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Neeraj Kulshrestha Chief Business Operations BSE Ltd Trading Technology Trends and Innovation

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2 Technology trends and Innovation NEERAJ KULSHRESTHA

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3 Other Investments BSE GROUP Exchange BSE 100% Equities/SLB  Equity Derivatives  Currency Derivatives  Interest Rate Derivatives Mutual Funds/ETFs SME / ITP Corporate Debt Listing Data  OFS  FII Auctions  G-sec CDSL ICCL CCP CDP 54.2% 100% Clearing Settlement Risk Management Depository Record Keeping CVL CIRL - Insurance BSE Investments Ltd. 100% Strategic Investments SERVICES 50% 100% 100% Market Place Technologies IT Service MT Tech Infrastructure BSE Institute Training Certification  BFSI  BSE SL Asia Index Pvt. Ltd.  50% JV with SPDJI Index Business BSE Sammaan CSR Limited CSR Activities 100% BSE CSR Integrated Foundation CSR Activities 75% 3 4.99% CSE 16.66% NPEX BSE Group – a complete Securities ecosystem

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4 BSE – some technology milestones •Fastest trading technology with 6 micro response time •Trading platform – Deutsche Borse T7 platform customised for Equity •Provides Colocation and HFT •PTP synchronisation – Meinberg •500 K OPS •Network Latency 10 micros

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5 Key trends in Trading Technology Social Media Mobile Apps Ultra HFT Hardware efficiency Connectivity Cloud AI Big Data Infrastructure consolidation E commerce DLT Cyber security

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6 Technology trends Social media for trading and analysis • People spend more time on social media • Integration of Social media with trading applications to accept orders, trade and Post trade Mobile based rich apps • Mobile apps are already available for trading systems. • Richer applications to utilize the powerful CPU's and huge RAM's • Mobile applications will substitute desktops FPGA based HFT's and FPGA based exchanges • Superior and cost effective technologies used in Defense sector • BSE order confirmation time of 6 microseconds is the fastest in the world - move to nano seconds • Limitations to application based performance improvement • Extract performance developing code for hardware- FPGA's • FPGA - Offer flexibility of software and performance of hardware,

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7 Technology trends 100G connectivity • 100 G will offer unprecedented speed of communications • Will help provide latencies in nanoseconds / sub nanoseconds • Faster inter-process communications • Superior technologies like Infiniband will significantly reduce IPC Cloud based exchanges • Scalability and extensibility with optimum use of infrastructure. • Private clouds to optimally utilize the bare metal infrastructure. • "Cloudification" of hardware goes a long way in scaling horizontally. Data and Cyber Security

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8 Technology trends Infrastructure consolidation • “One-box exchange" model • Using shared memory communications, wires are completely eliminated. With efficient use of NUMA and CPU sets, the processes are distributed over different cores and memory pools Big Data and Analytics • Consolidation of data across multiple platforms bringing efficiency and lower cost of ownership • Data Driven Enterprise - ability to analyse and act on information in near real time. • Real time surveillance and fraud detection models for Risk mitigation E-Commerce • Competitors of Exchanges • Indian regulators allow purchase of mutual funds through e commerce platforms

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9 Technology trends DLT • Technology under assessment • 5-10 year timeframe AI • Machine learning

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10 BSE IT in 2009 Trader BOLT / DTSS  EQ Trading  F&O Trading  RMS & Collateral (EQ) COSS (CLS) - EQ Sybase β3 ER BOSS-i Datafeed Central Data Warehouse DRS Reuters Bloomberg BSE Website Clearing House System (CHS) Banking System IDB Non-trading related back-office operations CMS IMOPS TWS 1 Online Collateral EQ Masters, System Parameters Orders, Inquiry, Broadcast Online EQ /F&O Trade info & Market Picture Online EQ/F&O Order info Trade info Market Picture Online EQ/F&O Market Picture EOD FQ/F&O Order & Trade info & Market Picture EOD EQ Trade info EOD F&O Trade info EQ Security Obligations F&O Security Obligations EQ Funds Obligations F&O Funds Obligations Online Trades I M L Internet DLOAD DUS Extranet FOW COSS (CLS) - EQ Banking System

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11 Transformation •Complete revamp of trading system •Distributed Architecture for Vertical and Horizontal scalability •Brought down round trip latency from 40 millisecond to less than 200 micros Core Trading System •Separated supporting functions from the trading system •Independent systems having real time integration with the trading system. 50 + applications Supporting Functions •Migration of Unix Based system to Windows and Linux Based •Migration and Consolidation of multiple Oracle and Sybase based databases to SQL Database Technology Migrations •Complete underlying network changed to the state-of-art technology to handle high speed, scale and throughput Network Revamp •Hadoop Cluster using Open Source Big Data technologies •Built up capacity of 320 TB •Migrated all MIS reporting and analytics to this framework Data Warehouse •PR of all application at P.J.Towers; real time DR •Near site Data Backup and resiliency •Automation of switchover Site Consolidation

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12 BSE IT in 2016

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13 BSE Testing philosophy Robust testing Faster time to market Standard testing across applications Ensure all stakeholder participation

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14 Testing process 4 tier testing • Development • User Application Testing • Quality Assurance • Marketwide Mock Testing environments • Development • UAT • Simulation – available to members 24x7 for testing patches • Internal Lab – for internal system and application testing and tuning • Algo Test Lab on cloud – members can test algo strategies

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15 Testing process Testing tools • Load simulator • Automated testing Type of testing • Black-box testing (functional) • Regression testing • Sanity testing • Negative testing • GUI testing

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16 Testing approach Development team • Design document/ Implementation approach shared with UAT and QA teams • Knowledge transfer session conducted for UAT and QA teams UAT and QA teams • Preparation of test plans, test scenarios, test cases • Observations/Defects reported in Reporting system Redmine • Review discussions of reported observations/defects with Dev team • Re-testing of observations once fixed by development team • Sign-off by both teams after completion of testing • One round of testing conducted in the production environment during mock trading session

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17 QA Testing approach • Agile methodology - reduces the testing and release to the market time • Test complete system v/s only the functions • Automated testing for the applications to do regression testing which ensures complete coverage (Qualitia Product with underlining tool QTP and Selenium) • Release Management tool like SVN ensures the correct code is migrated to the production setup

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