Props grab more of derivatives market; retail cedes share
Mint Mumbai|February 16, 2024
Retail investors dabbling in derivatives often get the short end of the stick.
Ram Sahgal
Props grab more of derivatives market; retail cedes share

But few know that they lose out to proprietary traders or props-brokers trading on their own account with sophisticated algorithms.

Prop traders pay hefty sums to place their server racks in the exchange data centre (called colocation), something retail investors can't do. This enables props to access data of price movements fractions of a second quicker than retail investors, who use Internet-based trading and mobile apps.

The National Stock Exchange of India (NSE) charges 12 lakh to colocate a (full rack) server in its data centre, plus connectivity charges and taxes. The exchange started the colocation facility in 2009 so that brokers located in, say, Mumbai and Chennai would get data feeds at the same time, despite the Mumbai broker being closer to the exchange's servers.

Interestingly, exchange data shows that colocation-based trades accounted for 60.7% of gross turnover in April-December 2023, up 247 basis points (bps) from a year earlier, followed by mobile-based trade at 17.6% (up 22 bps), Internet-based trades at 8.9% (down 106 bps) and algo trades 1.1% (up 45 bps). A basis point is one-hundredth of a percentage point.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM MINT MUMBAIView all
Using AI In Workflow To Make Work Less Stressful
Mint Mumbai

Using AI In Workflow To Make Work Less Stressful

Al's role in workflow automation goes beyond efficiency-it also directly impacts employee well-being

time-read
3 mins  |
November 25, 2024
Employees' Provident Fund Has Issues. Can Employees Opt Out?
Mint Mumbai

Employees' Provident Fund Has Issues. Can Employees Opt Out?

EPF contributors face mounting challenges as limited withdrawal options and high rejection rates persist

time-read
3 mins  |
November 25, 2024
Mint Mumbai

The Promise And Challenges Of Insurance Reform

One of the most awaited results of the hike in foreign holding is the infusion of capital

time-read
2 mins  |
November 25, 2024
Becoming better at work with daily reflection
Mint Mumbai

Becoming better at work with daily reflection

Fujifilm India's Arun Babu on the significance of constant learning

time-read
1 min  |
November 25, 2024
A new incentive structure could help preserve standing forests
Mint Mumbai

A new incentive structure could help preserve standing forests

The proposed tropical forest forever facility would use blended finance to reward countries for protecting their green cover

time-read
3 mins  |
November 25, 2024
Let someone else play knight in shining armour for Disney
Mint Mumbai

Let someone else play knight in shining armour for Disney

CEO Iger should quit can-kicking and help the next chief succeed

time-read
3 mins  |
November 25, 2024
Mint Mumbai

Thomas E. Kurtz gave us our Basic lessons in software

He wanted computers kept accessible, as seen in the programming language he pioneered

time-read
3 mins  |
November 25, 2024
Mint Mumbai

Why the 5-star hotel experience needs urgent reforms

From gagging TV sets to guiding guests on surviving tucked-in beds, plenty needs to be fixed

time-read
4 mins  |
November 25, 2024
COP-29 could not escape the US election's impact
Mint Mumbai

COP-29 could not escape the US election's impact

The $300 billion pledged by rich countries as climate funding is grossly insufficient. True, Trump's US may revert to climate scepticism, but others must try harder to mobilize funds

time-read
2 mins  |
November 25, 2024
Empower women to participate equally in Digital India's success
Mint Mumbai

Empower women to participate equally in Digital India's success

We must go beyond bridging gaps in internet access and maximize women's agency in using devices

time-read
3 mins  |
November 25, 2024