BISM Individual Project

INFORMATION TECHNOLOGY USED

IN NATIONAL STOCK EXCHANGE

National Stock Exchange (NSE) of India is one of the leading exchanges in the world on several key
parameters. Number of contracts traded relate directly to the technology and liquidity of the
exchange. NSE ranks* in top 3 globally for Stock Futures and Index Futures and Options. Technology at
the exchange remains backstage to fulfil the demand for capacity, reliability and performance
ensuring the competitive edge of NSE as India’s number one exchange platform. The following
document tries to cover all the Information systems that NSE uses.

Akhil Chaudhary PGP/05/005

Section A (IIM Amritsar)
 Table of Contents

GENESIS 2

TECHNOLOGY 4

APPLICATION SYSTEMS 6

Frontend applications 6
• NEAT – CM System 6
• NEAT – WDM System 6
• NEAT – F&O System 6
• NEAT – IPO System 7
• NEAT – MF System 7
• Surveillance System offers 7

Backend applications 8
• NCSS (Nationwide Clearing and Settlement System) 8
• FOCASS 8
• OPMS 8
• PRISM 8
• Data warehousing 9
• Listing system 9
• Membership system 9

NIBIS (NSEIL’S INTERNET BASED INFORMATION SYSTEM) 10

Introduction 10

Connection Details 10

Structural Diagram 10

VSAT (VERY SMALL APERTURE TERMINAL) 11

What are VSATs? 11

What Are VSAT Terminals Used For? 12

INNOVATIONS & RECOGNITIONS 13

Awards won by NSE 14

SOURCE 15
Genesis

Capital market reforms in India have outstripped the process of liberalisation in

most other sectors of economy. However, the creation of an independent capital

market regulator was the initiation of this reform process. After the formation of

the Securities Market regulator, the securities and exchange board of India

(SEBI), attention were drawn towards the inefficiencies of the bourses and the

need was felt for better regulation, discipline and accountability. A committee

recommended the creation of a 2nd stock exchange in Mumbai called the

“national stock exchange”. The committee suggested the formation of an

exchange which would provide investors across the country a single, screen

based trading platform, operated through a VSAT network.

NSE’s nationwide, automated trading system has helped in shifting the trading

platform from the trading hall in the premises of the exchange to the computer

terminals at the premises of the trading members located at different

geographical locations in the country and subsequently to the personal

computers in the homes of investors and even to hand held portable devices for

the mobile investors. It has been encouraging corporatization of membership in

securities market.

As a consequence, the market today uses state of the art information technology

to provide an efficient and transparent trading, clearing and settlement

mechanism. In order to take care of investors’ interest, it has also created an

investors protection fund, that would allow investors who have incurred

financial loss due to default of brokers.

NSE's trading systems is a state-of-the-art application. It has an uptime record of

99.99% and processes more than a billion messages every day with the sub-

millisecond response time.

NSE has taken huge strides in technology in these 20 years. In 1994, when

trading started, NSE technology was handling 2 orders a second. This increased

to 60 orders a second in 2001. Today NSE can handle 1,60,000 orders/messages

per second, with infinite ability to scale up at short notice on demand, NSE has

continuously worked towards ensuring that the settlement cycle comes down.

Settlements have always been handled smoothly. The settlement cycle has been

reduced from T+3 to T+2/T+1.

The backdrop above helps establish a case for studying the information systems

related to the NSE(India) and other stock exchanges from around the world. The

following aspects have been covered for the same.

1. The Information systems in business

2. Sustainability

3. operations/competitive/futuristic market advantage

Technology

Technology has been the

backbone of the exchange.

Providing the services to the

investing community and the

market participants using

technology at the cheapest

possible cost has been its

main thrust. NSE chose to

harness technology in

creating a new market

design.

It believes that technology

provides the necessary

impetus for the organisation

to retain its competitive edge

and ensure timeliness and

satisfaction in customer

service. In recognition of the

fact that technology will

continue to redefine the

shape of the securities

industry.
NSE stresses on innovation and sustained investment in technology to remain

ahead of competition. NSE is the first exchange in the world to use Satellite

communication technology for trading. It uses satcom tech to energise participation

through about 2829 VSATs from nearly 349 cities spread all over the country.

The list of towns and cities and the state-wise distribution of VSATs is as at the end

of march 2005. Its trading system, called National exchange for automated trading

(NEAT), is a state of the art client server based application. At the server end all

trading information is stored in an in-memory database to achieve minimum response

time and maximum system availability for user.

It has uptime record of 99.7%. For all trades entered into NEAT system, there is

uniform response time of less than 1.5 seconds. NSE has been continuously

undertaking capacity enhancement measures so as to effectively meet the

requirements of increased users and associated trading loads.

