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Rising Stock - NSE benefits from telecom upgrade

April 15, 2010
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The National Stock Exchange of India (NSE) was set up on the recommendation of the high-powered study group on the establishment of new stock exchanges. Promoted by leading financial institutions, it was formally incorporated as a tax-paying company in November 1992.

After being recognised as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, the NSE commenced operations in the wholesale debt market segment in June 1994.The capital market segment became operational in November 1994 and the derivatives segment in June 2000. Over the years, the NSE expanded its focus areas to include internet trading, exchange traded funds, stock derivatives, etc.

The NSE's group companies comprise the National Securities Clearing Corporation, National Commodity Clearing, NSE Infotech Services, India Index Services & Products, DotEx International and NSE IT Limited.

With its areas of operations expanding, the NSE realised the importance of establishing a strong communications infrastructure to streamline operations, meet business requirements and reduce overheads.

tele.net tracks the development of its communication infrastructure...

Legacy system

The stock market major started off with a simple IT and telecom infrastructure, which primarily comprised telephones and broadband connectivity. All the computers were connected to one main computer, which was primarily used for sending and receiving e-mails. Internal and external communication was carried out via plain old telephone lines.

The shift

The NSE decided to replace its modest telecom facilities with a more robust infrastructure. It opted for multiple wide area network (WAN) technologies to ensure better connectivity. Its technologies of choice included digital loop carrier (DLC) (local loop), DLC (national long distance), international private leased circuit (IPLC), very small aperture terminal (VSAT), ISDN, point-to-point Ethernet, the internet and multi-protocol label switching. These mediums are of 2 MB bandwidth, except the internet (4 MB).The company deployed IPLCs, which offer high scalability and reliability. It used satellite communication technology to ensure participation from around 200 cities across the country.

Today, the NSE is one of the largest interactive VSAT-based stock exchanges in the world, supporting more than 2,000 VSATs and 3,000 leased lines nationwide. It has the largest private WAN in India and the first extended C-band VSAT network in the world. Currently, more than 9,000 users trade on the real-time online NSE application. It has installed over 15 computer systems, which include non-stop faulttolerant computers and high-end UNIX servers under one roof. This, coupled with the nationwide VSAT network, makes the NSE the country's largest IT user.

Recently, the NSE enhanced the capacity of its trading systems in order to meet the requirements of its growing users and the associated trading loads. Today, the entity can handle up to 15 million trades per day in the capital market segment. The telecommunications network, which was based on the X.25 protocol and was the backbone of the automated trading system, was upgraded to internet protocol (IP).This involved the parallel use of X.25 and IP, ensuring a smooth transition to IP.Trading members now trade on the NSE through a personal computer (PC) from their office premises. Members from various market segments are linked to the central computer at the NSE through dedicated leased lines and VSATs. The exchange uses RISC-based UNIX servers procured from HP for back-office processing.

The NSE has a client server-based trading application called NEAT. At the server end, all trading information is stored in an in-memory database to achieve minimum response time and maximum system availability for users. The trading server software runs on a fault-tolerant Stratus mainframe computer while the client software runs under Windows on PCs.

In an effort to improve the NSE's infrastructure, a corporate network, connecting its Mumbai, Delhi, Kolkata and Chennai offices, is being implemented.The network will enable speedy communication, as well as data and voice connectivity among offices.

The company is also leveraging the internet as a strategic tool. Apart from multiple internet links and domains for internal browsing and email purposes, the company has set up its own website, which provides live stock quotes. The site allows the members of the NSE to provide internet-trading facilities to their clients through the use of NSE on web, a shared web infrastructure.

For last mile connectivity, the NSE uses multiple mediums. These include DSL and optic fibre connectivity provided by Mahanagar Telephone Nigam Limited with Reliance Communications and Tata Teleservices as the secondary providers.

The NSE has also deployed multiple enterprise applications. Including web hosting, voice over internet protocol, video and audio conferencing, email, instant messaging, etc. It has a data centre in place, which ensures server uptime, data recovery and power back-up, and facilitates storage management, hardware and network operations, end-user support and overall operations.

Benefits and challenges

The NSE's biggest concerns have been latency, capacity constraints, security and downtime. While the new communications infrastructure has helped the organisation to improve information flow and address these concerns, it does experience some amount of downtime. Overall, however, the telecom and IT upgradation has given the NSE a competitive edge, brought about innovations in its products and services, and helped it tap new business opportunities.

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