In order to facilitate small and medium-sized trading members, NSE on Monday introduced a facility of managed co-location service, wherein space will be provided to vendors along with provision for receiving market data. The move comes after markets regulator SEBI asked stock exchanges last month to introduce such facility.
This initiative will facilitate small and medium sized members, who otherwise find it difficult to avail co-location facility, due to various reasons including but not limited to high cost, lack of expertise in maintenance and troubleshooting, among others. Under the facility, rack in co-location facility will be allotted to empanelled vendors of the exchange along with provision for receiving market data for further dissemination of the same to the trading member and the facility to place orders (algorithmic or non-algorithmic) by the trading members from co-location.
In a statement, the exchange has announced “to introduce a facility of managed co-location service christened as NSE ‘co-location as a Service’ (CaaS)”.
The circular will be effective immediately, the exchange added. Co-location is a facility provided by stock exchange to trading members and data vendors, whereby their trading or data systems are allowed to be located within or at close proximity to the premises of the bourses.
This facility enables the co-located entities to access the trade/order related data before other non-co-located entities. It also enables co-located members to minimise the time for sending orders to the trading system of the exchange. According to NSE, only vendors empanelled by the exchange will be eligible to provide such service, vendors need to provide a fully managed end to end solution which can be used by trading members to trade from the exchange’s co-location facility.
Empanelled vendors need to make an application to the exchange for offering CaaS in a prescribed format and vendors, who need this facility also need to apply for rack in exchange’s co-location facility in a prescribed format.
“Maximum permitted members availing vendor services per half rack shall be 10 and full rack shall be 20,” NSE said. The exchange said that trading members will be permitted to have only one contract with an empanelled vendor, subject however to maximum of two vendors, at any given point of time for CaaS.
“Beyond this, members desirous of expanding their presence in co-location are encouraged to seek independent racks in co-location. Thus, members who have matured/ in future mature to independent rack ownership shall not have access to CaaS,” it added.