| Date: |
04-06-2010 |
| Subject: |
High-frequency trade charges at NSE pared |
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In a move that will further boost Algo trade or programme-based trading in India, the National Stock Exchange (NSE) has decided to reduce charges for offering co-location services to its members at its premises.
The service was introduced with the main intent of reducing the latency (the overall time taken for the execution of trade), which is highly beneficial for broking firms offering direct market access and algorithm facilities to their clients.
The exchange has reduced annual charges for half rack by close to 40% and for full rack by just over 11%. This is expected to encourage small and medium size members to take benefit of the co-location services at a reasonable cost.
The co-location server facility allows a trading members to place their servers in the same place as NSE’s trading engine, which will enable them faster access to order book data provided by the exchange. Currently, the exchange offers the facility in two variants, full racks with an annual charge of Rs 22.50 lakh and half rack at an annual charge of Rs 14 lakh. It is expected to come down to Rs 20 lakh and Rs 8.50 lakh, respectively. Full racks are generally used by large and high frequency members with large volumes while the half racks are designed to cater to the needs of small & medium size members.
At present, over 90 members, who are basically large brokers, have opted to use this facility majors, including Morgan Stanley, Goldman Sachs, Citi, Deutsche, Motilal Oswal and Edelweiss Capital. Experts said that programme based trade accounts for around 8- 10% of the overall traded volume on the exchange now and is expected to grow up to 40-50% of the total volume in next two to three years.
However, with growing number of brokers starting to opt for such sophisticated technology, Sebi is treading with caution. It has constituted a technical advisory committee to recommend measures for improvements in market structure as well advice Sebi in framing appropriate policies.
Source :- financialexpress.com
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