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Difference between NSEI and OTCEI

Last Updated : 18 Apr, 2024
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A market that serves as a link between the savers and borrowers, by transferring the capital or money from those who have a surplus amount of money to those who are in need of money or investment, is known as Financial Market. In general, the investors are known as the surplus units and business enterprises are known as the deficit units. Hence, a financial market acts as a link between surplus units and deficit units and brings the borrowers and lenders together. The four basic functions of a financial market are the facilitation of price discovery, mobilisation of savings and channelising them into the most productive use, provision of liquidity to financial assets, and reduction of cost of the transaction. Financial Markets are of two types; namely, Capital Market and Money Market. 

Difference-between-NSEI-and-OTCEI

What is National Stock Exchange of India (NSEI)?

The National Stock Exchange of India (NSEI or NSE) is a leading stock exchange in India that allows people all over the country to trade securities of all types. It was incorporated in 1992 and started its operations in 1994. The NSE also launched a capital market segment in 1994 along with the futures and options segment in 2000 for different derivative instruments. The NSE was set up by the leading financial institutions, banks, insurance companies, and other financial intermediaries, and is managed by eminent professionals and senior executives from promoter institutions. These people directly or indirectly trade in exchange. With the help of National Stock Exchange of India, the investors, sell and purchase securities through the trading members. 

What is Over the Counter Exchange of India (OTCEI)?

Over the Counter Exchange of India (OTCEI) is an organisation, which was incorporated in 1990 under the Companies Act 1956. The trading in OCTEI commenced in 1992 and is a fully computerised, single window, and transparent exchange. OTC Market or Over the Counter can be defined as a place where sellers seek buyers and buyers seek sellers, and then tries to arrange some terms and conditions for the sale and purchase, which is acceptable to both parties. OTCEI was established to provide access to the capital market to small and medium companies, so they can raise finance in a cost-effective manner and provide the investors with a convenient, efficient, and transparent avenue for capital market investment.

Common Features between NSEI and OTCEI

The common features between them are as follows:

1. Incorporate Entities: The National Stock Exchange of India and Over the Counter Exchange of India, both have been established as companies, which are promoted by the leading banks, financial institutions, insurance companies, and other financial intermediaries.

2. Transparent Market: As the transactions taking place are screen-based, both NSE and OTCEI provide the traders with a transparent market. Besides, the investors can check the exact price of the securities at which the transaction has taken place.

3. Nationwide Coverage: The NSEI and OTCEI, both have nationwide coverage. It means that there are no geographical and distance barriers in the National Stock Exchange of India and Over the Counter Exchange of India.

4. No Trading Floor: The NSEI and OTCEI both don’t have a trading floor. In other words, the trading in both exchanges takes place through a computer network.

5. Screen-Based Trading: The transactions under NSEI and OTCEI are conducted electronically through computers by using a satellite link. 

Difference between NSEI and OTCEI

Basis

NSEI

OTCEI

Year of Establishment NSEI was established in 1992. OTCEI was established in 1990.
Objective It aims at providing nationwide transparent and efficient trading facilities for all types of securities. It aims to serve as an exchange for the securities of small companies.
Securities Traded The securities traded in NSEI are the securities of both capital market and money market. OTCEI deals in the securities of capital market only.
Settlement Cycle The settlement cycle of National Stock Exchange of India is 15 days. The settlement cycle of OTCEI is 7 days.
Size of Listed Companies The listed companies under the National Stock Exchange of India have a paid-up capital of at least ₹10 crores. The listed companies under Over the Counter Exchange of India have a paid-up capital of at least ₹3 crores.

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