NSE IT is the technology arm of the National Stock Exchange or NSE as it is widely recognised. The NSE is the third largest exchange globally in terms of volume handled. There are about fourteen hundred members trading daily on the NSE’s technology platform. Given the complexity of operations that the exchange has to deal with, its IT infrastructure has to be steady and reliable to keep operations running smoothly as desired. Biztech2.0 caught up with M R Krishnan, VP – NSE IT, who overlooks the entire IT infrastructure of the exchange to get an insight of the role that IT plays in stock trading.

Can you describe the IT infrastructure being used by NSE?

We have a fault-tolerant infrastructure. The trading server software runs on Stratus mainframe computer, which is composed of three CPUs. Each message or calculation is processed on all the three CPUs and the results in at least two of the CPUs have to be identical for the transaction to go through. The machine has built-in intelligence to compare the results. It uses the 3GHz Intel Xion processor with VOS from Stratus as a proprietary operating system. All the systems that we use are fault-tolerant ones; and in case of a breakdown here, if this site goes down, the Chennai system takes over.

The applications run on about three hundred servers. We have lease line connectivity. The network protocol is on X.25 and by October we should have complete IP connectivity. A couple of members are already on IP.

What are the on-going IT initiatives at NSE?

There are some new projects under implementation, for example, we are migrating the telecommunications protocol from X.25 to IP, the reason being X.25 is old and obsolete now. We are already facing difficulties in sourcing routers and other equipment that works with X.25, as a result the whole thing is becoming expensive for us to carry forward. Secondly, given the fact NSE is the third largest exchange globally in terms of business volume, X.25 does not offer the desired speed. The IP migration will speed up our capabilities several times. We are working with HCL Comnet on the migration project.

To further enhance our capabilities, we are also going to introduce algorithmic trading, which will see a hundred-fold increase in the number of messages. Algorithmic trading is machine-based trading that uses algorithms with built-in intelligence to guide equity buying and selling decisions. For example, if a trader wants to sell hundred shares at a given time on the basis of his intelligence, the machine may use its own intelligence and break up the lot to be sold into instalments based on the market volatility. Once the algorithmic trading is operationalised, the volumes will take a leap. IP will then enable the desired performance levels for us.

What are the capacity enhancements being undertaken?

Capacity enhancement can be done in two ways. One is buying quality hardware and the other is through software upgradation. There is an all-round effort that goes on at every stage to make sure that we are able to build capacity in an effective manner. In terms of messages, we want to reach the 'one lakh messages per second' target that is currently hovering around 1200 messages a second. We should be able to reach the desired level within the next one year and that is how the NSE will metamorphose into next-generation trading.

We are also working on providing DMA (Direct Market Access) to the trader, wherein he can directly trade on the NSE platform rather than trade via a member. Currently, the trader uses the member as a medium; however, the moment a trader starts trading via the DMA, the member will only act as a conduit while the trader will directly interact with the trading platform, which will also require new trading processes to be introduced to enable quick transactions.

We keep upgrading our hardware too – our servers are changed every four years. We also use the latest technologies like NAS (Network Attached Storage).

NSE IT is in the process of building POP (Point of Presence) and is planning for enhancements at the DR site. What is the progress on this front?

On the line of IP migration, we are building POP (Point of Presence) in various major cities. To put it in simple terms, POP will help us to virtually bring the exchange to the respective city. So for example, if a member is trading from Ahmedabad, instead of connecting to the NSE, he will connect to the Ahmedabad POP. It is a kind of decentralised access to the exchange. We are building one in Ahmedabad, two in Delhi, three in Mumbai and two in Kolkata. There are nine POPs scheduled for the first roll-over stage.

We are also planning to make enhancements at our DR site in Chennai to make sure that at any given time, the DR site is exactly identical to the exchange and the data is in sync at all points of time.

Is there any unique initiative that NSE IT has implemented, which none of the other exchanges world over have ventured into?

The VSAT-enabled trading offered by NSE remains unique as far as global exchanges are concerned. Even today, India being a country with a wide geographical spread, members residing at distant places can trade through VSAT. As a part of the latest IP migration project, the VSATs will also be upgraded using IP technology.

As NSE IT handles huge computational resources, is grid computing an option?

Our trading platform is similar to a small grid. The Stratus platform runs on three machines. The names of the security firms are divided into three machines and are accordingly handled by the respective machine; however, all the three machines are inter-connected. Similarly, members are also divided machine wise; however, they can buy or sell to members who are not on the same machine as well. We are also planning a fourth machine in the wake of a constant increase in transaction volumes.