Constituted in 1992, the National Stock Exchange was registered as a stock exchange in April 1993 and started operations in June 1994.

The National stock exchange aims were to:

  • Establishing a national trading center for securities of all kinds.
  • To have fair access to information through an effective communication network for all the investors in the country.
  • To have an effective and open market for securities that is fair to all investors and equal.
  • Using the electronic trading network and meeting international requirements and benchmarks.
  • To have settlements for book entries as well as allow for shorter settlement periods.

The National stock exchange operates within 3 divisions of the markets.

1. Whole sale segment of the debt market which was launched in June 1994.

2. The capital-market segment that began in November 1994 and.

3. Segment Futures and Options which began in June 2003.

The National Stock Exchange shall provide the service of trading of securities at the same price to any stock exchange in the country. National stock exchange brokers can link to an automated quotation system and allow brokers to purchase and sell electronically.

 The national stock exchange is operating on the National Exchange for Automated Trade (NEAT) system. Equipped with the date of the National Stock Exchange, the price data will be transmitted to the Press Trust of India. The National Clearing House will be in a position to provide information on the owner of the scrips and the number of scrips owned by a specific person.

What is national stock exchange?

India Limited’s National Stock Exchange is the leading finance exchange in the country, with headquarters in Mumbai. It was incorporated in 1992 and has since evolved into an advanced, automated, electronic system offering investor trading facilities nationwide. This exchange system was ranked fourth in the world in 2015 according to its trading volume metric.

This stock exchange began its operations in 1994 at the Indian government’s behest to add a degree of transparency to the capital market in the country. Established by an assembly of leading financial institutions and on the recommendations of the Pherwani Committee, this stock exchange consisted of diverse shareholding assets from global as well as domestic investors.

It was also the world’s first stock exchange to implement electronic trading facilities, thus enabling the convergence of investors across the world into a single base.

As of 2018, the National stock exchange had a total market capitalization of more than $2.25 trillion, placing it 11th on the list of the world ‘s largest stock exchanges.

Unlike the USA, however, where corporate-sector trade accounts for about 70 percent of the country ‘s GDP, this sector accounts for just 12-14 percent of its total GDP in India. Of those traded on Indian stock markets, about 7800 companies are listed out of this entire corporate sector, with around 4000. Therefore, stock exchange trading accounts for a mere 4 percent of the overall GDP of the world.

Developments in National stock exchange :

Since 2000, the National stock exchange has launched Internet trading services. In the same year, trading in index futures derivatives began. In 2001, trading in Index Options and Options and Futures for individual securities began. In 2002, the Exchange of Traded Funds and the National stock exchange Government Securities Index were launched. It also won the Wharton-Infosys Business Transformation Award in the organization’s wide transformation category.

It started trading in the Retail Debt Market in 2003. It also started trading in Interest Rate Futures, and an electronic interface for listed companies began in 2004. The Futures and Options Bank NIFTY Index was established in 2005. In this way, the National stock exchange has continuously tried to develop new activities and ranks among the largest stock markets in the world.

How Does National  Stock Exchange Work?

Trading via this Indian stock exchange is done via an electronic restricted order book where order matching takes place through a trading machine. This whole process has no specialists or market makers interference and is driven entirely by orders; meaning that when investors place a market order, it is automatically matched to a limit order. Thus, sellers and buyers in this market have the advantage of remaining anonymous.

In addition, an order-driven market often provides investors with greater clarity by showing every purchase and sale order within the trading system. Such National stock exchange orders are put via brokers who also provide customers with the facility to transact online. There are very few institutional investors who can use this “easy market access” service, where they can position their orders directly into the trading network.

National stock exchange trading on equity segment is conducted during the week, except on Saturdays , Sundays, and other holidays announced by the stock exchange. The pacing of the demand is as follows-

1.Session pre-opening-

  • Entry opens at 9.00 a.m.
  • Check-in closes at 9.08 hours

2.Ordinary session-

  • Market opens at 9.15
  • Market closes at 3.30 p.m.

The flagship index of the National Stock Exchange is the Nifty50 which accounts for about 63 per cent of the total market capitalization quantity listed under it. This index includes about 12 economic sectors below 50 variable inventories.

Currently, Vikram Limaye as CEO and Managing Director and Ashok Chawla as Chairman of the Board of Directors spearhead the stock exchange.

Benefits of listing with India’s national  stock exchange:

National stock exchange has many advantages to listed with it. Some of them are the following-

Extensive visibility-

This trading network offers different trade and post-trade details in an effective way. As well as the total number of shares available for a trade, investors can quickly look up the top buy and sell orders on the trading network. This is helping investors quickly gage the size of the market.

Makes a leading marketplace-

The scale of trading activity in this stock market tends to reduce the cost of relying on it, which decreases investor trading expenses. In addition, the automated trading system of the exchange assists in maintaining transparency and consistency with an investor.

The country’s largest trade-

The National Stocks Exchange is the largest exchange in the world in terms of trading volume, with its market capitalization approaching $2.25 Trillion.

Rapid transactions-

In this Market, the speed at which orders are handled lets investors make use of the best rates. The stock exchange, for instance, reported 11,260,392 trades on May 19th 2009, which was its highest number in a day.

Data on exports-

Listed companies may use the provision of monthly trading statistics to help monitor the output of trading firms.

Thus, with the aforementioned benefits, the National Stock Exchange makes market transactions a favourable facility.

Ownership and Management of National stock exchange

Leading financial institutions, banks , insurance companies, and financial intermediaries retain the national stock exchange. It’s run by professionals not investing in the stock exchange. Its Board is comprised of senior professional executives. The Board plans capital market strategy.

It has executive committees that were formed to manage the work and administration of the exchange under the Articles of Association and National stock exchange rules for different market segment.

The executive committees have members some of whom may also be market traders. Several committees do exist. For example, the Trade-related issues committee, arbitration issues, and regulatory issues. The managing director and CEO is the competent staff manager.

Expenditure Segment –

National stocks exchange offers investment and trading in the following segments –

Equity –-

This includes a volatile asset class that helps investors maximize investment returns. Equity investment consists of several types of assets, such as mutual funds, equities, indices, Exchange Traded Funds, Security Loan and Borrowing Scheme, Initial Public Offerings, etc.

Derivatives of Equity –

Derivatives traded under  stock exchange include global indices such as  CNX 500, etc., commodity derivatives, currency derivatives, interest rate futures, etc. The National stocks exchange market began trading in derivatives in 2002 with the launch of the futures index. In 2011, it also launched derivative contracts for the world’s most-followed index – Dow Jones Industrial Average and S Percent P 500.

Debt – Debt –

This type of investment pool consists of different mutual funds, exchange-traded funds, etc., where the core asset holdings consist of different long-term and short-term bonds , corporate bonds, securitised products, etc.

National Stock Exchange launched the country’s first debt platform on 13 May 2013 to provide investors with a transparent and liquid trading platform for all debt-associated products.

Major Indices in the Exchange System –

An index of the stock market is created by choosing a collection of shares that represent the whole or a specific segment of the market. Following are some of the most important broad market indices, consisting of liquid stocks listed on that stock exchange –

Nifty-50 index

fThe Nifty100 Index

Nifty Next Index 50

Nifty Midcap Index 50

Index of Nifty Smallcap 250

Index of India Vix

National stock exchange also includes other indices such as thematic, strategy, hybrid and fixed income indices.

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