What is NSE?

NATIONAL STOCK EXCHANGE OF INDIA (NSE):
Formation of National Stock Exchange of India (NSE) in 1994 is one important
development in the Indian capital market. The need Was felt by the industry and investing
community since 1991. The NSE is slowly becoming the leading stock exchange in terms
of technology, systems and practices in due course of time.
On 30th June, 1994, the first trade on the National Stock Exchange was transacted. For
the first time in the history of the securities market, a trade was conducted in the full view
of the other participants. Gone is the old fashioned telephone based quote system; gone is
the hush-hush nature of market. On the first day of NSE trading, deals worth ` 2.4 crore
were completed. In addition, orders for ` 102 crore were place on the NSE. The new
exchange which boasts of screen based trading system has been promoted as a
competitor to the Bombay Stock Exchange (BSE). In the NSE, the available system
provides complete market transparency of trading operations to both trading members and
the participants and automatically matches and strikes deals of the orders received when it
finds a suitable match.
The NSE has been set up to provide a nation wide stock trading facilities to investors, The
NSE is an important step in upgrading trading facilities for investors and bringing Indian
financial markets in the line with international markets. Major stock exchanges have
agreed to set up an integrated National Stock Market System (NSMS) and the SEBI has
given consent to the new scheme.
The NSE is a stock exchange with a difference. It acts as a traditional retail market for
equities and debentures, etc., traded under the Capital Market Segment. In addition, the
NSE operates as a Wholesale Debt Market and a separate segment of the NSE.
The NSE provides nationwide screen-based trading facilities and equal access to
investors. High quality service to investors has been provided through an efficient,
transparent and fair trading system. Each trading member trades on the NSF with other
members through a computer located at the trading members’ office, anywhere in India.
The computer is connected to the central computer system at the NSE through telephone
lines for an interim transition period and subsequently by satellite link.
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-the-art client-server based application. At the server end all trading information is
stored in memory database to achieve minimum response time and maximum system
availability for users. It has uptime record of 99.7%. For all trades entered into NEAT
system, there is uniform response time of less than one second.
In short, special features of NSE are :
(a) Central Depository Trust,
(b) National clearing house, and
(c) Common settlement and trading cycles.