India’s top stock exchanges, NSE and BSE, are expanding their co-location infrastructure to meet the rising demand from market participants who want faster access to trading systems.
Co-location allows brokers to place their servers physically closer to the exchange’s systems, giving them a speed advantage. As demand for this service has steadily grown over the years, both exchanges are taking steps to increase the number of server racks available.
Currently, NSE has about 1,300 full racks and plans to add 300 more by the end of June. Over the next two years, it aims to add an additional 2,000 racks in phases. Due to growing demand, the exchange has even relocated its employees to another building in Mumbai’s Bandra Kurla Complex (BKC) to make space. Its former office, Exchange Plaza, is being converted into a data center.
NSE’s CFO Ian Deouza mentioned that building 2,000 racks will cost around ₹520–550 crore, spread over time and depreciated based on the lifespan of the racks.
BSE is also working to expand its co-location capacity. About three years ago, it repurposed part of its historic Rotunda Hall in Mumbai for this use and reclaimed leased space on the ground floor to create more room. BSE currently has 300 racks and plans to add 200 more in the next 3–4 months. Its goal is to reach an effective capacity of about 650 racks, considering the mix of high-power and standard racks.
The exchange is also looking for more real estate to accommodate future growth in co-location services.
Though co-location is seen more as a product offering than a core revenue source, it can still generate significant income if demand continues. BSE’s annual rack charges range from ₹3 lakh for a quarter rack to ₹25 lakh for a high-capacity full rack. In contrast, NSE recently cut its fees, with full rack costs dropping from ₹12 lakh to ₹9 lakh per year.
Industry insiders expect this race to accelerate if commodity exchanges are also allowed to offer co-location services. While a proposal has been submitted to the regulator, there has been no official decision yet.
