Indian Exchange Grapples With Technology Divide Among Customers

  • 40% of volume in India is HFT, highest in developing world
  • Regulator asked exchange to look into claims of unfairness

The head of India’s largest stock exchange, which is facing questions about whether the fastest traders have an unfair advantage, said it’s a challenge to balance the needs of investors with vastly different technological capabilities.

“You have, on one hand, brokers which are one-terminal shops and then you have brokers who have thousands of branches all over India,” Chitra Ramkrishna, the chief executive officer of National Stock Exchange of India Ltd., said Wednesday at the Bloomberg Markets Most Influential Summit in New York. “Their appetite and their ability to use technology is very different.”

Chitra Ramkrishna

Photographer: Dhiraj Singh/Bloomberg

India’s stock market has undergone rapid change over the past five years, with computerized trading playing a starring role. High-speed strategies account for 40 percent of the country’s trading volume, the highest proportion in the developing world. That dominance is raising concerns that high-frequency trading may be scaring small investors away from markets.

The country’s markets regulator, the Securities and Exchange Board of India, asked the NSE last week to look into claims that some algorithm-driven firms are getting unfair access at the bourse. The NSE is hiring an external agency to carry out the investigation, NSE’s chairman said last week. Sebi has also proposed curbs on algorithmic trading to ensure fair access for all players to exchanges.

“As a market infrastructure, one of the things we have to continue to be focused on is how to offer common technology products and services which will help everyone to a new threshold,” Ramkrishna said.

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