Technological impacts on Indian financial markets

Abstract

This report intends to study the Impacts of Technology on the Indian Financial Markets. The falling cost of data processing and telecommunications have had a far-reaching impact on the Financial Markets. It has made possible the growth of information services, electronic trading platforms, order-routing system and a plethora of new complex derivatives. Stock Exchanges worldwide are shifting to the "Electronic Trading" model and as a result, they are highly dependent on the Technology and the capabilities provided with Technology. To study these changes and the technological disruptive effect on the Indian Financial Market, one Indian Stock Exchange "BSE" (also known as BSE) has been selected for study. The transition of Bombay Stock Exchange, with the effective use of Technology as a competitive advantage is jotted down in the report. This report first studies the Bombay Stock Exchange and the Systems currently working on "BOLT" Platform. It describes the Architecture and the network as required by the BSE for technology enablement. Also with the passage of time, and ever increasing applications to support the demands of the Trading Community, BSE faced complex hardware and inefficient IT infrastructure. It thus had to undergo a storage and server consolidation phase for streamlining its IT Infrastructure. Next, this report talks about the Operational Risks associated with the migration of Stock Exchanges to the "Electronic" medium. Regulation, Availability and Scalability is discussed with live examples of Stock Exchange Failures. Next the Report discusses the business model of the NYSE and London Stock Exchange (Global Exchanges). Idea over here is to compare BSE with these global Exchanges and look for strategies which BSE can adopt for its growth and global aspirations. The Major Trends in the Stock Market are studied to see if technology is enabling any of these changes. Finally the report ends with the Conclusions of the study and the recommendations for the Bombay Stock Exchange for its technology capability.