May 3, 2010

The Bombay Stock Exchange (BSE) secured the permission of the Securities and Exchange Board of India’s (SEBI’s) permission in 1997 to introduce a new form of stock and commodities trade. And, as a result, the brokers of the BSE were free to install their trading terminals in cities where there were no stock exchanges. However, at centers where the other exchanges are located, the BSE must sign a memorandum of understanding with the stock brokers so that they can install the BSE Online Trading System (BOLT) terminals.

In the first phase, the BSE signed a memorandum of understanding with 11 stock exchanges, viz., those at Calcutta (Kolkota), Pune, Ahmedabad, Saurashtra-Kutch (Rajkot), Madhya Pradesh, Vadodara, Bhubaneshwar, Magadh (Patna), Jaipur, Coimbatore and Chennai (Madras) to provide BOLT connections to the brokers of these exchanges. This has since been extended to over 200 cities.

BSE has now added a nationwide network to its existing network. It opted for the VSAT network technology for a number of reasons, including the availability of a satellite link through the indigenous INSAT satellite network. The Very Small Aperture Terminal (VSAT) network went online in September 1997. But, much more needs to be done to effect major changes.

For a commodities trading company, the decision of the BSE offers immense opportunities. Gone are the days when everything had to be done manually and using cumbersome procedures. Today, it is possible to get things done at the click of a button. Innovative approaches always do offer certain advantages. The results may not be evident immediately, but it will certainly be possible to see a difference later on.

Scores of new commodities trading companies have now entered this business. They have been able to reap more benefits than through the previous approach. It is now possible to trade in commodities from any part of the globe.