CDSL built its network, attained
technological maturity, and is now future-ready. A look
at the strategies it employed to make it possible. by
Soutiman Das Gupta
The Central Depository Services
India Limited (CDSL) was established in 1999 and is
the second securities depository in India. Its objective
is to provide convenient, dependable, and secure depository
services, and facilitate holding of Demats (securities
in the electronic form).
Its network covers 100 cities
and offers always-on connectivity to around 500 centers
nationwide. The company has handled Demat for over 8000
million securities settlements. The number is still
growing and will continue since the government plans
to phase out physical trading of shares. This will compel
every transaction at any stock exchange to be processed
at an online depository.
The Central Depository Services India Limited
(CDSL) provides depository services and facilitates
holding of Demats (securities in the electronic
form). Its network covers 100 cities and offers
always-on connectivity to around 500 centers nationwide.
The company has handled Demat for over 8000 million
To effortlessly service a growing volume of securities,
Depository Participants (DPs), and users, CDSL
had to upgrade its network and work seamlessly.
CDSL upgraded aspects like connectivity, applications,
hardware, software, and deployed a disaster recovery
The upgraded network offers Straight Through Processing
(STP) and will help the company achieve a T+2
Click on image for larger view
Numbers and the need
CDSL connects to 172 Depository Participants (DPs) nationwide
through its network which supports 149,832 investor
accounts and spans 355 branches. Every branch has access
to the company's online database.
A minute's downtime will severely
affect the daily operations of the capital market. To
ensure efficient operations which is reliable, free
from downtime, and able to support the growing number
of users, CDSL had to strengthen its network elements
like connectivity applications, and hardware.
As a solution the company made
an elaborate plan and upgraded its connectivity, software
and hardware. It is now ready to achieve its objectives
without interruption and fear of downtime in future.
Pramod Deshpande, Vice-President, IT, CDSL, used the
following strategies to plan the upgrade path.
- Upgradation was strictly
need-based. The nature of business was studied in
- Realistic projections about
future market size and demand were made.
- A service provider's facilities
were used to take advantage of an established and
tested network infrastructure.
- Connectivity mechanisms
to nationwide locations were upgraded and made reliable.
- Software applications were
tried, updated, and newer versions purchased/licensed.
- Hardware systems were replaced
with better and scalable configurations.
- Additional reserves of resources
whose needs are not always anticipated like fail-over,
disaster recovery, and bandwidth were deployed.
A management challenge
Pramod felt that it was a challenge to justify the investment
involved in upgradation, to the higher management. "The
IT Head can't simply tell higher management that he
got the feeling, or read in a magazine, that something
may happen, and its necessary to upgrade," said
Pramod. "The IT Head has to justify the expenditure
and define the business advantages likely to be received
from the exercise."
CDSL felt that the number of nationwide DPs and volume
of Demat custody and settlement was growing at a quick
pace. And when Dematerialization of shares would become
mandatory, there would be a huge increase in network
traffic and subsequently load. An upgrade was thus considered
essential for the company to continue uninterrupted
BSE as the service provider
CDSL uses BSE- The Stock Exchange Mumbai, as its service
provider. CDSL has been promoted by BSE along with a
few Indian banks. This prompts BSE to have a considerate
view of the operations at CDSL. The two organizations
work hand-in-glove in their daily activities. The other
- BSE already has a sound
nationwide network infrastructure that CDSL can piggyback
on. There's no need to re-invent the wheel.
- BSE's network infrastructure
is in the same building and the physical proximity
helps in coordination.
- BSE has an efficient team
of technical personnel who perform 24x7.
Since leased lines were not easily available in remote
cities in 1999, the company used VSAT links. Earlier,
all users were in the same pool and were allotted a
fixed bandwidth for in-route traffic. If a file was
larger than the allocated bandwidth, the user had problems
The problem was eliminated
in January 2002 by using a flex-route concept. In this
a user can utilize additional bandwidth from the pool
if the file size is more than the allocated bandwidth.
This has improved user response time.
The VSAT IDU (Indoor Unit)
used to work in a 'bridge' mode with a single large
subnet which allowed only six workstations. In July
2002 the IDU was programmed to function in a 'routing'
mode. This allowed more workstations to be connected
on a subnet.
