NSE Treads the IT Path : Umesh Jain

Umesh Jain, Chief Technology Officer, National Stock Exchange of India Ltd

Talking about the potential of technology and techno-enabled services in the finance sector, Umesh Jain, Chief Technology Officer, National Stock Exchange of India Ltd, shares his thoughts over mobile money, internet trading and security concerns in online trading in an interaction with Veena Kurup of ENN

Technology has been accelerating the operational pace of country’s financial sector. Being a vital organisation in the sector, how does the National Stock Exchange of India exploit the potential of IT?

Technology has been the prime driver of the finance sector around the world and is a key enabler when it comes to economic development of India. In the field of governance, technology has played a significant role in bringing about transparency and accountability. It has made similar contributions in the fields of finance, education and health. Specifically speaking from economic and financial perspective, by cutting out the middlemen, schemes like direct benefits transfer (DBT) will help in uplifting the poor and increase efficiency and returns on spending. The ability to replace cash with mobile money ensures that cash is eliminated and brings the ‘undisclosed’ money back into the system. Moreover, bringing the economically weaker sections into the mainstream financial system will ultimately induce savings and encourage investments.

Technology has also played a great role in the evolution of stock exchange business. Today, people can access, trade and invest much more easily than before. In addition, the securities market today enjoys an extended reach and serves investors significantly. In India, the National Stock Exchange has been the harbinger of technology in the securities market, with investors as the ultimate focus. In the last two decades of National Stock Exchange’s existence, technology has contributed to the development of securities market much faster than what it had done in the preceding decades. The National Stock Exchange has used technology effectively to expand reach, provide access in remote areas and bring down the costs of trading.

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Brief us about the IT-enabled financial initiatives undertaken by the National Stock Exchange in escalating the operational presence?

In the age of satellites, networks, mobile telephony and the Internet, distances have become irrelevant and transactions instantaneous. At the same time, the need for secure, reliable and continuously updated databases has become an absolute necessity. The technologies employed by the National Stock Exchange, such as screen-based trading systems (SBTS), V-sat, leased line connectivity and dematerialisation of shares has increased transparency and helped members across the country trade in real time. Today, the National Stock Exchange has millions of users – members, financial institutions and investors – spread all across the country. Towns with a population of over 10,000 have at least one National Stock Exchange trading terminal for doing business, which was unthinkable 20 years ago. Currently, more than 3,000 towns are seamlessly connected. Even a remote small town like Lumding in Assam today boasts of a National Stock Exchange member, who trades regularly. SBTS together with V-sat technology has raised tremendous transparency in the system, minimised errors in the execution of trade and reduced transaction costs for brokers, thereby benefiting the customers.

“Internet trading has helped eliminate manual order inputs by members or brokers and enabled straight processing of orders, which has significantly helped in provide more transparency to retail investors”

How has been the contribution of Information Technology towards the equities and capital market?

Internet-based trading has helped eliminate manual order inputs by members or brokers and enabled straight processing of orders. I believe that this has significantly helped in providing more transparency for the retail investors. Due to its ease of access, it has also facilitated wider participation from small investors. While the volume of internet traders has been increasing gradually but consistently, mobile trading has also seen a significant jump, recording more than 100 percent rise last year. But there is tremendous scope for this service to grow, as the number of subscribers of mobile trading is very high. At present, many investors are trading through mobiles using the applications provided by the National Stock Exchange. We are also providing applications to facilitate mobile trading in even basic phones with GPRS connections.

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Cyber crimes are on the rise these days. How well equipped is the National Stock Exchange to tackle such hurdles?

The challenge with cyber security is that the landscape for such cyber threats is changing dynamically. Hence, from that perspective, it is important to have flawless policy procedures, rigorous training of people and ensuring a prime position in a dynamic landscape. We have made significant investments for creating an independent IT risk-fighting team, which is equipped with latest and the best in class tooling facilities. Governance mechanisms like the Information Security Forum are dealt with highest leadership levels to ensure top priority.

Are more such technology- enabled initiatives streamlined for the near future?

The National Stock Exchange has back-to-back projects to keep pace with the latest international developments. We are bringing in cutting-edge technologies to expand our investor base, provide an eco-system, which can take orders up to 2 billion messages a day and is scalable in a short span of time. From our side, investor protection is always ensured and upheld while implementing any such initiative.