National stock exchange of india
Published on: Mar 3, 2016
Transcripts - National stock exchange of india
Exchange of India
M W Q
National Stock Exchange of India
A stock exchange is a form of exchange which provides services for stock
brokers and traders to trade stocks, bonds, and other securities. Stock
exchanges also provide facilities for issue and redemption of securities and
other financial instruments, and capital events including the payment of
income and dividends. Securities traded on a stock exchange include shares
issued by companies, unit trusts, derivatives, pooled investment products and
To be able to trade a security on a certain stock exchange, it must be listed
there. Usually, there is a central location at least for record keeping, but trade
is increasingly less linked to such a physical place, as modern markets are
electronic networks, which gives them advantages of increased speed and
reduced cost of transactions. Trade on an exchange is by members only.
There is usually no compulsion to issue stock via the stock exchange itself, nor
must stock be subsequently traded on the exchange. Such trading is said to be
off exchange or over-the-counter. This is the usual way that derivatives and
bonds are traded.
Stock exchanges have multiple roles in the economy. This may include the
Raising capital for businesses
The Stock Exchange provides companies with the facility to raise capital for
expansion through selling shares to the investing public.
Common forms of capital raising
Mobilizing savings for investment
Facilitating company growth
Creating investment opportunities for small investment
Government capital-raising for development projects
NSE and the Bombay Stock Exchange are the two most significant stock
exchanges in India.
The National Stock Exchange (NSE) is stock exchange located in Mumbai, India.
The National Stock Exchange of India was set up in 1993, at a time when PV
NarasimhaRao was the Prime Minister of India and Dr.Manmohan Singh was
the finance minister. It was set up to bring in transparency in the markets.
Promoted by leading financial institutions essentially led by IDBI at the behest
of the Government of India, it was incorporated in November 1992 as a tax-
paying company. In April 1993, it was recognised as a stock exchange under
the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in
the Wholesale Debt Market (WDM) segment in June 1994. The Capital market
(Equities) segment of the NSE commenced operations in November 1994,
while operations in the Derivatives segment commenced in June 2000.
NSE provides a modern, fully automated screen-based trading system, with
over two lakh trading terminals, through which investors in every nook and
corner of India can trade. NSE has played a critical role in reforming the Indian
securities market and in bringing unparalleled transparency, efficiency and
NSE was started by a clutch of leading Indian financial institutions. It offers
trading, clearing and settlement services in equity, debt and equity derivatives.
It is India's largest exchange, globally in cash market trades, in currency trading
and index options. NSE has diversified shareholding. There are many domestic
and global institutions and companies that hold stake in the exchange
Currently, NSE has the following major segments of the capital market:
Exchange Traded Funds
Initial Public Offerings
Security Lending and Borrowing Scheme
Equity Derivatives (including Global Indices like S&P 500, Dow Jones and
Interest Rate Futures
Interest Rate Futures
ROLE OF NSE IN INDIAN SECURITIES MARKET
National Stock Exchange of India Limited (NSE) was given recognition as a stock
exchange in April 1993. NSE was set up with the objectives of
(a) establishing a nationwide trading facility for all types of securities, (
b) ensuring equal access to all investors all over the country through an
appropriate communication network,
(c) providing a fair, efficient and transparent securities market using electronic
(d) enabling shorter settlement cycles and book entry settlements, and
(e) meeting the international benchmarks and standards.
Within a short span of life, above objectives have been realized and the
Exchange has played a leading role as a change agent in transforming the
Indian Capital Markets to its present form.
NSE has set up infrastructure that serves as a role model for the securities
industry in terms of trading systems, clearing and settlement practices and
procedures. The standards set by NSE in terms of market practices, products,
technology and service standards have become industry benchmarks and are
being replicated by other market participants. It provides screen-based
automated trading system with a high degree of transparency and equal access
to investors irrespective of geographical location. The high level of information
dissemination through online system has helped in integrating retail investors
on a nation-wide basis. The Exchange currently operates three market
segments, namely Capital Market Segment, Wholesale Debt Market Segment
and Futures an Options segment. NSE has been playing the role of a catalytic
agent in reforming the market in terms of microstructure and market practices.
