framework. Straight Through Processing (STP) framework seeks to provide seamless data flow both within the enterprise as well as across the market without any manual intervention using ISO 15022 messaging standards.In India, inspite of SEBI making STP mandatory, market participants were not able to fully adapt the STP framework into their operations as the STP services provided by various providers were not interoperable. This meant that messages destined for market participants registered across the service providers could not be achieved. One of the options was to ensure that each of the STP provider "talked" to other STP providers, but this meant a mathematical explosion in terms of number of interconnects in case of increasing number of service providers.Recognising that the success of the STP is crucial to make a move towards T+1 settlement cycle, NSE took up the challenge of setting up a Central Hub to resolve inter-operability amongst various STP Service Providers. After developing the application software, the STP Central Hub was put for operational testing from end of March 2004 to route the messages between Service Providers. STP Central Hub has ensured seamless operations of message processing. After the initial testing and stabilization period, SEBI has mandated use of STP system for all institutional trades. SEBI endeavoured to shorten the settlement cycle and has been successful in reducing the same from T+5 to T+2. It has now set a target for achieving T+1 settlement in Indian Securities Market. T+1 settlement cycle has not been achieved anywhere in the world and India is the first country to successfully implement STP effectively for all the market intermediaries. NSE through its strength in technology innovations has made it possible for the integration of all STP service providers using heterogeneous protocols within their own system so as to provide the necessary impetus to the processBusiness BenefitsImproved efficiency, reduction of manual activities leading to higher accuracy of trade execution and settlement. Reduced operational risk by automating the process from execution through to settlement. Reduction in operational cost by sending data electronically. Transparency & improved customer service with detailed reports about delivery and failure of messages are available instantaneously, on an on-line basis. Reduced settlement cycle to facilitate T+1 settlement. BeneficiariesEntire Indian Securities Industry has been the beneficiary of the STP Central Hub initiative. It is the only STP Central Hub operational since the last few years. This move has helped for faster clearing and settlement in Indian Securities Industry and help achieve 'T+1' environment in India. India's profile in International markets was enhanced which will help in attracting further foreign investments.