2,500 to 10,000: An upward BOLT for the BSE Sensex
February 8, 2006

On February 6, 2006, the Sensex, Mumbai Stock Exchange's (BSE) benchmark index, crossed 10,000 points for the first time. Ten years of seamless and glitch free operations by CMC's revolutionary Bombay Online Trading System (BOLT) has now seen the index power its way to a historic landmark.

The Sensex's ride to glory began in 1995 when CMC's BOLT system first became operational. It was then that CMC had taken up the challenge of computerising operations at the BSE in order to put the Indian stock exchange's operations at par with those of the top international exchanges. The outcome of CMC's effort was the revolutionary software BOLT, which successfully replaced the then famous "out-cry system" with screen based trading.

When CMC undertook the responsibility of developing software for automated trading for the BSE, it was uniquely placed as the only software company in India attempting such an intricate task. Eventually, on March 14, 1995, 818 scrips were transferred to the screen-based trading system.

BOLT is one of the few stock trading system in the world that handles hybrid / mixed modes of trading; both order-driven and quote driven. It supports the normal segment, the auction segment, the odd-lot segment and continuous net settlement. Currently there are more than 6,000 BSE trading terminals installed across the country.

The BSE Sensex, composed of 30 companies, accounts for around one-fifth of the market capitalisation of the BSE, and is the Indian equivalent of the Dow Jones (US) index. With the Sensex hitting the 10,000 mark the index joins the ranks of only a few indices around the world that have crossed the magical five figure mark.

As India's premier market index, the BSE is an important benchmark for fund managers. Apart from indicating market movements it also acts as a basis for index based derivative products.

The scrips that constitute the Sensex can, and do, change from time to time The BSE uses the "weighted market capitalisation" method for compiling the Sensex, keeping in mind a company's market capitalisation, trading frequency and dividend record. The Sensex is calculated as current market capitalization against base year market capital. The current market capitalization is a summation of the last traded price on BOLT, against the free float shares of that scrip, for all the scrips constituting the index at that point of time.

Given its varied tasks, the calculations of the Sensex are carried out on BOLT every 15 seconds. The calculations are then broadcast online with the same periodicity to information vendors and internal BSE departments, including its surveillance cell.

Brokers send their quotes, orders, negotiated deals and in-house deals from their offices to the central trading engine (CTE) from their broker workstations. The best bid and the best offer (what is commonly known as best bid and offer or BBO) is available to all broker workstations using a mechanism called 'broadcast of market information'. The buy and sell orders placed by the brokers / traders are matched with the best available price in the market for that scrip. After they are matched and the transaction concluded, a confirmation is sent to the broker, which can be printed out.
The implementation of BOLT and its maintenance is one of the major successes of CMC. The company currently deploys a group of 50 engineers towards the maintenance and enhancement of the BOLT system.

It is a matter of immense pride for CMC as the BOLT system efficiently takes the Sensex past one milestone after another. In 1995 when CMC had put BOLT into operation, the Sensex was at a modest 2,500. Over the last ten years it has been a long and rewarding experience for CMC seeing BOLT take the Sensex from 2,500 to 10,000 in great style.

Now that the Central Statistical Organisation (CSO) has projected the country's economic growth at 8.1 per cent for the fiscal 2005-06 the Sensex may well be poised to cross more landmarks. A journey begun in 1995, still continues - powered by a system that has stood the test of time.