Right from its inception, the exchange has adopted the purest form of
demutualised set up whereby the ownership, management and trading rights
are in the hands of three different sets of people. This has completely
eliminated any conflict of interest and helped NSE to aggressively pursue
policies and practices within a public interest framework. It has helped in
shifting the trading platform from the trading hall in the premises of the
exchange to the computer terminals at the premises of the trading members
located country-wide and subsequently to the personal computers in the
homes of investors and even to hand held portable devices for the mobile
investors. Settlement risks have been eliminated with NSE’s innovative
endeavors in the area of clearing and settlement viz., reduction of settlement
cycle, professionalisation of the trading members, fine-tuned risk management
system, dematerialisation and electronic transfer of securities and
establishment of clearing corporation. As a consequence, the market today
uses the state-of-art information technology to provide an efficient and
transparent trading, clearing and settlement mechanism.
NSE provides a trading platform for of all types of securities-equity and debt,
corporate and government and derivatives. On its recognition as a stock
exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, it
commenced operations in the Wholesale Debt Market (WDM) segment in June
1994, in the Capital Market (CM) segment in November 1994, and in Futures &
Options (F&O) segment in June 2000. The Exchange started providing trading
in retail debt of Government Securities in January 2003.
The Wholesale Debt Market segment provides the trading platform for trading
of a wide range of debt securities. Its product, which is now disseminated
jointly with FIMMDA, the FIMMDA NSE MIBID/MIBOR is used as a benchmark
rate for majority of deals struck for Interest Rate Swaps, Forwards Rate
Agreements, Floating Rate Debentures and Term Deposits in the country. Its
‘Zero Coupon Yield Curve’ as well as NSE-VaR for Fixed Income Securities have
also become very popular for valuation of sovereign securities across all
maturities irrespective of its liquidity and facilitated the pricing of corporate
papers and GOI Bond Index.
NSEs Capital Market segment offers a fully automated screen based trading
system, known as the National Exchange for Automated Trading (NEAT)
system, which operates on a strict price/time priority. It enables members
from across the country to trade simultaneously with enormous ease and
efficiency. Its Futures & Options segment provides trading of a wide range of
derivatives like Index Futures, Index Options, Stock Options and Stock Futures.
NSEs Futures & Options segment provides trading of a wide range of
derivatives like Index Futures, Index Options, Stock Options and Stock Futures.
NSEs Currency Derivatives segment provides trading on currency futures
contracts on the US $-INR which commenced on August 29, 2008. In February
2009, trading on additional pairs such as GBP-INR, EUR-INR and JPY-INR was
allowed while trading in US $-INR currency options were allowed for trading on
October 29, 2010. The interest rate futures trade on the currency derivatives
segment of NSE and they were allowed for trading segment on August 31,
Exchange Traded Funds
ETF is an investment fund that is traded on a stock exchange, just like stocks.
An ETF holds assets such as stocks, commodities or bonds and trades in value,
around its (NAV) over the course of the trading day. Most ETFs track an index
such as a stock index or a bond index. ETFs are attractive investments because
of their low costs, tax efficiency and stock-like features. ETFs are the most
popular type of exchange-traded products in the USA and Europe.
Exchange Traded Funds are simple and easy to understand. Most ETFs also
have an intrinsically lower risk due to their diversified portfolio. This
diversification coupled with low expenses allows the smallest of the investors
to reap the benefits of market based returns. Retail investors can use ETF’s as
an easy entry vehicle into the capital markets. Equity investments are most
likely to give you attractive long term growth. And, this growth is reflected in
market indices, like the NSE Nifty.
The following products are trading on CNX Nifty Index in the Indian and
7 Asset Management Companies have launched ETFs on CNX Nifty Index
which are listed on NSE
15 index funds have been launched on CNX Nifty Index
Unit linked products have been launched on CNX Nifty Index by several
insurance companies in India
Derivatives Trading on CNX Nifty Index:
Futures and Options trading on CNX Nifty Index
Trading in CNX Nifty Index Futures on Singapore Stock Exchange (SGX)
Trading in CNX Nifty Index Futures on Chicago Mercantile Exchange (CME)
Technology and Application Systems in NSEIL
NSE is the first exchange in the world to use satellite communication
technology for trading. Its trading system, called National Exchange for
Automated Trading (NEAT), is a state of-theart client server based application.
