The Securities and Exchange Board of India (SEBI) regulates the securities market in India. The SEBI has accorded a permanent operator status to three stock exchanges. These are the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), and the Calcutta Stock Exchange (CSE).
Besides these three, two other exchanges have an operating licence till the end of this year, 2019. These are the India International Exchange (INX) and the Metropolitan Stock Exchange.
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What is a stock exchange?
A stock exchange is a marketplace that facilitates the buying and selling of shares, securities, and bonds between traders and investors. The SEBI acts as the regulator for the share market in India.
A company that wants to go public register with any of these exchanges. After that, investors could buy the shares of that company.
If you wish to invest in the share market, you’ll need a demat account. You can open a demat account with Kotak securities today.
The Bombay Stock Exchange
- The Bombay Stock Exchange (BSE) was established in 1875 with the name ‘The Native Share & Stock Brokers Association’. It was the first such exchange in the entire continent.
- In 1957, the SEBI recognised BSE as a premier stock exchange.
- The BSE introduced the Sensitive Index (SENSEX) in 1986 as the first equity index listing the top 30 companies in more than 10 sectors.
- The year 1995 saw the introduction of the BSE Online Trading System (BOLT), which could perform 8 million transactions per day.
- In 2005, the association of persons became a separate legal entity and was renamed the Bombay Stock Exchange Limited.
- The BSE offers market data services, risk management, depository services (CDSL), and more.
- The BSE introduced India’s first mobile-based trading in 2010.
- In 2017, it became the first stock exchange to float its own shares.
The National Stock Exchange
- The National Stock Exchange (NSE) was set up in 1992.
- The NSE introduced the electronic trading system, replacing the paper-based system, for the first time in India.
- The NSE was initially a tax-paying company but became a registered stock exchange in 1993.
- The NSE’s depository arm, the National Securities Depository Limited (NSDL), was set up in 1995.
- In 1995, the NSE introduced the National Fifty (NIFTY) that tracks the performance of the top 50 companies at the exchange.
- The World Federation of Exchanges (WFE) recognised the NSE as the world’s second-largest exchange due to its large trading volumes between January and June 2018.
- In 2018, it became the first Indian stock exchange to be among the 30 exempted exchanges in the world by the Commodity Futures Trading Commission (CFTC). This exemption enables the NSE to service US clients.
Key differences between NSE and BSE
- The BSE is the oldest stock exchange in India, whereas the NSE is the newest and the largest.
- The BSE SENSEX comprises 30 companies, but the NSE NIFTY has 50 companies.
- While the BSE has about 5,000 entities listed with it, the NSE features about 2,000 companies.
- The NSE introduced the first electronic trading system in India in 1992, whereas the BSE adopted the electronic system in 1995.
Both the BSE and the NSE are leading players in the Indian share market today. Both cater to millions of investors every day and are headquartered in Mumbai. They both facilitate transparent trading and provide quality services, thus enhancing the capital market in India.