National Stock Exchange of India
|National Stock Exchange|
|राष्ट्रीय शेयर बाजार|
|Location||Mumbai, Maharashtra, India|
|Owner||National Stock Exchange of India Limited|
|Key people||Chitra Ramkrishna (MD) and (CEO)|
|Currency||Indian rupee ()|
|MarketCap||US$0.989 trillion (Aug 2013)|
CNX Nifty Junior
The National Stock Exchange of India Ltd. (NSE) (Marathi: राष्ट्रीय शेयर बाजार Rashtriya Śhare Bāzaār)) is the country’s leading stock exchange located in the financial capital of Mumbai, India. National Stock Exchange (NSE) was established in the mid 1990s as a demutualised electronic exchange. NSE provides a modern, fully automated screen-based trading system, with over two lakh trading terminals, through which investors in every nook and corner of India can trade. NSE has played a critical role in reforming the Indian securities market and in bringing unparalleled transparency, efficiency and market integrity.
NSE has a market capitalisation of more than US$989 billion and 1,635 companies listed as on July 2013. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions. NSE's flagship index, the S&P CNX Nifty, is used extensively by investors in India and around the world to take exposure to the Indian equities market.
NSE was started by a clutch of leading Indian financial institutions. It offers trading, clearing and settlement services in equity, debt and equity derivatives. It is India's largest exchange, globally in cash market trades, in currency trading and index options. NSE has diversified shareholding. There are many domestic and global institutions and companies that hold stake in the exchange. Some of the domestic investors include LIC, GIC, State Bank of India and IDFC Ltd. Foreign investors include MS Strategic (Mauritius) Limited, Citigroup Strategic Holdings Mauritius Limited, Tiger Global Five Holdings and Norwest Venture Partners X FII-Mauritius, who have a stake in NSE. As on June 2013, NSE has 1673 VSAT terminals and 2720 leaselines, spread over more than 2000 cities across India.
Origin was started by a clutch of leading Indian financial institutions at the behest of the Government of India to bring transparency to the Indian market, and has a diversified shareholding comprising domestic and global investors. The domestic investors includes Life Insurance Corporation of India, GIC, State Bank of India and Infrastructure Development Finance Company (IDFC) Ltd, while the foreign investors include MS Strategic (Mauritius) Limited, Citigroup Strategic Holdings Mauritius Limited, Tiger Global Five Holdings and Norwest Venture Partners X FII-Mauritius. 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 Mr. P. V. Narasimha Rao was the Prime Minister of India and Dr. 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. In December 2013, NSE celebrated its 20th anniversary in a glittering ceremony attended by the Chairman of the market regulator SEBI Mr. U. K. Sinha, Finance Minister Mr. P. Chidambaram and a host of dignitaries from other regulatory organizations, the market and the corporate world. The institution that has been a catalyst of reforms since inception pledged to continue with this tradition on this solemn occasion, and set even loftier goals for the future, while the market regulator announced that NSE had made India proud in the global arena. Over the years, NSE has constantly re-invented itself, be it adapting to the latest technology, introducing new products, or in its endeavor to promote financial literacy. The spirit of the organisation is aptly summed up in MD & CEO Ms. Chitra Ramkrishna’s words when she said, at heart NSE always wants to be young and always wants to be energetic. In the past 20 years, the exchange has set certain standards. As articulated by Ms. Ramkrishna, the endeavour now is not only on ensuring that those standards are maintained, but also on being able to improve upon them.
How NSE brought about a paradigm shift in Financial market
NSE was mainly set up to bring in transparency in the markets. Instead of trading membership being confined to a group of brokers, NSE ensured that anyone who was qualified, experienced and met minimum financial requirements was allowed to trade. In this context, NSE was ahead of its times when it separated ownership and management in the exchange under SEBI's supervision. The price information which 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 was that a robust risk management system was set in place, so that settlement guarantees could protect investors against broker defaults.
NSE was also instrumental in creating the National Securities Depository Limited (NSDL) which allowed investors to securely hold and transfer their shares and bonds electronically. It also allowed investors to hold and trade 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 the incidents of 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 offers trading in the following segments:
- Mutual Funds
- Exchange Traded Funds
- Initial Public Offerings
- Security Lending and Borrowing Scheme
- Equity Derivatives (including Global Indices like S&P 500, Dow Jones and FTSE )
- Currency Derivatives
- Interest Rate Futures
- Corporate Bonds
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 mark for itself globally. In the Futures and Options segment, trading in CNX Nifty Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index and single stock futures are available. Trading in Mini Nifty Futures & Options and Long term Options on CNX Nifty are also available. The average daily turnover in the F&O Segment of the Exchange on 28 February 2013 stood at Rs 4,02,090.64 crore.