At the server end all trading information is stored in an in-memory database to
achieve minimum response time and maximum system availability for users. It
has uptime record of 99.7%. The system also ensures data integrity with past
record of a single error in 10 million bits. NSE has been continuously
undertaking capacity enhancement measures so as to effectively meet the
requirements of increased users and associated trading loads. NSE has also put
in place NIBIS (NSE’s Internet Based Information System) for on-line real-time
dissemination of trading information over the Internet.
As part of its business continuity plan, NSE has established a disaster back-up
site at Chennai along with its entire infrastructure, including the satellite earth
station and the high-speed optical fibre link with its main site at Mumbai. This
site at Chennai is a replica of the production environment at Mumbai. The
transaction data is backed up on near real time basis from the main site to the
disaster back-up site through the high-speed optical fibre to keep both the
sites all the time synchronised with each other.
NSEIL is a technology driven exchange and since its inception it has been
harnessing technology to provide the best possible and efficient service to all
market participants and stake holders. The various application systems that it
uses for trading as well clearing and settlement and other operations are the
backbone of the Exchange. The application systems used for the day-to-day
functioning of the Exchange can be divided into (a) Front end applications and
(b) Back office applications.
In the front end, there are 6 applications:
(a) NEAT – CM system takes care of trading of securities in the Capital Market
segment that includes equities, debentures/notes as well as retail Gilts. The
NEAT – CM application has a split architecture wherein the split is on the
securities and users. The application runs on three Stratus systems with Open
Strata Link (OSL). This application also provides data feed for processing to
some other systems like Index, OPMS through TCP/IP. This is a direct interface
with the Trading members of the CM segment of the Exchange for entering the
orders into the main system. There is a two way communication between the
NSE main system and the front end terminal of the Trading Member.
(b) NEAT – WDM system takes care of trading of securities in the Wholesale
Debt Market (WDM) segment that includes Gilts, Corporate Bonds, CPs, T-Bills,
etc. This is a direct interface with the Trading members of the WDM segment
of the Exchange for entering the orders/trades into the main system. There is a
two way communication between the NSE main system and the front end
terminal of the Trading Member.
(c) NEAT – F&O system takes care of trading of securities in the Futures and
Options (F&O) segment that includes Futures on Index as well as individual
stock and Options on Index as well as individual stocks. This is a direct interface
with the Trading members of the F&O segment of the Exchange for entering
the orders into the main system. There is a two way communication between
the NSE main system and the front end terminal of the Trading Member.
(d) NEAT – IPO system is an interface to help the initial public offering of
companies which are issuing the stocks to raise capital from the market. This is
a direct interface with the Trading members of the CM segment who are
registered for undertaking order entry on behalf of their clients for IPOs. NSE
uses the NEAT IPO system that allows bidding in several issues concurrently.
There is a two way communication between the NSE main system and the
front end terminal of the Trading Member.
(e) NEAT – MF system is an interface with the Trading members of the CM
segment for order collection of designated Mutual Funds units.
(f) NEAT- CD system is trading system for currency derivatives. Currently,
currency futures are trading in the segment.
(g) Surveillance system offers the users a facility to comprehensively monitor
the trading activity and analyse the trade data online and offline.
In the back office, the following important application systems are operative:
(i) NCSS (Nationwide Clearing and Settlement System) is the clearing and
settlement system of the NSCCL for the trades executed in the CM segment of
the Exchange. The system has 3 important interfaces –
a) OLTL (Online Trade loading) that takes each and every trade executed
on real time basis and allocates the same to the clearing members,
b) Depository Interface that connects the depositories for settlement of
securities and Clearing Bank Interface that connects the 13 clearing
banks for settlement of funds. It also interfaces with the clearing
members for all required reports.
c) Through collateral management system it keeps an account of all
available collaterals on behalf of all trading/clearing members and
integrates the same with the position monitoring of the trading/clearing
members. The system also generates base capital adequacy reports.
(ii) FOCASS is the clearing and settlement system of the NSCCL for the trades
executed in the F&O segment of the Exchange. It interfaces with the clearing
members for all required reports. Through collateral management system it
keeps an account of all available collaterals on behalf of all trading/clearing
members and integrates the same with the position monitoring of the trading/
clearing members. The system also generates base capital adequacy reports.
