Last Updated on May 25, 2022 by Neera Bhardwaj

The largest stock exchange in the country, the National Stock Exchange of India Limited (NSE), was formed in 1992 by the Indian government to develop solutions for simplifying stock market participation and making it more accessible to all interested parties. The NSE India is the country’s first completely automated electronic trading exchange. The National Stock Exchange of India Limited provides firms with a place to raise funds. On the platform, investors may trade stocks, currencies, debt, and mutual fund units. In this article, we deep dive into what NSE is and its functions.

What is NSE?

The NSE (National Stock Exchange of India Limited) is an Indian wholesale debt, equity, and derivatives exchange. The Nifty 50 index, which monitors the largest assets in the Indian equities market, is one of the most popular passive investing options with investors. Electronic trading was first introduced to the Indian stock exchange market by the NSE in 1994.

Trading at the exchange takes place on an open electronic limit order book, with the trading computer matching orders. There are no market makers, and the entire process is order-driven, which means that market orders are automatically matched with the best limit orders made by investors. As a consequence, both buyers and sellers maintain their anonymity. An order-driven market has the benefit of providing greater transparency by showing all buy and sell orders in the trading system.

Understanding of NSE

The Nifty 50 is the National Stock Exchange’s flagship index, providing for almost 63% of the exchange’s total market capitalization. Under 50 variable stocks, this index covers about 12 sectors of the economy.

NSE orders are submitted through brokers, who frequently provide consumers with the option of trading online. A few institutional investors have “direct market access,” which allows them to enter orders directly into the trading system. Except on Saturdays, Sundays, and other holidays specified by the stock exchange, NSE market trading on the equities sector takes place throughout the week.

Functions of NSE

  • To provide a trading facility where investors from all across the country may trade debt, equities, and other asset types
  • To serve as a communication network that allows investors to engage in the trading system on an equal footing
  • To comply with the international norms for financial exchange markets
  • To enable the book-entry settlement mechanism and shorten the trade settlement duration
NSE provides a trading facility where investors can trade debt, equity and other assets classes from all across the country. Click To Tweet

NSE market

NSE has offered trading and investments in various segments such as equity, mutual funds, indices, initial public offerings (IPOs), exchange-traded funds, security lending and borrowing, equity derivatives, currency derivatives,  commodity derivatives, interest rate futures and corporate bonds.

Benefits of listing on the NSE

  • The platform offers comprehensive visibility. This trading system is capable of delivering a wide range of trade and post-trade data. Investors may quickly see the trading system’s top buy and sell orders, as well as the total quantity of shares available for a transaction
  • The level of trading activity on this stock exchange serves to reduce the effective cost on it, lowering trading costs for investors. Additionally, the exchange’s automated trading mechanism aids in maintaining investor transparency and consistency
  • Investors benefit from the speed with which orders are executed on this exchange since it allows them to get the best pricing
  • The NSE offers listed businesses monthly transaction information. The data may be used to track the performance of the businesses

The National Stock Exchange of India Limited (NSE) is a stock exchange in India that provides automated trading services across the country. Market orders drive NSE trade, and buyers and sellers remain anonymous. The NSE offers debt, equities, equity derivatives, mutual funds, initial public offerings (IPOs), currencies, and exchange-traded funds for trading and investing (ETFs).

Ayushi Mishra