Networking of stock broking divisions to facilitate multiple exchange trading; Indbank Merchant Banking Services

Abstract

Providing multi-exchange, location-independent trading facility requires establishing communication between various stock broking divisions (operating at different cities) as well as addressing the issues that arise due to variations in procedures and trading mechanisms at different exchanges. Thus, it is needed that all the stock broking divisions be networked and an information system be implemented to facilitate the various processes involved in multiple exchange trading. This study finds the functional requirements of such an information system. The variations in working of different stock exchanges are studied and their implications for the multiple exchange trading system are analysed. These include settlement periods, payment and delivery obligations at different exchanges, positions etc. Thereafter these implications are translated into functional requirements of the information system. Also, procedures for handling issues like order validation, finding out the client's net liabilities, internal matching of orders etc. are also identified. To facilitate the location-independent trading, network configuration is proposed which implements batch mode information transfer between the order accepting branch (minor node ) and order executing branch ( major node ). The major nodes will be only at the cities where a stock exchange is located while the minor nodes will be at all other cities where stock broking service is offered. The majority of the processing work is assigned to the minor nodes. This includes running procedures for order validation, management of accounts etc. Such an arrangement not only saves on high communication costs but also makes the network easily upgradable to suit the expansion needs of the stock broking business.