Page 68 - DCOM507_STOCK_MARKET_OPERATIONS

Unit 3: Primary Market and Secondary Market

3. Provide counter-party risk guarantee, and Notes
4. Operate a tight risk containment system. The NSE (National Stock Exchange) is a Mumbai-
based stock exchange.

NSE (National Stock Exchange) is the largest stock exchange in India and the third largest in the
world in terms of volume of transactions. The NSE (National Stock Exchange) is mutually-
owned by a set of leading financial institutions, banks, insurance companies and other financial
intermediaries in India but its ownership and management operate as separate entities. The NSE
has remained a lead player in the modernization of India’s capital and financial markets. Towards
this end the NSE (National Stock Exchange) set up the first clearing corporation in India – the
NSCCL (National Securities Clearing Corporation Ltd). The NSCCL was a landmark in providing
novation on all the spot equity market (and later, derivatives market) trades in India.

Part of the NSE Group (National Stock Exchange Group)

The National Securities Clearing Corporation Ltd. (NSCCL) is part of the NSE (National Stock
Exchange) group and is a wholly-owned subsidiary of the NSE. It was incorporated in August
1995 and started clearing operations in April 1996. It was formed to build confidence in clearing
and settlement of securities, to promote and maintain short and consistent settlement cycles, to
provide a counter-party risk guarantee and to operate a tight risk containment system.

Clearing and Settlement

The NSCCL (National Securities Clearing Corporation Limited) carries out the clearing and
settlement of the trades executed in the CM segment of NSE (National Stock Exchange) and
operates constituent SGL for settlement trades in government securities.

Inter-region Clearing

The NSCCL (National Securities Clearing Corporation (Limited) facilitates inter-region clearing.
It has Regional Clearing Centres at Delhi, Kolkata and Chennai and a Central Clearing Centre
at Mumbai. Members have the option of delivering or receiving the securities at a clearing
centre chosen by them.
Certificates Handled

To provide a level playing field to members irrespective of their location, the NSCCL (National
Securities Clearing Corporation Limited) moves securities in the normal pay-in and pay-out on
behalf of the Clearing Members from and to Regional Clearing Centres (RCC) and the Central
Clearing Centre (CCC) at Mumbai.

Pre-delivery Verification

The NSCCL (National Securities Clearing Corporation Limited) was the first to start pre-delivery
verification to detect bad papers such as fake and forged certificates or lost and stolen share
certificates.

Dematerialised Settlement

The only effective solution to the problem of fake/forged and stolen shares was dematerialised
trading and settlement. As SEBI made demat settlements mandatory in an ever-increasing number
of securities in a phased manner, the proportion of shares delivered in the dematerialised form
by the NSCCL (National Securities Clearing Corporation Limited) has increased.

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