In any transaction, a fair price is possible if there is more than one buyer or seller, the more the merrier. Such a place, which has been created for multiple buyers and sellers to meet, is called a market.
In equity markets, such transactions take place in stock exchanges. The only difference between a market where tangible goods are bought and sold and the share market is that every transaction is done through a broker.
Before trading was done electronically, it was the brokers who were allowed in the exchanges where, through an open outcry system, trading took place. Even now, every transaction is routed through a broker, and no individual is allowed to buy or sell in the market without being registered with a broker.
All brokers on their part are required to be registered with stock exchanges. If a broker is only registered with one stock exchange, then their client will not be allowed to trade in that exchange.
The role of stock exchanges is not only to facilitate the transaction of clients through brokers but also to allow companies to get their shares listed, either through a public offer or an offer for sale route.
In order to bring in competition among exchanges, the Indian government has allowed many exchanges to function. However, two exchanges are responsible for almost all the transactions in the market.
In India, stocks are traded on the two main stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). BSE is the oldest stock exchange in the country, but when it comes to size, NSE walks away with the cake.
Let’s have a closer look at the two exchanges
Both the stock exchanges BSE and NSE have contributed to nation building in a big way. They are now among the top exchanges globally. With the commencement of operations of international exchanges in the country, both the exchanges are hopeful of making their presence felt global
A stock exchange is a place where shares are transacted. A customer transacts with the help of brokers, who in turn are registered with stock exchanges. If a broker is only registered with one stock exchange, then their client will not be allowed to trade in that exchange.
The role of stock exchanges is not only to facilitate the transaction of clients through brokers but also to allow companies to get their shares listed, either through a public offer or an offer for sale route.
Along with shares, debt, mutual funds, currencies, and commodities are now traded on exchanges.
BSE is Asia’s first and the Fastest Stock Exchange in the world. It was established in 1875 as The Native Share & Stock Brokers’ Association. In 2017, BSE became the 1st stock exchange in India to get listed. The company’s stock is listed on the NSE as an exchange is not allowed to trade its own shares.
BSE’s benchmark index S&P BSE Sensex is India’s most widely tracked stock market benchmark index.
The instruments traded on the exchange are cash equity, currencies, debt instrument, derivatives, and mutual funds.
Its platform for the SME sector BSE SME is India’s largest, with over 250 companies being traded on it. BSE StAR MF is India’s largest online mutual fund platform with over 27 lakh transactions every month and adds almost 2 lakh new SIPs (Systematic Investment Plans) every month.
BSE has launched India INX, India’s first international exchange, located at GIFT CITY IFSC in Ahmedabad.
NSE was incorporated in 1992 and commenced operations in 1994 with the launch of the wholesale debt market, followed by the launch of the cash market segment. NSE was the first stock exchange in India to offer screen based trading, bringing in much needed transparency to market operations.
Almost all trading in the derivative segment in India takes place in NSE. NSE has launched India NSE IFSC at GIFT CITY IFSC in Ahmedabad.
The exchange launched its benchmark index called Nifty, that is comprised of 50 companies.
The BSE is the oldest stock exchange not only in India, but also in Asia. It was started by a group of brokers who transacted under a tree. It was established in 1875 as The Native Share & Stock Brokers’ Association. Since then, BSE has grown by leaps and bounds and is among the prominent exchanges globally. It is ranked as the 11th biggest exchange globally.
Ranked 10th globally, NSE is the biggest stock exchange in India. Incorporated in 1992, the exchange has an almost monopoly in the index and stock derivative segment. NSE is the biggest stock exchange in India and among the largest ones globally.
NSE was the first stock exchange in India to offer screen based trading, bringing in much needed transparency to market operations. This led to its success as clients were uncomfortable with brokers using the open outcry system where transparency was lacking.
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