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”.
“Today the top of the line global exchanges across the world are 80-90 microseconds. So on a fastest basis we are 120 microseconds, and on an average we are able to do about 180 microseconds. So we are pretty close to them,” he told The Indian Express when asked where BSE stands globally. He said the volumes of orders of BSE was not only higher than most of the exchanges, but the cost of operations was also cheaper. BSE currently has a market capitilsation of Rs 103 lakh crore, making it the ninth largest entity of it’s kind in the world.