Mumbai: Like in politics, there are no permanent enemies or permanent friends in the stock exchange business. Faced with a threat from Financial Technologies and its upcoming stock exchange, the two leading stock exchanges in the country — the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) — have decided to join hands.

For 15 years, these two exchanges have been arch rivals, fighting each other in every sphere of business activity, viz equity trading, depositories, clearing houses, currency derivatives and data vending.

Now, say reliable sources, the two have inked a significant deal, which could be the harbinger of increased cooperation between them.

Call it the NBA-NSE-BSE Alliance. To begin with, BSE’s online trading platform (BOLT) will soon be available on NSE’s in-house software Neat-on-Web (NOW). Traders using this platform will get access to over 7,000 stocks listed on the BSE.
While the NSE has over 1,300 of the major companies listed, a number of BSE-listed stocks, which lie outside this universe, are darlings of operators.

The deal’s significance extends beyond just the number of stocks, say experts.
For NSE, which is facing a coup of sorts from its technology provider Financial Technologies, the opening up of currency derivatives market was an eye opener.
It has realised that without a front-end platform of its own, it could be at a great disadvantage when the MCX SX begins equity trading.

BSE’s willingness to offer its system for trading on NOW comes as a surprise, as so far, it was perceived to be close to the MCX camp. But the alliance gives it access to the huge network of NSE terminals.

NSE has over 1,84,000 trading terminals in over 1,400 towns across the country.
“Whenever MCX SX launches, it will come with a free version. So, they are facing a threat. These guys want to do something proactive, that’s why they are looking to capture some market share in the front-end solutions space,” says a broker who has been testing some of the new offerings on NOW, on a pilot basis.

Brokers say Financial Technologies charges up to Rs 10,000-12,000 per user ID for its ODIN platform. Sometimes, it charges on a variable basis, based on turnover.
To counter this, NSE has started offering its front-end trading platform, NOW, free-of-cost to member brokers till March 2011.

Brokers bitten by falling volumes are looking to cut corners wherever possible. Many are moving to net-based solutions, which can be accessed through broadband connection, which works out lot cheaper than dedicated leased lines.

In this scenario, market watchers feel offering the BSE trading system on top of the free offer it had started would be a huge boost for NSE.

Harish Vasudevan of SVS Securities says, “The NOW offering is significant and could help NSE garner market share in technology solutions when the brokers are looking to cut costs. People may shift to this as it is available free of cost. It is important for NSE to do this if they want to sustain their No.1 position in the face of impending competition from MCX SX.”

source: DNAIndia.com

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