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Issue of February 2003 
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Case Study: BSE implements intelligent switching architecture
Combining networks intelligently

BSE - The Stock Exchange, Mumbai, had three separate communication channel networks: LAN, WAN, and VSAT. It combined them into a single Ethernet-based core backbone with the help of an intelligent switching architecture. The new single network was cost-effective and offered effective QoS features. by Soutiman Das Gupta

The volume of business conducted at BSE - The Stock Exchange, Mumbai is staggering. In 2001-2002 (April-March) the average daily turnover of the exchange was Rs 1244.10 crore, and the number of average daily trades was Rs 5.17 Lakh. In order to support this large volume of daily transactions, the exchange had three separate communication channel networks. It had a robust LAN, a nationwide WAN, and an elaborate VSAT network.

In a nutshell
  • The company
    BSE - The Stock Exchange, Mumbai is the oldest stock exchange in Asia, with over 7500 listed scrips, amounting to over 90 percent of market capitalization. In 2001-2002 (April-March) the average daily turnover was Rs 1244.10 crore, and the number of average daily trades was Rs 5.17 Lakhs.
  • The need
    The exchange had three separate communication channel networks: LAN, WAN, and VSAT. It wanted to integrate them into a single, intelligent, and cost-effective network which has QoS features.
  • The solution
    It combined the three networks into a single Ethernet-based core backbone with the help of an intelligent switching architecture from Nortel.
  • The benefits
    The exchange can provide faster, reliable, and secure services to brokers over a more efficient, manageable, intelligent, and cost-effective network.

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The LAN was a Layer 3 network, between three BSE buildings namely P.J. Towers, Rotunda, and Cama. It was set up in June 1996, had a capacity of 2500 nodes, and ran on an optical fiber backbone.

The WAN primarily used Managed Leased Data Network (MLDN) links and connected its offices in Mumbai and all the regional stock exchanges. This provided access to services like the BSE Online Trading Systems (BOLT), settlement systems, derivatives trading, and central depository. The MLDN network allowed 300 2MB links and 1,500 64K links nationwide.

BSE set up its own VSAT earth station with an 11 meters antenna in P.J. Towers. DoT had allotted a full transponder in the extended 'C' band on Insat 3B. The exchange was able to extend BOLT to more than 400 cities. BSE now covers 414 cities, has installed 1,871 VSATs and 7,829 Trader WorkStations (TWSs).

Network scenario
S.B. Patankar, Director, Infor-mation Systems, at the exchange said, "We had multiple mediums of communication. We had a mix of leased lines of different bandwidths and our own VSAT network with hubs that needed to be managed by us."

BSE was looking forward to expand its network and introduce more services, trading members, nodes, and TWSs. And in order to make the task of managing and scaling the networks simple, they felt the need to integrate into a single network. The single network needed to work across all its systems and bind together the three separate channels of communication.

The integrated network needed to:

  • Work across systems and offer integration.
  • Offer QoS features.
  • Support additional applications like derivatives and central depository.
  • Provide substantial benefits to the member, who is the end-user.
  • Work as an intelligent coordinator of the various services.

The exchange was not interested in supporting separate networks for each communication channel. And it needed to have the single integrated network at minimum cost, which offered the desired QoS.

Solution considerations
Among the various considerations, BSE placed high emphasis on security.

"The exchange's applications have security and risk management as an inherent component. So it was essential that the vendor solution had very good security features in it," said Patankar.

BSE evaluated solutions from various vendors and found that Nortel's solution offered the best price/performance benefit.

"We had used Alteon switches in our network earlier, and they performed very well. The New York Stock Exchange uses Nortel's solution and has benefited from it. That makes it a proven and safe technology," said Patankar.

BSE found that the switches perform load-balancing functions well. This ensures that the servers are used efficiently and increases throughput levels. It also allows for virtual IP address, which provides additional security and flexibility. Since security is an in-built feature of the Nortel solution, it adds value and intelligence to the existing robust security framework.

The integrated network
The three networks at BSE: LAN, WAN, and VSAT now integrate into a core Ethernet backbone based on Nortel's Passport 8600 switch. The exchange's server farm which houses the infrastructure for BOLT, Central Depository Services Limited (CDSL), and Derivatives Trading and Settlement System (DTSS), also connect to a stack of Nortel's Passport 8600 switches, used as a resource switches stack. The resource switches stack connects to the core switch.

A Nortel Backbone Node Concentrator (BCN) backbone router connects to the core and extends connectivity to a Nortel Advanced Remote Node (ARN) edge router at the member end. The ARN is a low-end router, which is linked by a 2 Mbps leased line, backed up by an ISDN link. Passport 8300 floor switches connect to the core, and link to Baystack switches at the member end. The exchange also uses Nortel Networks Optivity network management, and Alteon Web switches.

The new merged network connects around 3,000 WAN routers to make multiple applications available to more than 10,000 TWSs.

Solution testing
"Nortel has been very proactive and meticulous in providing the solution. We furnished Nortel with details of the real-life scenario technology systems at the exchange. The company replicated the same environment in their test lab in USA. The BSE systems configurations were deployed on the switches and a number of quality tests were performed on them," said Patankar.

The final test was on broadcast traffic and went on for around six months. BSE provided the traffic parameters and the test lab loaded ten times the required parameters to test the equipment. After Nortel was satisfied with all the results, the products were shipped to BSE. So it got a pre-configured, ready-to-use, and plug-and-play solution which it deployed on its network. The solution was found to be at par with international solutions.

Solution features
The solution provided features like:

  • Integrated network
  • QoS
  • Broadcast traffic support
  • Guaranteed response time for trading applications.
  • Priority traffic settings so that interactive traffic like trade confirmation and order flow get more priority
  • Consolidation of server-side management.
  • Increased reliability and intelligence.
  • Switches functions in a halt-tolerant mode, i.e. no single point of failure will bring the systems down.
  • No additional network management headache as it integrates with the current network infrastructure.

And now
In the operation of a stock exchange, downtime leads to huge losses in revenue and opportunities. So BSE has combined all its networks into one, and it is positioned to provide faster, reliable, and secure services to brokers over a more efficient, manageable, intelligent, and cost-effective network.

"We have always been open to explore benefits of advancements in technology, and feel the integration of our networks will provide us a road to better technology benefits," said Patankar.

Soutiman Das Gupta can be reached at

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