Overview

 The National Stock Exchange (NSE) is India's leading stock exchange based in
Mumbai.
 It is the largest stock exchange in India in terms of daily turnover and number of
trades, for both equities and derivative trading.
 NSE has a market capitalization of around 7,262,507 crore (US$ 1,648.59
billion).
 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.
 Origins
 The National Stock Exchange of India was promoted by leading Financial
institutions at the behest of the Government of India, and was incorporated in
November 1992 as a tax-paying company.
 In April 1993, it was recognized as a stock exchange under the Securities
Contracts (Regulation) Act, 1956.
 In June 1994,NSE commenced operations in the Wholesale Debt Market (WDM)
segment.
 The Capital market (Equities) segment of the NSE commenced operations in
November 1994, while operations in the Derivatives segment commenced in June
2000.
Progress On A Timeline
 November 1992 Incorporation
 April 1993 Recognition as a stock exchange
 June 1994 Wholesale Debt Market segment goes live
 November 1994 Capital Market (Equities) segment goes live
 April 1995 Establishment of NSCCL, the first Clearing Corporation
 October 1995 Became largest stock exchange in the country
 April 1996 Commencement of clearing and settlement by NSCCL
 April 1996 Launch of S&P CNX Nifty
 November 1996 Setting up of National Securities Depository Limited, first
depository in India, co-promoted by NSE
 December 1996 Commencement of trading/settlement in dematerialised
securities
 May 1998 Launch of NSE's Web-site: www.nse.co.in
 July 1998 Launch of NSE's Certification Programme in Financial Market
•February 2000 Commencement of Internet Trading
•June 2000 Commencement of Derivatives Trading (Index Futures)
•June 2001 Commencement of trading in Index Options
•July 2001 Commencement of trading in Options on Individual Securities
•November 2001 Commencement of trading in Futures on Individual Securities
•January 2002 Launch of Exchange Traded Funds (ETFs)
•June 2003 Launch of Interest Rate Futures
•August 2003 Launch of Futures & options in CNXIT Index
•August 2008 Launch of Currency Derivatives
•August 2009 Launch of Interest Rate Futures
•November 2009 Launch of Mutual Fund Service System
•February 2010 Launch of Currency Futures on additional currency pairs
Indices
NSE has launched several stock indices, including:
•S&P CNX Nifty(Standard & Poor's CRISIL NSE Index)
•CNX Nifty Junior
•CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
•S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)
•CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)
S&P CNX Nifty
 S&P CNX Nifty is a well diversified 50 stock index accounting for 23 sectors
of the economy. It is used for a variety of purposes such as benchmarking
fund portfolios, index based derivatives and index funds.
 S&P CNX Nifty is owned and managed by India Index Services and Products
Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL has a
Marketing and licensing agreement with Standard & Poor's (S&P), who are
world leaders in index services.
FACTS:
 The total traded value for the last six months of all Nifty stocks is
approximately 48% of the traded value of all stocks on the NSE.
 Nifty stocks represent about 56% of the Free Float Market Capitalization as
on Sep 30, 2010.
 Impact cost of the S&P CNX Nifty for a portfolio size of Rs.50 lakhs is
0.06%.
CNX Nifty Junior
 The next rung of liquid securities after S&P CNX Nifty is the CNX Nifty Junior.
We can say that the S&P CNX Nifty and the CNX Nifty Junior as making up the
100 most liquid stocks in India.
 As with the S&P CNX Nifty, stocks in the CNX Nifty Junior are filtered for
liquidity, so they are the most liquid of the stocks excluded from the S&P CNX
Nifty.
 S&P CNX Nifty and the CNX Nifty Junior are synchronized so that the two
indices will always be disjoint sets; i.e. a stock will never appear in both indices
at the same time.
FACTS :

