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National Stock Exchange of India Limited (NSE) is the leading
stock exchange under the
ownership
Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...
of various group of domestic and global financial institutions, public and privately owned entities and individuals. It is located in
Mumbai
Mumbai (, ; also known as Bombay — the official name until 1995) is the capital city of the Indian state of Maharashtra and the ''de facto'' financial centre of India. According to the United Nations, as of 2018, Mumbai is the second- ...
,
Maharashtra
Maharashtra (; , abbr. MH or Maha) is a states and union territories of India, state in the western India, western peninsular region of India occupying a substantial portion of the Deccan Plateau. Maharashtra is the List of states and union te ...
. It is the world’s largest
derivatives exchange
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts defined by the exchange. Futures contracts are derivatives contracts to buy or sell specific quantities of a commodity or f ...
in 2021 by number of contracts traded based on the statistics maintained by Futures Industry Association (FIA), a
derivatives
The derivative of a function is the rate of change of the function's output relative to its input value.
Derivative may also refer to:
In mathematics and economics
* Brzozowski derivative in the theory of formal languages
* Formal derivative, an ...
trade body. NSE is ranked 4th in the world in cash equities by number of trades as per the statistics maintained by the World Federation of Exchanges (WFE) for the calendar year 2021. It is under the ownership of some leading financial institutions, banks, and insurance companies. NSE was established in 1992 as the first
dematerialized electronic exchange in the country. NSE was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system that offered easy trading facilities to investors spread across the length and breadth of the country.
Ashishkumar Chauhan is the Managing Director and Chief Executive Officer of NSE. The Indian stock exchange BSE and NSE has been engulfed in series of corruption scandals such as
1992 Indian stock market scam and others.
National Stock Exchange has a total
market capitalization of more than trillion, making it
the world's 9th-largest stock exchange as of August 2021.
NSE's flagship index, the
NIFTY 50, a 50 stock index is used extensively by investors in
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
and around the world as a barometer of the Indian capital market. The
NIFTY 50 index was launched in 1996 by NSE. However, Vaidyanathan (2016) estimates that only about 4% of the Indian economy / GDP is actually derived from the stock exchanges in India.
Unlike countries like the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
where nearly 70% of the country's
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
is derived from large companies in the
corporate
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
sector, the corporate sector in India accounts for only 12–14% of the national GDP (as of October 2016). Of these only 7,400 companies are listed of which only 4000 trade on the stock exchanges at
BSE
BSE may refer to:
Medicine
* Bovine spongiform encephalopathy, also known as mad cow disease, a neurodegenerative disease of cattle
* Breast self-examination
Stock exchanges
* Bahrain Stock Exchange, Bahrain
* Baku Stock Exchange, Azerbaijan
* B ...
and NSE. Hence the stocks trading at the BSE and NSE account for only around 4% of the
Indian economy
The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy with notable state participation in strategic sectors.
*
*
*
* It is the world's fifth-largest economy by nomin ...
, which derives most of its income-related activity from the so-called unorganized sector and household spending.
Economic Times estimates that as of April 2018, 6 crore (60 million) retail investors had invested their savings in stocks in India, either through direct purchases of equities or through mutual funds. Earlier, the Bimal Jalan Committee report estimated that barely 1.3% of India's population invested in the stock market, as compared to 27% in the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
and 10% in
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
.
History
National Stock Exchange was incorporated in the year 1992 to bring about transparency in the Indian equity markets. Instead of trading memberships being confined to a group of brokers, NSE ensured that anyone who was qualified, experienced, and met the minimum financial requirements was allowed to
trade
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.
An early form of trade, barter, saw the direct excha ...
. In this context, NSE was ahead of its time when it separated ownership and management of the exchange under
SEBI
The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive ...
's supervision. Stock price information that could earlier be accessed only by a handful of people could now be seen by a client in a remote location with the same ease. The paper-based settlement was replaced by electronic depository-based accounts and settlement of trades was always done on time. One of the most critical changes involved a robust risk management system that was set in place, to ensure that settlement guarantees would protect investors against
broker
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
defaults.
NSE was set up by a group of leading Indian financial institutions at the behest of the
Government of India
The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, ...
to bring transparency to the Indian capital market. Based on the recommendations laid out by the Pherwani committee, NSE was established with a diversified shareholding comprising domestic and global investors. The key domestic investors include
Life Insurance Corporation,
State Bank of India,
IFCI Limited,
IDFC Limited and
Stock Holding Corporation of India Limited
Stock Holding Corporation of India Limited (SHCIL) is an Indian custodian and depository participant, based in Navi Mumbai, Maharashtra. SHCIL was established in 1986 as a public limited company and is a subsidiary of IFCI. It is also responsi ...
