(Image: NSE Building)
History of NSE
National Stock Exchange (NSE) was promoted as a new stock market in which both securities of companies and debt instruments are traded in order to counter the influence of Bombay Stock Exhange (BSE) and to reduce the influence of certain powerful intermediaries in the Stock Market. NSE takes into account of the screen based trading and so it is the most advanced. The success of this stock exchange is quite evident that within a few years of its promotion, the volume and the value of transactions have surpassed the Bombay Stock Exchange. Apart from this, the prices of securities prevailing in National Stock Exchange have its influence on the prices of securities traded in the Bombay Stock Exchange.
Who are the promoters of NSE?
The National Stock Exchange was promoted in November 1992, as a limited company by insurance companies, commercial banks and other financial institutions. Besides, SBI Capital Markets Limited, Infrastructure Leasing and Financial Services Ltd and Stock Holding Corporation Ltd., were also part of the promoters of NSE. The NSE was incorporated with an equity capital of Rs. 25 crores. The International Securities Consultancy (ISC) of Hong Kong has helped in setting up of the NSE.
Securities and Exchange Board of India regulates all the trading activities of NSE.
Salient features of NSE
As the name suggests, NSE is a country wide stock exchange and has its access throughout the country.
No fixed location for NSE:
As it is screen based, there is no need for any stock exchange floor and all the members of National Stock Exchange are able to transact through their computer terminals, sitting at their respective offices.
Confidential trading in NSE:
The identity of members is trading in NSE is withheld by the National stock exchange. The transactions and orders are entered only through code numbers. Thus, the anonymity of trading members is kept confidential with NSE.
Transparency of NSE:
There is total transparency in trading operations of NSE as the opening and closing prices of stocks are available for the investors on screen in realtime. Trading individuals will also be able to see their orders being executed.
Effective matching of order in NSE:
Buy order and Sell orders are effectively and quickly matched with the help of the trading software, i.e., buying and selling adjustments. The system also ensures best prices for securities thorough out India (both for buying and selling). The network system enables the trader to find a perfect match for his order or the system holds the order until a perfect match for the Buy or Sell order is found.
Borrowings made easy in NSE:
One of the salient features of NSE is that for the debt instruments, the system helps by providing a perfect match with sensible interest rate and repayment period. This exposure is available throughout India for the sale of debt instruments.
Settlement of transactions:
Since trading in NSE is fully online based, the matching of order in realtime makes it easy and ensures transactions are settled quickly and efficiently.
These are some of the salient features which give a clear edge for NSE, over other regional stock exchanges.
Listing Requirements in NSE
There are certain requirements imposed by the National Stock Exchange in order to list the securities, as follows.
- A company has to apply for listing securities in the prescribed form.
- Already listed companies should also apply for further issue of securities.
- 1% of the amount of securities offered for subscription to the public, should be kept as deposit and 50% of it should be deposited in cash. And the balance can be in the form of a bank guarantee.
- For IPOs, minimum paid up capital should be Rs. 20 crores.
- The paid up equity capital for existing companies should be not less than Rs. 10 crores and market capitalization of the applicant’s equity should be either Rs. 25 crores or Rs. 50 crores.
- In order to accommodate hi-tech companies going public, the paid up equity capital shall be not less than Rs. 5 crores.
- The capitalization at the time of issue is not less than Rs. 50 crores.
- There should be a 3-year track record for listing in NSE, out of which atleast dividends should have been paid for one year.
Only companies that stipulate to above terms and requirements are allowed to list their securities to be traded in the NSE.