In September 2002 a Channelized
E1 leased line was implemented with fiber at the CDSL
termination end. This offers better response time, minimal
downtime, and scalability to handle higher volumes of
transactions in future. CDSL also uses 64 Kbps leased
lines between cities to link its DPs. The links between
the CDSL main site and the Disaster Recovery (DR) site
were also upgraded to four Mbps. The whole exercise
will now enable CDSL to have a seamlessly functional
Pramod said, "After three years of operations we
faced scalability and time-related problems. This was
the indication that the application software needed
to be fine-tuned." A large number of software upgrades
and enhancements were made to this effect at CDSL. Some
of them are:
- Keeping in mind the evolving
capital market, enhancements and fine tuning of the
architecture and code of the customized banking software
was made. The application was developed by CMC,
- The database was migrated
from Oracle 184.108.40.206.1 to Oracle 8.7.1 on April 14,
2002 and runs on a centralized architecture. CDSL
found bugs in the older version. Oracle 8.7.1 offered
better performance, advanced backup features, and
- The database architecture
uses a Straight-Through Processing (STP) system, which
ensures instant recording of any sale/purchase action
by the investor and is added to the investor's account.
It benefits DPs since they have to make lower capital
expenditure to provide depository services.
- Users complained that the
Operator Console (Opconsole) did not reconnect and
re-register after connectivity loss or server time-out.
This slowed down the download of daily reports. A
new functionality was added to the Opconsole application
on August 25, 2001 and the problem has been addressed.
- CDSL introduced early pay-in
for NSE and BSE on November 09, 2001. The early pay-in
facility can be used by Clearing Members/ Beneficiary
Owners by issuing appropriate instructions to the
- The company's redesigned
Website with new features was floated on April 22,
2002. Users can view their balances which are refreshed
every 30 minutes, and transaction details of the last
- The display of Start of
Day (SOD)/End of Day (EOD) time in the master menu
was introduced on December 8, 2001. A mouse click
displays the actual SOD time and the EOD time for
the business day.
- The inter-depository debit/credit
job step was fine-tuned in June 22, 2002. This resulted
in reduction of processing timefrom one hour
to 10 minutes.
- Inter-depository upload
has been reduced from 200 records in one minute to
2000 records in a minute from June 29, 2002.
- A program called hostip.exe
was implemented on May 18, 2002, at every user's front-end
to help change IP addresses in case of a shift from
VSAT to leased line.
CDSL upgraded its V-series of HP servers to two HP rp7410
servers. These are mid-range servers that run on the
HP-UX 11i OS. Pramod said, "The servers provide
us architectural and performance advantages. Their performance
is at least three times better than the previous servers."
The servers are used in failover
mode rather than load-balancing mode. "This allows
scalability in case of increased load," said Pramod.
The company also uses storage
solutions from EMC which are near fault-tolerant systems.
They feature multiple RAID levels and intelligent diagnostics
like automatic disk fault finding system.
CDSL had a basic Disaster Recovery (DR) site in Nucleus
House at Andheri, Saki Naka, in Mumbai. On February
01, 2002 it shifted the DR operations to Reliance Infocom's
data center at Navi Mumbai.
The new DR site has features
- Vibration-proof, EMI/Radio
Frequency interference-proof, flooding and environmental
pollution-proof, tightly sealed, and thermally insulated
- Three layers of power supply.
Main feeders from MSEB, dual diesel generator sets,
dual UPSs. Dual electricity distribution system.
- Precisely controlled environment
for humidity, ventilation, and air conditioning.
- High sensitivity smoke-detection
- Centralized operations from
building management system.
- Multiple layers of physical
- Stringent fire detection
and protection norms.
- Located at a different seismic
zone from Mumbai.
After handling the company's upgrade according to its
upgrade strategy, the company felt that it had achieved
a respectful standard of networking technology. "In
March 2002 we felt we had achieved technological maturity
and were at par with market expectations," said
CDSL moved the system of settlement from a 'paper format'
to a T+3 mode (pure electronic format). CDSL began online
inter-depository transfers, where movement of stocks
between depositories takes place throughout the business
day. The Indian Finance Ministry has announced destination
dates for the Indian capital market to move to a T+2
settlement regime by April, 2003. CDSL hopes to achieve
the target well within the deadline.
In line with global trends,
CDSL plans to implement an Electronic Contract Note
System (ECNS) which is a step towards STP and will help
the company move from a T+3 mode to T+2.
The company plans to deploy
VPN links among nationwide locations. The idea will
be to connect the interior/remote locations of the country.
But problems like unreliable connectivity from telecoms,
limited penetration of the Internet, and limitations
of certain vendors have to be overcome.
Soutiman Das Gupta can be reached