(iii) OPMS – the online position monitoring system that keeps track of all
trades executed for a trading member vis-à-vis its capital adequacy.
(iv) PRISM is the parallel risk management system for F&O trades using
Standard Portfolio Analysis (SPAN). It is a system for comprehensive
monitoring and load balancing of an array of parallel processors that provides
complete fault tolerance. It provides real time information on initial margin
value, mark to market profit or loss, collateral amounts, contract-wise latest
prices, contract-wise open interest and limits.
(v) Data warehousing that is the central repository of all data in CM as well as
F&O segment of the Exchange,
(vi) Listing system that captures the data from the companies which are listed
in the Exchange for corporate governance and integrates the same to the
trading system for necessary broadcasts for data dissemination process and
(vii) Membership system that keeps track of all required details of the Trading
Members of the Exchange.
Trading on the equities segment takes place on all days of the week (except
Saturdays and Sundays and holidays declared by the Exchange in advance).
The market timings of the equities segment are:
(1) Pre-open session
• Order entry & modification Open: 09:00 hours.
• Order entry & modification Close: 09:08 hours.
Pre-open order matching starts immediately after close of pre-open order
(2) Regular trading session
• Normal/Retail Debt/Limited Physical Market Open: 09:15 hours
• Normal/Retail Debt/Limited Physical Market Close: 15:30 hours
Block deal session is held between 09:15 hours and 09:50 hours.
(3) The Closing Session is held between 15.40 hours and 16.00 hours.
The Exchange may however close the market on days other than the above
schedule holidays or may open the market on days originally declared as
holidays. The Exchange may also extend, advance or reduce trading hours
when it deems fit and necessary.
NSE is keen to ensure that the people of India are economically empowered to
take sound financial decisions and invest wisely. Therefore, National Stock
Exchange has collaborated with several universities to offer MBA and BBA
courses that impart knowledge on markets and also build the deficit in the
financial sector by giving them employable skills. NSE has also provided mock
market simulation software called NSE Learn to trade (NLT) to develop
investment, trading and portfolio management skills among the students.
NSE also conducts online examination and awards certification, under its
programs of NSE's Certification in Financial Markets (NCFM).
NSE has been offering a short-term course called NSE Certified Capital Market
Professional (NCCMP) since August 2009. The NCCMP or NSE Certified Capital
Market Professional is a 100 hour program for over 3-4 months, conducted at
the colleges, covers theoretical and practical training in subjects related to the
capital markets. Currently, certifications are available in 46 modules
Some of the important terms been used at stock exchanges are :
Clause 49 of the Listing Agreement to the Indian stock exchange comes into
effect from 31 December 2005. It has been formulated for the improvement of
corporate governance in all listed companies.
In corporate hierarchy two types of managements are envisaged:
i) Companies managed by Board of Directors; and
ii) Those by a Managing Director, whole-time director or manager subject
to the control and guidance of the Board of Directors.
• As per Clause 49, for a company with an Executive Chairman, at least 50 per
cent of the board should comprise independent directors. In the case of a
company with a non-executive Chairman, at least one-third of the board
should be independent directors.
• It would be necessary for chief executives and chief financial officers to
establish and maintain internal controls and implement remediation and risk
mitigation towards deficiencies in internal controls, among others.
• Clause VI (ii) of Clause 49 requires all companies to submit a quarterly
compliance report to stock exchange in the prescribed form. The clause also
requires that there be a separate section on corporate governance in the
annual report with a detailed compliance report.
• A company is also required to obtain a certificate either from auditors or
practicing company secretaries regarding compliance of conditions as
stipulated, and annex the same to the director's report.
• The clause mandates composition of an audit committee; one of the
directors is required to be "financially literate".
• It is mandatory for all listed companies to comply with the clause by 31
Corporate Governance may be defined as “A set of systems, processes and
principles which ensure that a company is governed in the best interest of all
stakeholders.” It ensures Commitment to values and ethical conduct of
business; Transparency in business transactions; Statutory and legal
compliance; adequate disclosures and Effective decision-making to achieve
corporate objectives. In other words, Corporate Governance is about
promoting corporate fairness, transparency and accountability. Good
Corporate Governance is simply Good Business.