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 the 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, 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 of an index of the UK equity stock market launched in India. FTSE 100 includes 100 largest UK listed blue chip companies and has given returns of 17.8 per cent 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 CNX Nifty 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 CNX Nifty 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 Rs 41,926.16 crore in futures and Rs 27,397.70 crore 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 favour of the product being cash settled and being available on a single bond. NSE will launch the NSE Bond Futures on January 21 on highly liquid 7.16 percent and 8.83 percent 10-year GOI bonds. Interest Rate Futures were introduced for the first time 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 an approval for interest-rate futures, as recommended by the SEBI-RBI committee.
On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid and transparent trading platform or debt related products.
The Debt segment provides an opportunity to retail investors to invest in corporate bonds on a liquid and transparent exchange platform. It also helps institutions who 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 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 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
Block deal session is held between 09:15 hrs and 09:50 hrs.
- (3) The Closing Session is held between 15.50 hrs and 16.00 hrs.
The Exchange may however close the market on days other than the above schedule holidays or may open the market on days originally declared as holidays. The Exchange may also extend, advance or reduce trading hours when it deems fit and necessary.
Exchange Traded Funds on NSE
An exchange-traded fund is an investment fund that is traded on a stock exchange, just like stocks. An ETF holds assets such as stocks, commodities or bonds and trades in value, around its (NAV) over the course of the trading day. Most ETFs track an index such as a stock index or a bond index. ETFs are attractive investments because of their low costs, diversified holdings, tax efficiency and stock-like features. ETFs are the most popular type of exchange-traded products in the USA and Europe.
Exchange Traded Funds are simple and easy to understand. Most ETFs also have an intrinsically lower risk due to their diversified portfolio. This diversification coupled with low expenses allows the smallest of the investors to reap the benefits of market based returns. Retail investors can use ETF’s as an easy entry vehicle into the capital markets. Equity investments are most likely to give you attractive long term growth. And, this growth is reflected in market indices, like the NSE Nifty.
The following products are trading on CNX Nifty Index in the Indian and international Market:
- 7 Asset Management Companies have launched ETFs on CNX Nifty Index which are listed on NSE
- 15 index funds have been launched on CNX Nifty Index
- Unit linked products have been launched on CNX Nifty Index by several insurance companies in India
- World Indices
Derivatives Trading on CNX Nifty Index:
- Futures and Options trading on CNX Nifty Index
- Trading in CNX Nifty Index Futures on Singapore Stock Exchange (SGX)
- Trading in CNX Nifty Index Futures on Chicago Mercantile Exchange (CME)
NSE’s trading system, is a state of-the-art application. It has an up time record of 99.99% and processes more than 450 million messages every day with sub millisecond response time.
NSE has taken huge strides in technology in these 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 infinite ability to scale up at short notice on demand
While settlements were delayed and uncertain before 1994, 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+5 to T+2/T+1. The exchange continuously strives to enhance capacity to effectively meet the requirements of increased users and associated transaction loads.
NSE is keen to ensure that the people of India are empowered to take sound financial decisions and invest wisely. It has collaborated with several universities like Gokhale Institute of Politics & Economics (GIPE), Pune, Bharati Vidyapeeth Deemed University (BVDU), Pune, Guru Gobind Singh Indraprastha University, Delhi, Ravenshaw University of Cuttack and Punjabi University, 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.
The exchange has also worked with a missionary zeal to educate investors about the opportunities in the market, the precautions they should take and their rights and obligations. In order to educate investors and help them invest wisely, NSE conducts nearly 1,500 seminars every year in the metros as well as the smallest towns of India.
NSE also conducts online examination and awards certification, under its Certification in Financial Markets (NCFM) programmes. 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 offers 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
- Companies listed on the National Stock Exchange of India
- List of South Asian stock exchanges
- Mahurat trading
- Clause 49
- Bombay Stock Exchange
- India out of trillion-dollar club; market cap slips to $989 billion - The Times of India. Timesofindia.indiatimes.com. Retrieved on 2013-12-06.
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- UPDATE 1-India's NSE, Japan's JPX plan Nifty futures for Osaka. Reuters. Retrieved on 2013-12-06.
- NSE launches debt trading platform | Business Line. Thehindubusinessline.com (2013-05-13). Retrieved on 2013-12-06.
- CXO-Dialogue. Moneycontrol.com. Retrieved on 2013-12-06.
- NSE ties with deemed University to offer pg diploma in financial markets. Edu-Leaders (2012-11-29). Retrieved on 2013-12-06.
- NCFM(Bhandarkar Road, Pune) - Pune - Maharashtra - India. Puneeducation.in. Retrieved on 2013-12-06.
14. http://www.nseindia.com/content/press/pr_09012013.pdf Agreement on Launch of S&P CNX Nifty Futures in Japan
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