Page 62 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 5: Securities and Exchange Board of India

5.3 Types of Exchanges Notes

The exchanges of India can be divided into national, regional or local exchanges. A detailed
explanation of each is as follows:

5.3.1 National Exchange

The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock exchange. It is the
second largest stock exchange in India in terms of daily turnover and number of trades, for both
equities and derivative trading. 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. The NSE's key index is the S&P CNX
Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalisation.
NSE 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.
NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities.
It is the second fastest growing stock exchange in the world with a recorded growth of 16.6%.

NSE has remained in the forefront of modernization of India's capital and financial markets, and
its pioneering efforts include:
1. Being the first national, anonymous, electronic Limit Order Book (LOB) exchange to trade
securities in India. Since the success of the NSE, existent market and new market structures
have followed the "NSE" model.
2. Setting up the first clearing corporation "National Securities Clearing Corporation Ltd."
in India. NSCCL was a landmark in providing innovation on all spot equity market (and
later derivatives market) in India.
3. Co-promoting and setting up of National Securities Depository Limited, first depository
in India.
4. Setting up of S&P CNX Nifty.
5. NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.
6. Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly
on an equity index, in India. After four years of policy and regulatory debate and
formulation, the NSE was permitted to start trading equity derivatives.
7. Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in India.
8. NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-
TV18.

Currently, NSE has the following major segments of the capital market:
1. Equity
2. Futures and Options
3. Retail Debt Market
4. Wholesale Debt Market

5. Currency futures.
It is the one of the most important stock exchanges in the world.

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