Clause 49 of the SEBI guidelines on Corporate Governance as amended on 29
October 2004 has made major changes in the definition of independent
directors, strengthening the responsibilities of audit committees, improving
quality of financial disclosures, including those relating to related party
transactions and proceeds from public/ rights/ preferential issues, requiring
Boards to adopt formal code of conduct, requiring CEO/CFO certification of
financial statements and for improving disclosures to shareholders. Certain
non-mandatory clauses like whistle blower policy and restriction of the term of
independent directors have also been included.
The term ‘Clause 49’ refers to clause number 49 of the Listing Agreement
between a company and the stock exchanges on which it is listed (the Listing
Agreement is identical for all Indian stock exchanges, including the NSE and
BSE). This clause is a recent addition to the Listing Agreement and was inserted
as late as 2000 consequent to the recommendations of the Kumarmangalam
Birla Committee on Corporate Governance constituted by the Securities
Exchange Board of India (SEBI) in 1999.
Clause 49, when it was first added, was intended to introduce some basic
corporate governance practices in Indian companies and brought in a number
of key changes in governance and disclosures (many of which we take for
granted today). It specified the minimum number of independent directors
required on the board of a company.
The setting up of an Audit committee, and a Shareholders’ Grievance
committee, among others, were made mandatory as were the Management’s
Discussion and Analysis (MD&A) section and the Report on Corporate
Governance in the Annual Report, and disclosures of fees paid to non-
executive directors. A limit was placed on the number of committees that a
director could serve on. In late 2002, SEBI constituted the Narayana Murthy
Committee to assess the adequacy of current corporate governance practices
and to suggest improvements. Based on the recommendations of this
committee, SEBI issued a modified Clause 49 on 29 October 2004 (the ‘revised
Clause 49’) which came into operation on 1 January 2006. The revised Clause
49 has suitably pushed forward the original intent of protecting the interests of
investors through enhanced governance practices and disclosures. Five broad
themes predominate. The independence criteria for directors have been
clarified. The roles and responsibilities of the board have been enhanced. The
quality and quantity of disclosures have improved. The roles and
responsibilities of the audit committee in all matters relating to internal
controls and financial reporting have been consolidated, and the accountability
of top management—specifically the CEO and CFO—has been enhanced.
Within each of these areas, the revised Clause 49 moves further into the realm
of global best practices (and sometimes, even beyond).
By Circular dated 8 April 2008, the Securities and Exchange Board of India
amended Clause 49 of the Listing Agreement to extent the 50% independent
directors rule to all Boards of Directors where the Non-Executive Chairman is a
promoter of the Company or related to the promoters of the company.
At the end of the first India Corporate Week in December 2009, the Ministry of
Corporate Affairs issued new Corporate Governance Voluntary Guidelines and
new Corporate Social Responsibility Voluntary Guidelines.
Mahurat trading (also pronounced Muhurat) is the stock market trading
activity for an hour on the auspicious occasion of Diwali (Deepawali), the
biggest festival for Hindus.
Mahurat trading in the stock market happens for about an hour on Diwali day.
Usually, this trading session is held in the evening. It is a symbolic ritual which
has been performed for years.
Stock brokers' offices take on a distinctly ethnic look with neatly designed
rangoli patterns and innumerable diyas lined up to welcome Goddess Lakshmi.
Mahurat trading is one of the many links the broking community retains with
its rich past. The practice of Mahurat trading has been retained and observed
for ages. The time of the mahurat trading is specified by the stock exchange. A
nominal trading time is allowed. Usually, the Sensex closes on a higher note on
the mahurat trading day. Most traders buy on this day.
With this, the traders on Dalal Street welcome the New Year on a positive
note. The traditional mahurat trading on the day of Diwali still retains much
significance for many traders. Many start the New Year with traditional
ceremonies and pujas.
Mahurat trading is traditionally an occasion for an auspicious beginning to the
traditional New Year. Investors place token orders and buy stocks for their
children, which are held for the long term and sometimes never sold. Traders
normally book their intra-day profits, however small they may be.
