National Stock Exchange of India Ltd. (NSE) is exploring the possibility of enabling investors to trade through handheld portable devices, said its Chairman L. Vijay Kelkar recently.

Delivering the second R. Venkataraman Endowment Lecture ‘on the economics of stock exchange' organised by the Madras School of Economics (MSE), he said since inception the NSE harnessed technology in all the areas such as trading, clearing, settlement, risk management services, surveillance and listing activities. In the last few years, mobile phone had turned popular and was being used by everyone to communicate. The gadget could be harnessed for trading as well.

Later talking to reporters, he said: “As of now, small numbers of investors are using handheld devices to trade. But, we want everyone to use it. However, we cannot give a definite date as we have to sort out the issue of payment mechanism as no one would like to wait for a longer time to get the payment. The roll out of Unique Identification Authority of India project can be used as a mechanism to identify the investors.”

Dwelling on the impact of technology on the speed of trade execution, he said it was now possible to enter an order and get confirmation for it in about 65 milliseconds. Two technologies have contributed to the speed — algorithmic trading and co-location.

“It is electronic trading which has facilitated the introduction of algorithmic trading, where computers replace humans in deciding on and executing trades. Co-location involves the placement of servers within the exchange premises. The number of trades executed per day at Indian exchanges has risen from about 10,000 in 1995 to about seven million now,” he said. Mr. Kelkar said that the NSE placed paramount importance on surveillance and investigation function and never compromised on it for any reason.

He called for addressing the conflict of interest arising from the exchange's dual role on priority basis, pertaining to commercial and regulatory roles and suggested several measures.

The exchange transaction charge in India is not only low, but also declining.


Law & OrderSeptember 24, 2010

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