With recent up-gradation of trading hardware, NSE can handle up to 6 million trades

per day. NSE has also put in place NIBIS ( NSEIL’s Internet Based Information

System) for on-line real-time dissemination of trading information over the internet.

As part of its business continuity plan, NSE has established a disaster back-up site at

Chennai along with its entire infrastructure, including the satellite earth station and

the high-speed optical fibre link with its main site at Mumbai.
Application systems

The various application systems that NSE uses for its trading as well as clearing and

settlement and other operations from the backbone of the exchange. The application

systems used for the day-to-day functioning of the exchange and are as follows

Frontend applications

• NEAT – CM System Takes care of trading of securities in the capital market

segment that includes equities, debentures/notes as well as retail gilts. The

NEAT- CM application has a split architecture wherein the split is on the

securities and users. The application runs on two stratus systems with open

strata Link (OSL). The application has been benchmarked to support 15000

users and handle more than 6 million trades daily. This app also provides

data feed for processing to some other systems like Index, OPMS through

TCP/IP. This is a direct interface with trading members of the CM segment of

the Exchange for entering the orders into the main system. There is a two

way communication between the NSE main system and the front end

terminal of the trading member.

• NEAT – WDM System Takes care of trading of securities in the wholesale debt

market (WDM) segment that includes Gilts, corporate bonds, CPs, T-Bills, etc.

This is a direct interface with the trading members of the WDM segment of the

exchange for entering the orders/trades into the main system. There is a two way

communication between the NSE main system and the front end terminal of the

trading member.

• NEAT – F&O System Takes care of trading of securities in the Securities in the

futures and options (F&O) segment that includes futures on index as well as
 individual stocks and options on index as well as individual stocks. This is a direct

interface with the trading members of the F&O segment of the exchange for

entering the orders into the main system. There is a two way communication

between the NSE main system and the front end terminal of the trading member.

• NEAT – IPO System Takes care of trading of securities in Initial public offering

of companies which are issuing the stocks to raise capital from the market.

This is a direct interface with the trading members who are registered for

undertaking order entry on behalf of their clients for IPOs. NSE uses the

NEAT IPO system that allows on behalf for IPOs. NSE uses the NEAT IPO

system that allows bidding in several issues concurrently. There is a two

communication between the NSE main system and the front end terminal of

the trading member.

• NEAT – MF System Takes care of trading members for order collection of

designated mutual funds units.

• Surveillance System offers The users use a facility to comprehensively monitor

the trading activity and analyse the trade date online and offline.
Backend applications

• NCSS (Nationwide Clearing and Settlement System) is the clearing and

settlement system of the NSCCL for the trades executed in the CM segment of

the Exchange. The system has 3 important interfaces OLTL (Online Trade

loading) that takes each and every trade executed on real time basis and

allocates the same to the clearing members, Depository Interface that

connects the 10 clearing banks for settlement of funds. It also interfaces with

the clearing members for all available collateral management system it keeps

an account of all available collaterals on behalf of all trading/clearing

members and integrates the same with the position monitoring of the

trading/clearing members. The system also generates base capital adequacy

reports.

• FOCASS is the clearing settlement system of the NSCCL for the trades

executed in the F&O segment of the Exchange. IT interfaces with the clearing

members for all required reports. Though collateral management system it

keeps an account of all available collateral on behalf of all trading/clearing

members and integrates the same with the position monitoring of the

trading/clearing members. The system also generates base capital adequacy

reports.

• OPMS the online position monitoring system that keeps track of all trades

executed for a trading member vis-à-vis its capital adequacy.

• PRISM is the parallel risk management system for F&O trades using Standard

portfolio Analysis (SPAN). It is a system for comprehensive monitoring and load

balancing of an array of parallel processors that provides complete fault tolerance.

 It provides real time information on initial margin value, mark to market profit or

loss, collateral amounts, contract-wise latest prices, contract-wise open interest

and limits. The system also tracks online real time client level portfolio, base

upfront margining and monitoring.

• Data warehousing that is the central repository of all data in CM as well as F&O

segment of the exchange.

• Listing system that captures the data of companies which are listed on the

exchange and integrates the same with the trading system for necessary

broadcasts, information dissemination

• Membership system that keeps track of all required details of the trading

members of the exchange.

NIBIS (NSEIL’s Internet Based Information System)

Introduction

NSE Data & Analytics Ltd. disseminates NSEIL’s real time broadcast data to various

information agencies. The NIBIS (NSEIL’s Internet Based Information System)

server that caters the NIBIS vendors is available through internet. All NIBIS vendors

are required to connect the server through internet and use FTP protocol to download

the files. The files on this server are generated with 15 minutes delay on regular 1

minute interval basis. The vendors are provided with a User ID and password that is

enabled for the agreement period.