For the trading communities of the north India, the new financial year begins
with Diwali. That is the reason puja is performed to accounts books and safes
on Dhanteras as well as on Diwali day. A coin - which signifies wealth – is
placed on the account books before the puja. Stock brokers perform 'Lakshmi
Puja' at the exchange and the customary mahurat trading takes place, where
the Sensex invariably notches up a few points even in a bad market.
It is believed that on the night of Lakshmi Puja, the Goddess comes to reside
at the place of the puja. That is the reason why the traders and shopkeepers
stay awake with lights burning all night.
As Diwali also marks the beginning of the New Year, it is believed that mahurat
trading on this day brings in wealth and prosperity throughout the year. An
auspicious beginning is thus made on the first day of the year.
National stock Exchange (NSE) and Bombay Stock Exchange (BSE) announce
their timings of mahurat trading every year.
LIVE MARKET ANALYSIS (as on 24th
Top gainers were:
Top losers were:
Latest News Related to NSE
RaghuramRajan's repo rate hike, NSE Nifty plunges 103
Shares retreated from their overnight multi-month highs as the stock market
reacted to the unexpected monetary tightening by the RBI to weed out the
threat of spiralling inflation, rattling investor confidence.
The 50-share Nifty plummeted by 103.45 points, or 1.69 per cent, to close at
6,012.10 on the National Stock Exchange (NSE). The barometer hit a high of
6,130.95 and a low of 5,932.85 in the early trade.
Banking stocks and the other rate-sensitive ones were the worst hit followed
by capital goods, oil gas, metal and technology as investors and traders reacted
with dismay and resorted to heavy sell-off.
Contrary to the market's expectations, the Reserve Bank of India today raised
the short-term policy repo rate to 7.5 per cent from 7.25 per cent, citing high
However, it rolled back some of the measures it had implemented to support
the battered rupee recently.
The CRR was kept unchanged at 4 per cent.
Retail inflation was at 9.52 per cent last month, while wholesale price inflation
rose to a six-month high of 6.1 per cent in August, driven by costlier food
Trading began on a cautious note, a day after the stunning rally. The Nifty had
rallied 216 points yesterday buoyed by the US Federal Reserve's decision to
keep its stimulus intact.
After trading almost flat, market reacted sharply to the apex bank's decision to
hike key interest rate as overall sentiment has been supported over recent
week amid hopes of a rate cut to give a push to faltering growth.
The key index plummeted below the psychological 6,000 mark briefly before
recouping some lost ground after the RBI Governor RaghuramRajan comments
at the customary press briefing.
DLF, PNB, Bank of Baroda, Indusind Bank, Ranbaxy, JP Associates, L&T, ICICI
Bank, Sesa Goa and Hindalco were among the biggest frontline index losers.
Prominent gainers included Reliance Infra, Ultratech Cement, GAIL, HCL Tech,
Ambuja Cement, Lupin, Asian Paints, BHEL, BPCL and Grasim.
Turnover in the cash segment rose to Rs 18,303.13 crore from 18,129.68 crore
yesterday. A total of 9,345.52 lakh shares changed hands in 78,90,038 trades.
The market capitalisation
WDM witnesses trade worth Rs 3,035.30 cr on NSE
The Wholesale Debt Market (WDM) segment of the National Stock Exchange
(NSE) today (23rd
Seprember 2013) witnessed a total turnover of Rs 3,593.77
crore in 60 trades.
Top securities (non-repo) traded at the WDM were:
The 91-days Treasury bills (Issue No.211113) which traded at Rs 915 cr at
weighted yield of 9.71%, the 7.28% Government securities maturing in CG2019
traded at Rs 400 cr at weighted yield of 9% and the 7.16% Government
securities maturing in CG2023 traded at Rs 305 cr at weighted yield of 8.78%,
the NSE release said.
Some of the companies listed at NSE
GlaxoSmithKline Pharmaceuticals Ltd
Gujarat Mineral Development Corporation
Indian Oil Corporation
Larsen & Toubro
National Stock Exchange of India
Oriental Bank of Commerce
Pantaloon Retail India
Rolta India Ltd
Shree Renuka Sugars
Copyright © 2014 Gagan Varshney
All rights reserved with the authors. Commercial use of this presentation, or its any part, is