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 on exchange. With the help of National Stock Exchange of India, the investors, sell and purchase securities through the trading members.
Objectives of National Stock Exchange of India (NSE)
The objectives of NSE are as follows:
1. It was set up to establish a trading facility all over the country for all types of securities.
2. It was set up to accomplish international standards and benchmarks.
3. Ensuring equal access to investors nationwide through an appropriate communication network.
4. Enabling shorter settlement cycles and book entry settlements.
5. Lastly, the objective of NSE is to provide traders with a fair, efficient, and transparent securities market through an electronic trading system.
NSE has successfully achieved its objectives for which it was set within a period of ten years. It has successfully been able to provide the following things to the traders or investors throughout India:
1. It has provided traders with a nationwide screen-based automated trading system.
2. It has given equal access to investors across the country and even at the lowest cost.
3. NSE has provided a high degree of transparency in trading.
4. Ultimately, it has fulfilled international standards through technological advancements.
Market Segments of National Stock Exchange of India (NSEI)
The National Stock Exchange of India (NSEI) provides trading in two securities segments; viz., the Whole Sale Debt Market Segment and Capital Market Segment.
1. Whole Sale Debt Market Segment
The first segment of NSE is Whole Sale Debt Market Segment which provides the traders with a trading platform to trade a wide range of fixed income securities. These securities include Certificate of Deposit, Bonds, Treasury Bills, Central Government Securities, Commercial Paper, etc.
2. Capital Market Segment
The second segment of NSE is Capital Market Segment which provides traders with a trading platform for securities like debentures, equity shares, preference shares, exchange-traded funds and retail Government securities.
Clearing and Settlement Operations of National Stock Exchange of India
- The settlement cycle of the National Stock Exchange of India is T+2 days. Here, T is the day of trading and 2 stands for the days within which the settlement of securities takes place.
- The clearing house handles the shares.
- The National Stock Exchange of India takes responsibility of the short deliveries and other objections.
- The NSE also assures the traders with a legal guarantee of all transactions and settlements.
- A wholly owned subsidiary, NSCCL (National Securities Clearance Corporation Ltd.) manages the clearing and settlement operations of the country.
- To guarantee settlement, the National Stock Exchange of India has set up a settlement guarantee fund with an initial corpus of ₹300 crores.
The National Stock Exchange of India (NSEI) is similar to Over the Counter Exchange of India (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.
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