. Key global investors include Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited, and PI Opportunities Fund I.
The exchange was incorporated in 1992 as a tax-paying company and was recognized as a stock exchange in 1993 under the Securities Contracts (Regulation) Act, 1956, when
P. V. Narasimha Rao
Pamulaparthi Venkata Narasimha Rao (28 June 1921 – 23 December 2004) was an Indian lawyer, statesman and politician who served as the 9th prime minister of India from 1991 to 1996. He is known for introducing various liberal reforms to Indi ...
was the Prime Minister of India and
Manmohan Singh was the Finance Minister. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The capital market (equities) segment of the NSE commenced operations in November 1994, while operations in the derivatives segment commenced in June 2000. NSE offers trading, clearing and settlement services in
equity
Equity may refer to:
Finance, accounting and ownership
* Equity (finance), ownership of assets that have liabilities attached to them
** Stock, equity based on original contributions of cash or other value to a business
** Home equity, the dif ...
,
equity derivative In finance, an equity derivative is a class of derivatives whose value is at least partly ''derived'' from one or more underlying equity securities. Options and futures are by far the most common equity derivatives, however there are many other ty ...
,
debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
,
commodity derivatives, and
currency derivatives segments. It was the first exchange in India to introduce an electronic trading facility thus connecting the investor base of the entire country. NSE has 2500 VSATs and 3000 leased lines spread over more than 2000 cities across India.
NSE was also instrumental in creating the
National Securities Depository Limited
National Securities Depository Limited (NSDL) is an Indian central securities depository, based in Mumbai. It was established in August 1996 as the first electronic securities depository in India with national coverage. It was established base ...
(NSDL) which allows investors to securely hold and transfer their shares and bonds electronically. It also allows investors to hold and
trade
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.
An early form of trade, barter, saw the direct excha ...
in as few as one share or bond. This not only made holding financial instruments convenient but more importantly, eliminated the need for paper certificates and greatly reduced incidents involving forged or fake certificates and fraudulent transactions that had plagued the Indian stock market. The NSDL's security, combined with the transparency, lower transaction prices, and efficiency that NSE offered, greatly increased the attractiveness of the Indian stock market to domestic and international investors.
NSE EMERGE
NSE EMERGE is NSE's new initiative for
Small and medium-sized enterprises (SME) &
Startup companies in India. These companies can get listed on NSE without an
Initial public offering (IPO). This platform will help SME's & Startups connect with investors and help them with the raising of funds. In August 2019, the 200th company listed on NSE's SME platform.
Markets
NSE offers trading and investment in the following segments
Equity
*
Equity
Equity may refer to:
Finance, accounting and ownership
* Equity (finance), ownership of assets that have liabilities attached to them
** Stock, equity based on original contributions of cash or other value to a business
** Home equity, the dif ...
*
Indices
*
Mutual fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...
*
Exchange-traded funds
*
Initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
s
* Security Lending and Borrowing etc.
Derivatives
*
Equity Derivatives In finance, an equity derivative is a class of derivatives whose value is at least partly ''derived'' from one or more underlying equity securities. Options and futures are by far the most common equity derivatives, however there are many other ty ...
(including Global Indices like
S&P 500
The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of ...
,
Dow Jones and
FTSE)
*
Currency derivatives
*
Commodity Derivatives
*
Interest rate futures
Debt
*
Corporate bonds
Equity Derivatives
The National Stock Exchange of India Limited (NSE) commenced trading in derivatives with the launch of index futures on 12 June 2000. The futures and options segment of NSE has made a global mark. In the Futures and Options segment, trading in the NIFTY 50 Index, NIFTY IT index, NIFTY Bank Index, NIFTY Next 50 index, and single stock futures are available. Trading in Mini Nifty Futures & Options and Long term Options on NIFTY 50 are also available. The average daily turnover in the F&O Segment of the Exchange during the financial year April 2013 to March 2014 stood at .
On 29 August 2011, National Stock Exchange launched derivative contracts on the world's most-followed equity indices, the S&P 500 and the Dow Jones Industrial Average. NSE is the first Indian exchange to launch global indices. This is also the first time in the world that futures contracts on the S&P 500 index were introduced and listed on an exchange outside of their home country, the USA. The new contracts include futures on both the DJIA and the S&P 500 and options on the S&P 500.
On 3 May 2012, the National Stock exchange launched derivative contracts (futures and options) on FTSE 100, the widely tracked index of the UK equity stock market. This was the first of its kind index of the UK equity stock market launched in India. FTSE 100 includes the 100 of largest UK-listed blue-chip companies and has given returns of 17.8 percent on investment over three years. The index constitutes 85.6 per cent of UK's equity market cap.
