The EDI (Electronic Data Interchange) forms the backbone of communication in all online trading operations. EDI provides a proprietary secure network for the transfer of dates and information between the following entities associated with online trading:
• Brokers and Stock Exchanges
• Brokers and Their Associates (Sub-brokers)
• Depository/National Securities Depository Limited (NSDL) and the Depository Participants
• Depository/NSDL and the Stock Exchange
• Depository/NSDL and Issuer Company and/or Their Registrar and Transfer Agents
But, certain questions remain to be answered. The following are some of the questions for which an investor may like to get an answer. Consequently, an understanding of how EDI works and the security it offers to the investors is essential.
1. Actually what is an EDI?
2. Does it provide a secure communication system for the transmission of investor’s financial information?
3. Is the security adequate and built into the system?
4. How does it facilitate Internet trading?
EDI was born in early 1970s to automate the supply change interactions. Buyers are connected to suppliers with exclusive data links that are used to exchange data electronically through a comprehensive set of standardized protocols. It is the first widely known application of business-to-business electronic commerce. The
top commodity trading companies and firms with global operations did not mind spending millions of dollars to install and maintain communication lines with the best protocol.
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