To deploy new online trading system for the bourse

The United Stock Exchange (USE) has dished out a five-year contract to Tata Consultancy Services for deploying and managing a new online trading system as part of its quest to turn profitable next fiscal.

Under the contract, TCS will replace the erstwhile technology platform at the currency derivatives exchange with a system that is more cost efficient but scalable enough to accommodate its future expansion plans, multiple sources close to the development told Business Line.

Once the solution is up and running, USE expects a reduction in its operating costs, thereby helping the exchange’s balance sheet return to black in the next fiscal, an official in the know said.

For TCS, which is offering an end-to-end trading platform for the first time, this deal is being seen as a launch pad to target other exchanges globally, analysts said.

‘End-to-end’ deal

In this ‘end-to-end’ deal, TCS – which is the country’s largest software provider – would also support other aspects of USE’s functioning such as clearing, settlement, real time risk management and surveillance.

Confirming the development, Arindam Saha, Director - Business Development of USE, said: “The project aims to upgrade operational efficiency and trading facilities of the exchange. Technology upgradation is a regular process for any exchange.”

A spokesperson for TCS did not comment on the development as the company is in the silent period before its third quarter results are declared on January 16.

Precise financial details of the arrangement could not be determined as the Tata group company would be paid for each transaction that takes place on the platform.

A team from TCS has been engaged in defining the technology roadmap of USE, which has the Bombay Stock Exchange as its largest investor, for the last few quarters, according to sources.

The platform would allow USE to extend its operations into equity, debt and other exchange-traded products as and when it chooses to become a full-fledged stock exchange.

Soaring tech costs

According to industry experts, technology costs account for the lion’s share of any exchange’s total expenditure and once the exchange shifts to the new platform from the second quarter of 2014-15, its operating costs would come down by 15-20 per cent.

This will help USE’s balance sheet to return to black next fiscal from the net loss expected for 2013-14.

For the half year ended September 2013, it had reported a net loss of Rs 0.88 crore against a net loss of Rs 0.29 crore in the year-ago period, data on USE’s website suggests.

Overall costs for the six-month period ended September 2013 went up by 12.5 per cent to Rs 9 crore.

manisha.jha@thehindu.co.in

adith.charli@thehindu.co.in

(This article was published on January 13, 2014)
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