On 10 January 2013, the National Stock Exchange signed a letter of intent with the Japan Exchange Group, Inc. (JPX) on preparing for the launch of NIFTY 50 Index futures, a representative stock price index of India, on the Osaka Securities Exchange Co., Ltd. (OSE), a subsidiary of JPX.
Moving forward, both parties will make preparations for the listing of yen-denominated NIFTY 50 Index futures by March 2014, the integration date of the derivatives markets of OSE and Tokyo Stock Exchange, Inc. (TSE), a subsidiary of JPX. This is the first time that retail and institutional investors in Japan will be able to take a view on the Indian markets, in addition to current ETFs, in their own currency and in their own time zone. Investors will therefore not face any currency risk, because they will not have to invest in dollar-denominated or rupee-denominated contracts.
In August 2008, currency derivatives were introduced in India with the launch of Currency Futures in USD–INR by NSE. It also added currency futures in Euros, Pounds, and Yen. The average daily turnover in the F&O Segment of the Exchange on 20 June 2013 stood at in futures and in options, respectively.
Interest Rate Futures
In December 2013, exchanges in India received approval from market regulator SEBI for launching interest rate futures (IRFs) on a single GOI bond or a basket of bonds that will be cash-settled. Market participants have been in favor of the product being cash-settled and being available on a single bond. NSE will launch the NSE Bond Futures on 21 January on highly liquid 7.16 percent and 8.83 percent 10-year GOI bonds. Interest Rate Futures were introduced in India by NSE on 31 August 2009, exactly one year after the launch of Currency Futures. NSE became the first stock exchange to get approval for interest-rate futures, as recommended by the SEBI-RBI committee.
Debt Market
On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid and transparent trading platform for debt-related products.
The Debt segment provides an opportunity for retail investors to invest in corporate bonds on a liquid and transparent exchange platform. It also helps institutions that are holders of corporate bonds. It is an ideal platform to buy and sell at optimum prices and help Corporates to get adequate demand when they are issuing the bonds.
Trading schedule
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the Exchange in advance). The market timings of the equities segment are:
* (1) Pre-open session:
** Order entry & modification Open: 09:00 hrs
** Order entry & modification Close: 09:08 hrs
*
*with random closure in last one minute. Pre-open
order matching starts immediately after the close of pre-open order entry.
* (2) Regular trading session
** Normal/Retail Debt/Limited Physical Market Open: 09.15 hrs
** Normal/Retail Debt/Limited Physical Market Close: 15:30 hrs.
** Aftermarket hours: 16:00 – 09:00 hrs
Exchange Traded Funds and Derivatives on National Stock Exchange
The following products are trading on the NIFTY 50 Index in the Indian and international Market:
* 7 Asset Management Companies have launched
exchange-traded funds on NIFTY 50 Index which is listed on NSE
* 15 index funds have been launched on NIFTY 50 Index
* Unit-linked products have been launched on the NIFTY 50 Index by several insurance companies in India
* World Indices
Derivatives Trading on NIFTY 50 Index:
* Futures and Options trading on NIFTY 50 Index
* Trading in NIFTY 50 Index Futures on Singapore Stock Exchange(SGX)
* Trading in NIFTY 50 Index Futures on Chicago Mercantile Exchange(CME)
Technology
NSE's trading systems are a state-of-the-art application. It has an uptime record of 99.99% and processes more than 450 million messages every day with a sub-millisecond response time.
[CXO-Dialogue](_blank)
Moneycontrol.com. Retrieved 2013-12-06.
NSE has taken huge strides in technology in 20 years. In 1994, when trading started, NSE technology was handling 2 orders a second. This increased to 60 orders a second in 2001. Today NSE can handle 1,60,000 orders/messages per second, with the ability to scale up at short notice on demand, NSE has continuously worked towards ensuring that the settlement cycle comes down. Settlements have always been handled smoothly. The settlement cycle has been reduced from T+3 to T+2/T+1.
Financial literacy
NSE has collaborated with several universities like
Gokhale Institute of Politics & Economics (GIPE), Pune,
Bharati Vidyapeeth Deemed University
Bharati Vidyapeeth is a 58 year old private deemed to be university established in Pune, India. It was established in 1964 by Indian politician and educationist Patangrao Kadam. Bharati Vidyapeeth has campuses across the country at New Delhi, N ...
(BVDU), Pune,
Guru Gobind Singh Indraprastha University
Guru Gobind Singh Indraprastha University, formerly Indraprastha University (IP or IPU), is a state university located in Dwarka, Delhi, India. The campus occupies 78 acres (31.56 hectares), among the largest in Delhi, and enrolls over 8,000 st ...
