National Stock Exchange

While India has had a long history of securities trading, the markets have not always kept pace with the changing trends and requirements for this industry to reach its full potential. Particular issues of concern in the securities industry have been lack of transparency, lack of trading facilities which are fair and accessible to all, undercapitalized trading members, dated procedures and practices and long and uncertain settlement cycles. NSE emerged as an endeavour by some of the institutional investors within the country to address these issues, and to break the monopoly that was enjoyed by the BSE brokers. NSE incorporated in 1992 was given recognition as a stock exchange in April 1993 and stared operations in June 1994.

Objectives of the NSE include:

To establish a nationwide trading facility for equities, debt instruments and hybrids,

To ensure equal access to investors all over the country through and appropriate communication network,

To provide a fair, efficient and transparent securities market to investors using electronic trading system,

To enable shorter settlement cycles and book entry settlement system, and

To meet the current international standards of securities markets

The trading system of the NSE, known as NEAT (National Exchange for Automated Trading) is a fully automated screen based trading system that enables members from across the country to trade simultaneously with enormous ease and efficiency. In one stroke, it has done away with the need for the people to congregate on the floor of an exchange to trade. The National Stock Exchange has set-up facilities which serve as a model for the securities industry in terms of trading systems, practices and procedures. Though the impetus for its establishment came from policy-makers in the country, it has been set-up as a public limited company, owned by the leading institutional investors in the country.

NSE is different from many stock exchanges in India where membership on an exchange also meant ownership of the exchange. The ownership and management of the exchange is completely separated from the right to trading members, to trade on NSE. The Exchange is managed by a board of Directors. Decisions relating to market operations are delegated by the Board to an Executive committee which includes representatives from Trading Members, public and the management. Besides, the Exchange operates various committees to advise it on areas such as good market practices, settlement procedures, risk containment system etc. These committees are manned by Industry professionals, Trading members and Exchange staff. The day to day management of the Exchange is delegated to the Managing Director who is supported by a team of professional staff. This way he exchange floor is brought to the investors’ doorstep for their convenience.