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ANALYSIS
NATIONAL STOCK EXCHANGE (NSE): It was inaugurated in 1994; the National Stock
Exchange seeks to
a) Establish a national wide trading facility for equities, debt and hybrids.
b) Facilitate equal access to investors across the country.
c) Impart fairness, efficiency and transparency to securities.
d) Shorten settlement cycle.
e) Meet international securities market standards.
The distinctive features of NSE as it functions currently as follows
NSE is first totally computerized exchange.
NSE has 2 segments:- 1) Capital Market Segment
2) Wholesale Debt Market Segment
Capital Market Segment: Which deals with Equities, Convertible and non convertible
debentures.
Wholesale Debt Market: Government securities, PSU bonds and debt instruments.
The trading members in the capital market segments are connected to the central
computer in Mumbai, through a satellites linkup, using VSAT (Very Small aperture
Terminals).
The NSE has opted for an order-driven system.
Members are required to deliver securities and cash by a certain day. The payout day in
the following day.
All trades on NSE are guaranteed by National Securities Clearing Corporation (NSCC).
BOMBAY STOCK EXCHANGE: It is established in 1875, the Bombay Stock Exchange
(BSE) is one of the oldest organized exchanges in the world. Its distinctive features are as
follows:
The BSE switched from the open outcry system to the screen-based system in 1995
which is called BOLT (which is an acronym for BSE Online Trading).
It is a computerization program.
To begin with, BOLT was a quote-driven as well as an order-driven system with
jobbers.
3
Jobbers play an important role on BSE. A jobber is broker who trades on his own account
and hence offers a two way quote or a bid ask quote.
The bid price reflects the price at which the jobber is willing to buy and the ask price
represents the price at which the jobber is willing to sell.
Investors have to transact via a jobber/broker. The jobber/broker feeds his buy/sell quotes
in his computer terminal, which is linked to main server at the BSE.
From August 13, 2001 both NSE and BSE became a completely order driven market.