, Delhi, the
Ravenshaw University
Ravenshaw University, formerly known as Ravenshaw college, is a co-educational state university situated in Cuttack, Odisha on the eastern coast of India. Founded as Ravenshaw College in 1868, the institution became a university in 2006. The un ...
of Cuttack and
Punjabi University
Punjabi University is a collegiate state public university located in Patiala, Punjab, India. It was established on 30 April 1962 and is only the second university in the world to be named after a language, after Hebrew University of Israel. ...
, Patiala, among others to offer MBA and BBA courses. NSE has also provided mock market simulation software called NSE Learn to Trade (NLT) to develop investment, trading, and portfolio management skills among the students. The simulation software is very similar to the software currently being used by the market professionals and helps students to learn how to trade in the markets.
NSE also conducts online examinations and awards certification, under its Certification in Financial Markets (NCFM) programs.
At present, certifications are available in 46 modules, covering different sectors of financial and capital markets, both at the beginner and advanced levels. The list of various modules can be found at the official site of NSE India. In addition, since August 2009, it has offered a short-term course called NSE Certified Capital Market Professional (NCCMP).
The NCCMP or NSE Certified Capital Market Professional is a 100-hour program for over 3–4 months, conducted at the colleges, and covers theoretical and practical training in subjects related to the capital markets. NCCMP covers subjects like equity markets, debt markets, derivatives, macroeconomics, technical analysis, and fundamental analysis. Successful candidates are awarded joint certification from NSE and the concerned.
NSE co-location case
On 8 July 2015, Sucheta Dalal wrote an article on
Moneylife
Moneylife is an online personal finance website. The original fortnightly print edition ceased production from May 2018.
History
''Moneylife'' was founded by husband and wife Debashis Basu and Sucheta Dalal in 2006.
The Moneylife foundation w ...
alleging that some NSE employees were leaking sensitive data related to high-frequency trading or co-location servers to a select set of market participants so that they could trade faster than their competitors. NSE alleged defamation in the article by Moneylife. On 22 July 2015, NSE filed a suit against the publication. However, on 9 September 2015, the Bombay High Court dismissed the case and fined NSE in this defamation case against Moneylife. The High Court asked NSE to pay to each journalist Debashis Basu and
Sucheta Dalal and the remaining to two hospitals.
The Bombay High Court has stayed the order on costs for a period of two weeks, pending the hearing of the appeal filed by NSE.
In May 2019 SEBI has debarred NSE from accessing the markets for a period of 6 months. While NSE confirmed this will not impact their functioning, they won't be able to list their IPO or introduce any new trading products for that period. Additionally, the watchdog also ordered NSE to disgorge Rs 624.9 crores (along with accrued interest for the period), an amount equivalent to the profits it made from the unfair trade practice of co-location servers they provided during the period from 2010–11 to 2013–14.
The board also passed orders against 16 individuals including former managing directors and CEOs Ravi Narain and Chitra Ramakrishna ordering them to disgorge 25% of their salaries during that period along with interest. All money is to be paid into the Investor protection and education fund. These individuals have also been debarred from the markets or holding any position in a listed company for a period of five years.
See also
*
India International Exchange
The India International Exchange Limited (India INX) is India's first international stock exchange which is under the ownership of Ministry of Finance, Government of India. It is located at the International Financial Services Centre, GIFT Cit ...
*
*
Stock market crashes in India
*
List of stock exchanges in the Commonwealth of Nations
This is a list of active stock exchanges in the Commonwealth of Nations (Full Members). The Commonwealth of Nations features member-states located on all major continents and represents almost one-third of the Earth's population. Some states ha ...
*
List of South Asian stock exchanges
This is a list of Asian stock exchanges.
In the Asian region, there are multiple stock exchanges. As per data from World Federation of Exchanges, below are top 10 selected in 2020:
* Shanghai Stock Exchange, China
* Tokyo Stock Exchange, Japan
...
*
Mahurat trading
Muhurat trading is the trading activity in the Indian stock market on the occasion of Diwali (Deepawali), a big festival for citizens of India. Usually, it is held during evening hour and is announced by the stock market exchanges notifying tra ...
*
Clause 49
''Clause 49'' of the Listing Agreement to the Indian stock exchange that came into effect from 31 December 2005. It has been formulated for the improvement of corporate governance in all listed companies.
Background
In corporate hierarchy two t ...
*
Bombay Stock Exchange
BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange. It is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman, it is the oldest stock exchange i ...
*
NSE EMERGE
NSE EMERGE is the National Stock Exchange of India's new initiative for small and medium-sized enterprises and startup companies from India. These companies can get listed on NSE without Initial public offering (IPO). This platform helps SMEs and ...
References
External links
*
{{DEFAULTSORT:National Stock Exchange Of India
Stock exchanges in India
Financial services companies based in Mumbai
Financial services companies established in 1992
1992 establishments in Maharashtra