The co-location facility at the Bombay Stock Exchange (BSE) has started attracting brokers in the past three weeks due to active marketing by Asia’s oldest stock exchange and its partners. The facility went live on November 15.
A co-location facility is a data centre with racks for computer servers. It allows brokers to host servers near the exchange’s trading platform, facilitating faster execution of trades due to low latency in data transmission.
BSE had tied up with Netmagic Solutions and Thomson Reuters for a co-location facility of 80 racks. Netmagic is managing this facility, while Thomson Reuters is providing feed of over 50 global stock exchanges.
“We have hosted six-seven brokers and 12-13 racks have been taken so far. We expect to book the entire facility by June,” said Sunil Gupta, president and chief operating officer, Netmagic. He declined to give the brokers’ names, citing client confidentiality. Though the facility went live in mid-November, the marketing push started only in recent weeks.
“BSE is conducting smart order routing sessions in various cities. We are using the platform to contact brokers,” said Sujit Janardanan, general manager, marketing, Netmagic. “BSE has also written to its members to make them aware about the facility.”
Smart order routing allows brokers’ trading engines to choose among various exchanges, based on factors such as price, cost, speed, likelihood of execution, etc. BSE has conducted these sessions in Mumbai and New Delhi and did one in Chennai on Monday. It plans a similar session in Kolkata soon.
For a full rack at BSE’s co-location facility, having 6 KvA of average power, Netmagic charges Rs 18-20 lakh yearly. Apart from that, if a broker wants hardware and management services from Netmagic, it has to pay Rs 4-5 lakh per month.
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High-frequency trading through co-location is catching on in India. BSE’s rival, National Stock Exchange (NSE), was the first to offer this facility in India in August 2009.
NSE charges Rs 20 lakh per rack for a co-location facility and an annual fee of Rs 2.5 lakh for information technology services. For a half rack, it charges Rs 8.5 lakh plus an annual fee of Rs 1.5 lakh. The exchange also charges a one-time initial set-up fee of Rs 1 lakh and Rs 50,000 for full and half-racks, respectively.