The National Stock Exchange (NSE) will start offering a new category of connectivity ?tick-by-tick? to its members beginning 2010. The facility will have the capacity to handle a volume in excess of 100 million messages on a daily basis. The new enhanced version for the broadcast of market data is expected to help the growth of algorithm or programme-based trading, according to experts as it can handle and display a large volume of trade data. In a programme- based trade, complex mathematical algorithms are created to track market movements and take investment decisions instead of leaving it to fund managers. Globally, Nasdaq and NYSE are among the few stock exchanges that provide this sophisticated service.
The new facility being introduced will disclose all events resulting in changes in the order book such as order entry, modification, cancellation and trades among others that will help traders and investors take quick investment decisions. Apart from this, investors will have the facility to view the entire quantum of buy and sell orders which, experts argue, will help traders gauge the depth of the volume in each counter. The facility will enable institutions to execute trade strategies based on tick-by-tick data. The existing technology allows market participants to view only the top five buy and sell orders limiting their ability to gauge the real mood and depth in the market.
?The new technology is basically targeted to help and support algorithmic trading. There will be quicker matching of transactions and trades can be executed faster since more data will be available,?? said Deven Choksey, KR Choksey Securities adding that the institutional segment will be the biggest beneficiary of this service.