India’s leading stock exchanges — NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) — are ramping up their co-location infrastructure in response to a steady rise in demand from brokers and high-frequency traders. This move aims to improve trading speed and efficiency by offering faster access to market data directly from exchange servers.
Co-location is a service where brokers place their trading servers physically close to the stock exchange’s systems. This reduces latency in receiving and acting on live market data, giving traders a competitive edge. With more traders and institutions showing interest in this premium service, both exchanges have decided to expand their rack capacity significantly.
NSE to Add 2,300 Racks in Phases, New Site Ready in BKC
The NSE currently operates around 1,300 full racks and plans to add 300 more by June-end. Over the next two years, the exchange will expand this to 2,000 additional racks, taking the total to 3,300. This expansion is happening in phased stages, and will involve a capital expenditure of nearly Rs. 520–Rs. 550 crore, as revealed by NSE CFO Ian Devuja during an analyst call.
To support this large-scale setup, NSE has moved its co-location office to a new facility in Mumbai’s Bandra Kurla Complex (BKC). Meanwhile, its historic Exchange Plaza office at BKC is being transformed into a dedicated data center to handle the increased infrastructure.
BSE to Double Rack Capacity with Real Estate Changes
The BSE is also stepping up to meet market demands. Currently, it operates 300 co-location racks and is working on adding 200 more racks in the next 3–4 months. The exchange is actively repurposing existing office space and acquiring more real estate to accommodate this growth.
A few years ago, BSE even closed parts of its iconic Rotunda Hall and took back areas from tenants on the ground floor to create more space for co-location equipment. According to BSE MD and CEO Sundararaman Ramamurthy, the upgraded setup will include a mix of 15 KVA and 6 KVA racks, bringing the total power capacity equivalent to 650 full racks based on their product needs.
NSE Cuts Rack Charges to Attract More Traders, BSE Hikes Rates
Interestingly, the two exchanges have taken opposite paths on pricing.
From April 1 this year, NSE has reduced its co-location charges:
- Full rack: Rs. 9 lakh per year (down from Rs. 12 lakh)
- Half rack: Rs. 4.5 lakh per year (down from Rs. 6 lakh)
- Quarter rack: Rs. 2.25 lakh per year (down from Rs. 3 lakh)
This move is expected to attract more participants, especially smaller players who previously found co-location expensive.
On the other hand, BSE has increased its rack charges across most categories:
- Quarter rack: Rs. 3 lakh per year
- Half rack: Rs. 6 lakh per year
- Full 6 KVA rack: Rs. 12 lakh per year
- Full 15 KVA rack: Up to Rs. 25 lakh per year
Despite the higher pricing, BSE believes its premium infrastructure and power configurations offer value to specific high-frequency traders.
Co-Location Seen as a Long-Term Strategic Product, Not Just Revenue
Both NSE and BSE view co-location services as long-term strategic offerings. While they bring in revenue, especially during high demand, the exchanges consider it more of a product innovation that ensures better market access, lower latency, and a modern trading environment.
As India’s equity market continues to evolve, infrastructure development like co-location plays a key role in shaping future trading behaviour and market speed.
Disclaimer: Co-location access is a paid service and may offer an edge in terms of speed. Exchanges and regulators ensure a level playing field through strict guidelines.