 CNX Nifty Junior represents about 11 % of the Free Float Market Capitalization
as on Sep 30, 2010.
 The traded value for the last six months of all Junior Nifty stocks is
approximately 14% of the traded value of all stocks on the NSE
 Impact cost for CNX Nifty Junior for a portfolio size of Rs.25 lakhs is 0.09%.
CNX 100
 CNX 100 is a diversified 100 stock index accounting for 35 sectors of the
economy.
 CNX 100 = S&P CNX Nifty + CNX Nifty Junior
 CNX 100 is owned and managed by India Index Services & Products Ltd.
(IISL). Which is a joint venture between CRISIL & NSE. IISL is India’s first
specialized company focused upon the index as a core products.
FACTS:
 CNX 100 represents about 67% of the Free Float market capitalization as on
Sep 30, 2010.
 The average traded value for the last six months of all CNX100 stocks is
approximately 61 % of the traded value of all stocks on the NSE.
 Impact cost for CNX 100 for a portfolio size of Rs. 50 Lakhs is 0.07%.
S&P CNX 500
 The S&P CNX 500 is India’s first broad based benchmark of the Indian
capital market.
 S&P CNX 500 = CNX 100 + 400 major players across 72 industries
 Industry weightages in the index reflect the industry weightages in the
market. For e.g. if the banking sector has a 5% weightage in the universe of
stocks traded on NSE, banking stocks in the index would also have an approx.
representation of 5% in the index.
FACTS:
 The S&P CNX 500 represents about 90% of the Free Float Market
Capitalization and about 87% of the total turnover on the NSE as on Sept 30,
2010.
CNX Midcap
 The primary objective of the CNX Midcap Index is to capture the movement
and be a benchmark of the midcap segment of the market.
 The CNX Midcap Index has a base date of Jan 1, 2003 and a base value of
1000.
 All constituents of the CNX Midcap Index must have a minimum listing
record of 6 months.
 All companies in the CNX Midcap Index have a minimum track record of
three years of operations with a positive net worth.
Markets
Currently, NSE has the following major segments of the capital market:
•Equity
•Futures and Options
•Retail Debt Market
•Wholesale Debt Market
•Currency futures
•MUTUAL FUND
•STOCKS LENDING & BORROWING
Equity
 NSE started trading in the equities segment (Capital Market segment) on
November 3, 1994 and within a short span of 1 year became the largest
exchange in India in terms of volumes transacted.
 Trading volumes in the equity segment have grown rapidly with average daily
turnover increasing from Rs.17 crores during 1994-95 to Rs.15,687 crores
during FY 2009-10.
 Under equity we will be discussing the following points:
 LISTING
 TRADING
 CLEARING AND SETTLEMENT
LISTING
•Listing on NSE provides qualifying companies with the broadest access to investors,
the greatest market depth and liquidity, cost-effective access to capital, the highest
visibility, the fairest pricing, and investor benefits.
•Securities listed on the Exchange are required to fulfill the eligibility criteria for
listing.

Eligibility Criteria for Listing

IPOs by Companies

1.The paid up equity capital of the applicant shall not be less than Rs. 10 crores and
the capitalisation of the applicant’s equity shall not be less than Rs. 25 crores
2.The Issuer shall have adhered to conditions precedent to listing as emerging from
inter-alia from Securities Contracts (Regulations) Act 1956, Companies Act 1956,
Securities and Exchange Board of India Act 1992.
3.Atleast three years track record.
4. The applicant desirous of listing its securities should satisfy the exchange on the
following:
a)No disciplinary action by other stock exchanges and regulatory authorities in past three
years
b)Redressal Mechanism of Investor grievance
c)Distribution of shareholding
d)Details of Litigation
e)Track Record of Director(s) of the Company

Listing Procedure
An Issuer has to take various steps prior to making an application for listing its securities
on the NSE. These steps are essential to ensure the compliance of certain requirements by
the Issuer before listing its securities on the NSE. The various steps to be taken include:
Approval of Memorandum and Articles of Association
Approval of draft prospectus
Submission of Application
Listing conditions and requirements
Listing Fees
 Companies which have a paid up share, bond and/ or debenture and/or debt
capital, etc. of more than Rs.500 crores will have to pay minimum fees of
Rs.3,75,000 and an additional listing fees of Rs.2,500 for every increase of
Rs.5 crores or part thereof in the paid up share, bond and/ or debenture and/or
debt capital, etc.
 Companies which have a paid up share, bond and/ or debenture and/or debt
capital, etc. of more than Rs.1,000 crores will have to pay minimum fees of
Rs.6,30,000 and an additional listing fees of Rs.2,750 for every increase of
Rs.5 crores or part thereof in the paid up share, bond and/ or debenture and/or
debt capital, etc.
TRADING
The NSE trading system called 'National Exchange for Automated Trading' (NEAT)

