India’s leading stock exchanges, NSE and BSE, are racing to expand their co-location infrastructure as the demand from market participants continues to surge.
NSE Plans Major Expansion in Rack Capacity
The National Stock Exchange (NSE) currently operates with around 1,300 full racks in its co-location facility. However, in response to the growing demand, NSE is planning to add 300 more racks by the end of June and another 2,000 racks over the next two years in a phased manner.
“We have a pipeline of participants who want racks… the demand has built up over the years,” said Sriram Krishnan, NSE’s Chief Business Officer, during the post-earnings call on May 7.
To support this ambitious expansion, NSE has already moved its staff to a new office within Bandra Kurla Complex (BKC) in Mumbai. The iconic Exchange Plaza will now be converted into a data centre to house the new racks. This strategic move highlights how seriously the exchange is pursuing the co-location expansion.
NSE’s Chief Financial Officer Ian Deouza estimated that setting up all 2,000 planned racks would cost approximately ₹520–550 crore, to be invested in phases and depreciated over the life of the infrastructure.
BSE Joins the Race with Plans for 500 Racks
Not far behind, the Bombay Stock Exchange (BSE) is also aggressively working on increasing its co-location rack capacity. The exchange currently has 300 racks, and it aims to add 200 more within the next 3–4 months, bringing the total to 500.
“At this point, 500 racks with a mix of 15 kVA and 6 kVA, giving an equivalence of 650, is a good number to aspire for,” said BSE MD and CEO Sundararaman R during a post-earnings call on May 6.
BSE has already taken steps to repurpose parts of its historic Rotunda Hall and reclaimed leased office space to accommodate the growing need for racks. Industry sources also suggest BSE is scouting for more real estate for future expansion.
What is a Co-Location Facility?
A co-location facility allows stockbrokers to place their servers close to the exchange’s infrastructure, enabling faster access to market data. This proximity gives high-frequency traders a competitive edge, as they receive price feeds milliseconds ahead of the general market.
Competitive Pricing Strategies: BSE vs NSE
Both exchanges have adopted different pricing strategies in this expanding co-location market.
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BSE charges ₹3 lakh annually for a quarter rack, ₹6 lakh for half rack, and up to ₹25 lakh for a 15 kVA full rack.
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In contrast, NSE revised its rates downwards from April 1, reducing its full rack fee from ₹12 lakh to ₹9 lakh annually. Half rack charges dropped to ₹4.5 lakh, and quarter racks now cost ₹2.25 lakh per year.
This pricing divergence shows BSE is focusing on premium services, while NSE is targeting scalability and affordability to attract more clients.
Will Commodity Exchanges Join the Game?
Currently, commodity exchanges are not allowed to offer co-location services. However, a formal request has been made to the regulator to permit this. If allowed, it could further intensify the co-location race and unlock new revenue streams for exchanges.
Revenue Opportunity or Product Offering?
While co-location is seen as a potential revenue generator, exchanges maintain that the primary goal is to offer robust infrastructure to trading members.
As of now, both NSE and BSE have not officially commented further on these developments.