Connection Details

The vendors connect the NIBIS server through Internet using FTP protocol. The

production server IP address is 203.199.75.115 while the backup server IP address is

203.199.39.136. NSE Data & Analytics Ltd also provides a backup setup of delayed

data service. The backup server is always in disabled mode and it is enabled only in

case of any hardware/ other problem in production server. The files are initially

generated on backup server and then instantaneously replicated on Nibis Production

server.

Structural Diagram
VSAT (Very Small Aperture Terminal)

What are VSATs?

VSAT Terminals, also known as “private earth stations,” are used primarily for

business, but also are also used for military and government applications. That

satellite dish on a neighbour’s home or the roof a corporate building is a VSAT

Terminal.

The “very small” part of the acronym refers to the size of the antenna reflector,

typically less than 3.8 meters in diameter. A VSAT terminal is relatively simple,

consisting of two primary components: The Outdoor and Indoor units.

The Outdoor Unit (ODU) encompasses everything you see outside the building

where the terminal is located. This is the equipment that enables the terminal to

transmit and receive signals to and from the satellite. The ODU includes:

• The reflector

• The feed, which both transmits signals toward and receives signals back

from the reflector

• The Block Upconverter (BUC) which is used for transmission, and consists

of a local oscillator and a power amplifier

• The Low Noise Block Downconverter (LNB) which is used for receiving

signals.

The Outdoor Unit is connected to the indoor VSAT component with an Intra-

Facility Link (IFL) cable. A coax cable is often used for this purpose. The Indoor

Unit (IDU) consists of the satellite modem and an IP router which connects to an
Ethernet interface, and it is here that the data being received by end users, and

data and commands, are entered in to be transmitted back to the satellite.

VSAT networks typically follow a network architecture form called a VSAT “Star

Network”, which consists of multiple VSAT terminals spread throughout a

designated service area and controlled by a central hub computer. VSAT

networks can also make use of a mesh topology, a method where one terminal

will transmit information to other terminals via the satellite, minimizing the

need for an uplink site.

However, Star and Mesh topologies are not mutually exclusive, and it can be

more cost-effective to use them together via multiple uplink sites connected

through multi-star network architecture.

What Are VSAT Terminals Used For?

A VSAT terminal is used to provide satellite-based telecommunications and

internet access to companies and individuals. For businesses, the primary

advantage to setting up a VSAT network is that it allows the users to have their

own private communications infrastructure that they have complete control

over, as opposed to relying on existing infrastructure controlled by other parties.

Perhaps the most widely understood use of VSAT networks would be the service

offered by satellite TV providers like DirecTV. Customers pay to have a terminal

installed at their home and subscribe to the service to gain access to the network.

But that’s just scratching the surface of what VSAT networks can do.
VSAT terminals are used in military and naval applications to ensure

communication even in remote locations. They are also used in narrowband

financial applications like point-of-sale transactions, and broadband data like

Voice over Internet Protocol (VoIP), and satellite internet. VSAT networks can be

used to facilitate communication in emergency and disaster relief efforts, as well

as industrial applications, scientific research and more.

Anywhere reliable, stable, narrowband and broadband communication is

required, VSAT networks can be a great solution for users who either don’t have

access to existing telecom infrastructure or prefer not to use it. If satellite

communications are an integral feature of the modern world, VSAT terminals are

one of the most important technologies that make it all possible.

Innovations & Recognitions

The sustainability of the

NSE can be established
by the continuous
innovations it invests
upon which becomes its
competitive advantage.
To justify the same a
snap-shot of all the
awards and recognitions
it has earned in the last
5-6 years has been
given below
Awards won by NSE

• NSE-NSCCL gets ISO 27001:2013 Certification

• National Stock Exchange wins the FICCI CSR Award for Exemplary Innovation,
2017
• CII- Exim Bank Prize for Business Excellence.
• Global Architecture Excellence Awards 2016 - New Service Offering Initiative.
• Golden Peacock Innovative Product / Service Award
• The Asian Banker Achievement Awards 2015 - Stock Exchange of the Year.
• FOW Awards for Asia - Best New Technology Product - Market Surveillance.
• CII-Exim Bank Prize for Business Excellence.
• Futures and Options World Award for Indian Exchange of the Year.
• Global Finance - Best Derivatives Providers Award 2014 for exchange
performance.

Source
• https://www.nseindia.com/national-stock-exchange/awards-recognition
• https://www1.nseindia.com/technology/content/technology.htm
• https://www1.nseindia.com/global/content/about_us/trading_technolog
y.htm
• https://www1.nseindia.com/products/content/equities/equities/tradin
g_system.htm
• https://www.investopedia.com/terms/v/vsat.asp
• https://archives.nseindia.com/content/press/Snapshot_15_CM.pdf