Circuit Breakers
The Exchange has implemented index-based market-wide circuit breakers in
compulsory rolling settlement with effect from July 02, 2001.
The market-wide circuit breakers are triggered by movement of either the BSE Sensex
or the NSE S&P CNX Nifty, whichever is breached earlier.
In case of a 10% movement of either of these indices, there would be a one-hour
market halt if the movement takes place before 1:00 p.m. In case the movement takes
place at or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for ½ hour.
In case movement takes place at or after 2:30 p.m. there will be no trading halt at the
10% level and market shall continue trading.
In case of a 15% movement of either index, there shall be a two-hour halt if the
movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00p.m.
but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or
after 2:00 p.m. the trading shall halt for remainder of the day.
In case of a 20% movement of the index, trading shall be halted for the remainder of
the day.
Apart from circuit breakers, price bands are also used.
Locations
NSE trading terminals are present in various cities and towns all over India.
NSE uses sophisticated telecommunication technology through which members can
trade remotely from their offices located in any part of the country.

Computer to Computer Link (CTCL) facility

NSE offers Computer-to-Computer Link (CTCL) facility to its trading members by
which members can use their own trading front-end software in order to trade on the
NSE trading system.

Trading Hours
NSE's normal trading sessions are conducted from 9:15 am India Time to 3:30 pm
India Time on all days of the week except Saturdays, Sundays and Official Holidays
declared by the Exchange (or by the Government of India) in advance.
CLEARING & SETTLEMENT (EQUITIES)
Clearing is the process of determination of obligations, after which the obligations are
discharged by settlement.
NSCCL has two categories of clearing members:
1. Trading Clearing Members: Trading members can trade on a proprietary basis or
trade for their clients. All proprietary trades become the member’s obligation for
settlement.
2.Custodians: Custodians are clearing members but not trading members. They settle
trades on behalf of their clients that are executed through other trading members.
Some of the custodians empanelled with NSCCL are Axis Bank Ltd., Citibank N.A.,
Deutsche Bank A.G.,  ICICI Bank Ltd.

Settlement Cycle
NSCCL follows a T+2 rolling settlement cycle. For all trades executed on the T day,
NSCCL determines the cumulative obligations of each member on the T+1 day and
electronically transfers the data to Clearing Members (CMs). All trades concluded
during a particular trading date are settled on a designated settlement day i.e. T+2 day.
Risk Management
A sound risk management system is integral to an efficient clearing and settlement
system.
NSCCL has put in place a comprehensive risk management system, which is
constantly upgraded to pre-empt market failures. The Clearing Corporation ensures that
trading member obligations are commensurate with their networth.
Risk containment measures include capital adequacy requirements of members,
monitoring of member performance and track record, stringent margin requirements,
position limits based on capital, online monitoring of member positions and automatic
disablement from trading when limits are breached, etc.
 Innovations
NSE has remained in the forefront of modernization of India's capital and financial markets, and its
pioneering efforts include:
•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.
•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) trades in India.
•NSE pioneered commencement of Internet Trading in February 2000, which led to the wide
popularization of the NSE in the broker community.
•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
•Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in India.
•NSE.IT Limited, setup in 1999 , is a 100% subsidiary of the National Stock Exchange of India. A
Vertical Specialist Enterprise, NSE.IT offers end-to-end Information Technology (IT) products,
solutions and services.
Certifications
NSE also conducts online examination and awards certification, under its
programmes of NSE's Certification in Financial Markets (NCFM). Currently,
certifications are available in 19 modules, covering different sectors of financial
and capital markets. Branches of the NSE are located throughout India.
References

 www.nseindia.com
 www.wikipedia.org