National Stock Exchange of India

National Stock Exchange of India Limited (NSE, राष्ट्रीय शेअर बाजार) is one of the leading stock exchanges in India, based in Mumbai. NSE is under the ownership of various financial institutions such as banks and insurance companies.[3] It is the world's largest derivatives exchange by number of contracts traded[lower-alpha 1] and the third largest in cash equities by number of trades[lower-alpha 2] for the calendar year 2022.[4] It is one of the largest stock exchanges in the world by market capitalization.[2] NSE's flagship index, the NIFTY 50, a 50 stock index is used extensively by investors in India and around the world as a barometer of the Indian capital market. The NIFTY 50 index was launched in 1996 by NSE.[5]

National Stock Exchange of India
TypeStock exchange
LocationMumbai, Maharashtra, India
Founded1992 (1992)
OwnerVarious group of domestic and global financial institutions, public and privately owned entities and individuals[1]
Key people
CurrencyIndian rupee (₹)
No. of listings2,137[2]
Market capUS$3.27 trillion (Jan 2023)[2]
IndicesNIFTY 50
NIFTY Next 50
NIFTY 500
Websitewww.nseindia.com
The National Stock Exchange building in the Bandra Kurla Complex in Mumbai

The 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.[6] Earlier, the Bimal Jalan Committee report estimated that barely 3% of India's population invested in the stock market, as compared to 27% in the United States and 10% in China.[7][8][9][10]

History

National Stock Exchange was incorporated in the year 1992 to bring about transparency in the Indian equity markets. NSE was set up at the behest of the Government of India, based on the recommendations laid out by the Pherwani committee in 1991[11] and the blueprint was prepared by a team of five members (Ravi Narain, Raghavan Puthran, K Kumar, Chitra Sankaran and Ashishkumar Chauhan) along with R H Patil and SS Nadkarni who were deputed by IDBI in 1992.[12][13] 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.[14]

NSE commenced operations in 30 June 1994 starting with the wholesale debt market (WDM) segment and equities segment in 03 November 1994 .[15] It was the first exchange in India to introduce an electronic trading facility.[16] Within one year of the start of its operations, the daily turnover on NSE exceeded that of the BSE.[12]

Operations in the derivatives segment commenced in 12 June 2000.[15] In August 2008, NSE introduced currency derivatives.[17]

NSE EMERGE
Main article: NSE EMERGE

NSE EMERGE is NSE's new initiative for Small and medium-sized enterprises (SME) & Startup companies in India.[18] 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.[19] In August 2019, the 200th company listed on NSE's SME platform.[20]

Markets

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.[21] The average daily turnover in the F&O Segment of the Exchange during the financial year April 2013 to March 2014 stood at ₹1.52236 trillion (US$19 billion).

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.[22]

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.[23]

Moving forward, both parties will make preparations for the listing of yen-denominated NIFTY 50[24] On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid and transparent trading platform for debt-related products.[25]

Stakeholders

The key domestic investors which hold a stake in NSE include Life Insurance Corporation, State Bank of India, India Infoline Limited and Stock Holding Corporation of India Limited. Key global investors include Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited, Veracity Investments Limited, Crown Capital Limited and PI Opportunities Fund I.[26]

Subsidiaries
  • NSE Indices Limited
  • NSE Clearing Limited
  • NSE NSEIT
  • NSE Infotech Services Limited
  • NSE Cogencis Information Services Ltd
  • NSE IFSC Clearing Corporation Limited (NICCL), or simply NSE International Clearing
  • NSE IFSC Limited, or simply NSE International Exchange
  • NSE Investments Limited
  • NSE Data & Analytics
  • NSE Academy Limited[27]

Financial literacy

NSE 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, the 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.[28] 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.[29] NSE has set up NSE Academy Limited to further financial literacy.

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).[30]

Criticism and controversies

Market manipulation
See also: Ketan Parekh

The Indian stock exchanges BSE and NSE have witnessed several corruption scandals.[31][32][33][34][35][36][37][38][39][40][41][42][43][44] At times, the Securities and Exchange Board of India (SEBI) has barred several individuals and entities from trading on the exchanges for stock manipulation, especially in illiquid smallcaps and penny stocks.[45][46][47][48][49][50][51][52]

NSE co-location case
Main article: NSE co-location scam

On 8 July 2015, Sucheta Dalal wrote an article on Moneylife 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 ₹1 billion (US$13 million) suit against the publication.[53] However, on 9 September 2015, the Bombay High Court dismissed the case and fined NSE ₹5 million (US$63,000) in this defamation case against Moneylife.[54] The High Court asked NSE to pay ₹150,000 (US$1,900) to each journalist Debashis Basu and Sucheta Dalal and the remaining ₹4.7 million (US$59,000) 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.[55]

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.[56]

See also

Notes
  1. Based on the statistics maintained by Futures Industry Association (FIA), a derivatives trade body
  2. As per the statistics maintained by the World Federation of Exchanges (WFE)

References
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  2. "Market Statistics – March 2023 – World Federation of Exchanges". Focus.world-exchanges.org.
  3. "Who Owns The Stock Exchanges?". Investopedia.com.
  4. "NSE maintains its lead as largest global derivatives market for 4th year – Check its rank in equity segment". Times Now. 30 January 2023. Retrieved 28 February 2023.
  5. "History & Milestones". Nseindia.com. Retrieved 23 February 2022.
  6. Thukral, Arun (24 April 2018). "For those who do not make much money in stocks, here's the catch". The Economic Times. Retrieved 24 April 2018.
  7. "Increasing retail investor base: SEBI has a tough job ahead". Moneylife. 2 June 2011. Retrieved 24 April 2018.
  8. Jalan, Bimal (1 November 2010). Jalan Committee report 2010 – Review of Ownership andGovernance of Market Infrastructure Institutions (PDF). Mumbai: SEBI. Retrieved 24 April 2018.
  9. Chandrasekhar, C.P.; Mallick, Sarat; A, Akriti. The elusive retail investor: How deep can (and should) India's stock markets be? (PDF). SEBI. Retrieved 24 April 2018.
  10. Library of Congress, Federal Research Division (30 December 2011). FINANCIAL LITERACY AMONG RETAIL INVESTORS IN THE UNITED STATES (PDF). Washington DC: SEC / The library of congress. Retrieved 24 April 2018.
  11. "Pherwani Committee report recommends setting up of NSE in New Bombay". India Today. Retrieved 28 February 2023.
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  20. Laskar, Anirudh (22 August 2019). "NSE gets 200th company listed on its SME platform". Mint. Retrieved 7 October 2019.
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  34. "SEBI penalises BSE, NSE for 'laxity' in Karvy fraud case". 13 April 2022.
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