You might have come across this term in some or the other way, you might be getting the question in you mind that what is NSE? In this blog we will be knowing about NSE and its functions.
Contents of this Blog
HISTORY OF NSE
Firstly, National Stock Exchange is located in Mumbai, also It plays an important role in the field of the Stock Market.
It is a place where sellers and buyers of the Stock Market meet, but nowadays everything is online so NSE also offers online buying and selling of shares.
The Exchange is established in the year 1992. So, It was Established according to the Securities Contracts Regulation Act 1956. It got the approval from the Securities and Exchange Board of India (SEBI) in April 1993.
So, After the approval, it started its operations. But in its initial days – it traded only in the wholesale debt market.
Later it started its operations in equity cash segment in November 1994, later in June 2000, it started its operations in the derivatives segment.
The founder of the NSE is Dr.Ramachandra H Patil. Firstly, He started it with the help of Indian Financial Institutions in the direction of the Government of India to bring clarity in the Capital Markets of India.
So, It has diversified shareholding including domestic and global investors. The important investors are Life Insurance Corporation of India (LIC), State Bank of India (SBI), etc.,
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Main Motive of NSE
Firstly, The main motive of founding NSE is avoiding the scams taking place. So, It was the first exchange in the country to start the modern and totally automated digital screen-based electronic trading platform. Which offers easy trading and good facilities to the investors across the globe.
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ADVANTAGES OF NSE
National Stock Exchange is successful in creating the National Securities Depository Limited (NSDL). Which facilitates the investors to securely hold and transfer their shares and bonds electronically with less time. So, It also enables investors to hold and trade in as few as one share or bonds.
This not only made holding financial instruments convenient but more importantly reduced the need for paper certificates and greatly reduced the incidents of forged or fake certificates and fraud transactions that had affected the Indian Stock Market. The NSDL’s security, including the transparency, fewer transaction charges, and accuracy that NSE offered, rapidly increased the attractiveness towards the Indian Stock Market to domestic and especially to International Investors
The Increasing Frauds
National Stock Exchange (NSE) came into play for establishment in keeping mind all the frauds taking place in the 1990s like Harshad Mehta Scam and loopholes. So, The fraud rates were less after the establishment of NSE.
NSE has established a nationwide trading facility for equity, debts, and another financial instrument for the people with basic internet.
Firstly, One of the biggest advantages of NSE was its way of converting the physical shares to the electronic format by which a big revolution came in the Indian Stock Market.
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Previously one should have to go to the exchanges and make deals but NSE made it possible for every one from anywhere through the internet. It ensures equal access to investors across the nation through an appropriate communication network.
It provides fair, efficient, and transparent services through its electronic trading system. NSE meets the global standards of investing by which International Investors were attracted to invest in the Indian Stock Market, previously Investors would have to route their orders through a series of correspondent brokers, and it involves so much of cost. But, after the establishment of NSE, it was made more accessible and cheaper for an Investor.
MARKET SEGMENTS IN NSE
National Stock Exchange has trading in following sectors:
- Equities
- Indices
- Mutual Funds
- Exchange-Traded Funds
- Initial Public Offerings
- Security Lending and Borrowing Scheme
- Derivatives
- Equity Derivatives
- Currency Derivatives
- Interest Rate Futures
- Debt
- Corporate Bonds
Trading schedule
The market timings of the equities segment are:
(1) Pre-open session
- Order entry & modification Open: 09:00 hrs
- Order entry & modification Close: 09:08 hrs
(2) Regular trading session
- Normal/Retail Debt/Limited Physical Market Open: 09:15 hrs
- Normal/Retail Debt/Limited Physical Market Close: 15:30 hrs.
Equity trading is open on all days of the week, except for Saturdays, Sundays and other holidays declared by NSE in advance.
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BENEFITS OF LISTING ON NATIONAL STOCK EXCHANGE
A premier marketplace
Firstly, The large volume of trading activity assures that the impact cost is lesser on the Exchange. So, it reduces the cost of trading of the investor. Firstly, NSE’s electronic mechanized trading technology ensures stability and transparency in the trade matching that enhances investors’ belief and transparency of our market.
Visibility
Firstly, the trading system enables a unique level of trade and post-trade statistics. The best five bid and ask orders get matched on the trading system, and the total number of securities available for buying and selling is shown. This enables the investor to realize the depth of the market. Besides this, the corporate announcements, results, corporate actions, etc., are also accessible on the trading system.
Largest exchange
NSE is the largest Stock Exchange in the matters of trading volumes per day
Unmatched reach
NSE has a trading system that extends across the country. So, the Investors from 191 Countries can avail of trading facilities on the NSE Trading System. Firstly, The Exchange uses new communication technology to give quick access from every location.
Good Transaction speed
The speed of the transactions made on the Exchange is so better that it results in liquidity and good available prices. The Biggest number of trades in a day recorded at 11,260,392 on May 19, 2009.
Broadcast advantage for corporate announcements
The NSE platform publicizes the information and company announcements across the country. Significant details regarding the companies are set forth to the market through the Broadcast System on the National Exchange for Automated Trade (NEAT) System as well as publicize through the NSE official website.
Corporate developments such as dividends, rights, takeover, financial results, book closure, announcements of bonuses, splits, mergers, subsidiaries, etc. are publicized across the country thus decreasing chances of price manipulation or misuse.
Trade details for listed companies
Listed companies get their monthly statistics report from the Exchange
Nominal listing Charges
The fees charged by the exchange for listing is very lower when compared with the other exchanges in the country.
Conclusion
National Stock Exchange is a place where the sellers and buyers of the Stock market meet for transacting. It was found under the Securities Contracts Regulation Act 1956. In the olden days, people needed to go to Stock Exchange to buy or sell Stocks, but nowadays, as everything is working on digital platforms, Sellers and Buyers are not required to go to the exchange. They can make purchases and Sell the Stocks digitally
FAQs
NSE is located in Mumbai, the financial capital of India.
The National Stock Exchange was established in 1992 under the Securities Contracts Regulation Act 1956
There are many benefits of Listing on NSE, such as Premier Market place, Large Visibility, Large Exchange, Unmatched reach, good Transaction Speed, Nominal Listing Charges, etc.,
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