Amongst the several emerging markets across the globe, India accounts for a small percentage of the global market cap. But, when it comes to promising investment opportunities, the country has a whole lot to offer. With that said, let’s take a look at the two leading stock exchanges in India, namely the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). These two entities typically manage a majority of trading in the Indian stock market. However, considering the volatile nature of the stock market it is best to analyse both the NSE and BSE before investing in either one of them. What is NSE, What is BSE? What is listing process? What are the differences between NSE and BSE? Buy shares from BSE or NSE?
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National Stock Exchange of India (NSE)
The National Stock Exchange of India, or NSE, happens to be India’s leading stock exchange established in 1992. Housed in Mumbai, it was the very first fully automated electronic exchange/trading system in India, which also accounted for the dismissal of the paper-based system. This revamped the trading facility completely. It renders its customers with equity derivatives, debt and currency segments, as well as clearing and settlement services in equity, trading, etc.
Bombay Stock Exchange (BSE)
The Bombay Stock Exchange or BSE is one of the oldest and the fastest growing stock exchanges in the whole of Asia; clocking a median trade speed of 6 microseconds. It was established in the year 1875. Located in Mumbai, it is a demutualized market base, which provides services such as risk management, depository services, CDSL (Central Depository Services Limited), data services, debt instrument derivatives etc. # BSE Website :
Bombay Stock Exchange is the ancient securities exchange of the continent, formerly known by the name of ‘The Native Share & Stock Brokers Association’ in the year 1875.
In 1957, BSE was recognised by the Central Government of India as the premier Stock Exchange of the country, under the Securities Contract Regulation Act, 1956.
SENSEX was introduced, as a first equity index in 1986 to provide a base for identifying the top 30 trading companies of the exchange, in more than 10 sectors.
In the year 1995, BSE Online Trading System (BOLT) was started. The Association of person is converted into a Separate Legal Entity with the name of Bombay Stock Exchange Limited, in 2005.
Listing of a company on Stock Exchange
In finance, listing refers to the company’s shares being on the list (or board) of stock that are officially traded on a stock exchange. The company gets registered to issue a certain amount of shares and raise money. This is also called getting listed in a stock exchange. A company enters primary markets to raise capital. If the company is selling shares for the first time, it is called an Initial Public Offering (IPO). The company thus becomes public Each stock exchange has its own listing requirements or rules such as the company to be profitable for the last 3 years.
Once IPO is over, new securities are listed then these shares are traded in the secondary market. Secondary market transactions are referred to trades where one investor buys shares from another investor at the prevailing market price or at whatever price the two parties agree upon. This is to offer a chance for investors to exit an investment and sell the shares. Normally, investors conduct such transactions using an intermediary such as a broker, who facilitates the process.
Delisting refers to the practice of removing the stock of a company from a stock exchange so that investors can no longer trade shares of the stock on that exchange. This typically occurs when a company goes out of business, declares bankruptcy, no longer satisfies the listing rules of the stock exchange.
Listing on BSE
The BSE Limited has a dedicated Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of BSE. Details at Guidelines for Company Listing.For example
- The minimum post-issue paid-up capital of the applicant company shall be Rs. 10 crores for IPOs & Rs.3 crore for FPOs
- The minimum issue size shall be Rs. 10 crores
- The minimum market capitalization of the Company shall be Rs. 25 crore (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price).
Listing on NSE
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 following. Details at NSE webpage
- Submission of Memorandum and Articles of Association
- Approval of draft prospectus
- Submission of Application
There are listing fees applicable to the companies listed on BSE and NSE. The listing fees depend on the companies paid up capital at both NSE and BSE.
For example on NSE The listing fee applicable from April 01, 2018 is as follows:
A. Listing Fee Structure based on Paid up Capital:
|Initial Listing Fees||50,000|
|Annual Listing Fees (on equity share, bond and/ or debenture capital)|
|Upto 100 crore||2,90,000|
|Above 100 Crore and upto 200 Crore||3,80,000|
|Above 200 Crore and upto 300 Crore||4,90,000|
|Above 300 Crore and upto 400 Crore||5,95,000|
|Above 400 Crore and upto 500 Crore||7,30,000|
Companies which have a paid up capital, bond and/or debenture and/or debt capital, etc. of more than 500 crore will pay minimum fees of 7,35,000/- and an additional listing fees of 4,800/- for every increase of 5 crore or part thereof in the paid up share, bond and/debenture and/or debt capital, etc.
Differences Between BSE and NSE
Here’s a look at some of the key differences between these two leading stock exchanges.
- Between the two stock exchanges, BSE is the older one and was founded in the year 1875. NSE, on the other hand, recently came into force in the year 1992.
- BSE ranks 10th amongst the largest stock exchanges in the world, while NSE is said to be the 12th largest exchange in the world.
- The NSE introduced the electronic exchange system in the year 1992, whereas the same system, called BOLT, was initiated by the BSE in 1995.
- While the NSE exhibits a market capitalization worth over $1.65 trillion, the market capitalization of BSE is over $1.7 trillion.
- Over 1700 companies have been registered on the NSE. The BSE, on the hands, holds over 5500 companies.
- Nifty is the standard index for NSE, while it is Sensex is for BSE.
- While the NSE is present in almost all cities in India, the BSE can only be found in about 400 cities.
Both these dominant stock exchanges constitute an integral part of the Indian stock market. They practically serve as the two pillars of the Indian economy.
Buy from BSE or NSE
When you buy a stock which is available on multiple exchanges, then you have to specify which stock exchange are you buying from. The image below shows placing the Market order for buying Reliance Industries.
There is some price difference in the share prices of a stock on the BSE and NSE. If you are buying you should check the rates at both the exchanges before buying.
There is no other difference in buying on either exchange for a limit order. If you want to place a limit order to sell Reliance shares at Rs 1035 it does not make a difference on which exchange you want to sell.
The brokerage charged by the broker, the Securities Transaction Tax are all the same on either of the exchanges. The volumes of shares are generally higher on the NSE, which means if you are selling sizeable quantities the NSE could be a better proposition. Also, some shares are not traded on the NSE, which will force you to buy or sell the shares on the BSE. For example, Claris Lifesciences, Spice Jet are examples of stocks that are not traded on the NSE.
This YouTube Video shows how to place an equity order where first you have to select the Exchange,the company,the order type
Much like the several traders and brokers who conduct daily trades on these stock exchanges, you too can operate trades with the help of a simple demat account. In order to do so, you can open an online demat account and begin trading right away.