The journey of enabling 1.4 billion dreams
Sep 2024
Providing backbone infrastructure to the financial markets, India’s National Stock Exchange is a linchpin for the equity markets
Image: anton_balazh/stock.adobe.com
National Stock Exchange (NSE) was set up in 1992 and went live in 1994, with the objectives of facilitating capital formation, addressing the need to offer democratic and transparent access to stock trading and to help improve the financial well-being of the people. In this time, it has always aimed to embrace new technologies, platforms and products. With a technology-first focus, it was the first stock exchange in the country without a trading floor, with the orders getting executed from across the nation on an automated screen using the V-SAT network.
From a market capitalisation of US$120 billion in 1994, to the market capitalisation surpassing US$5 trillion, the journey for NSE has just begun. This journey of wealth creation was facilitated with the listing of over 2500 companies.
The role of the Securities and Exchange Board of India (SEBI) has also been instrumental in spearheading financial inclusion, ensuring a secure investment environment helping the overall development of the securities market. SEBI, as well as the ecosystem of the early 1990s, propelled the creation of NSE India Annual 202419 Stock Exchange anchored by the values and purpose to contribute to the country’s progress.
The World Federation of Exchanges (WFE) in 2024 recognised NSE as the largest derivatives exchange for the fifth consecutive year based on the number of trades, and the world’s largest exchange by the number of orders and trades processed daily. It ranks as the third largest equity exchange globally.
NSE has many firsts to its credit:
First demutualised stock exchange
First exchange to commence automated screen based electronic trading •
First to offer dematerialisation of shares
First to promote India’s depository, National Securities Depository Limited (NSDL), as well as establishing the first clearinghouse, NSE Clearing.
NSE introduced APIs to enable its members to build their own platforms and expand their reach. NSE services over 1300 trading members covering 100 million unique registered investors across 99.85 per cent of the 19,300 pin codes in India. It continues to work towards achieving leadership built on trust, security and inclusiveness. It also facilitates participation of foreign portfolio investors from 61 countries. In 2024, fund mobilisation through NSE exceeded US$166Billion.
NSE’s multidimensional nature, covering multiple asset classes and wide customer segments, serve the multiple roles of: being an exchange; a front-line regulator; index provider; technological solutions provider; educator; and market developer. Technology, innovation, and transparency and inclusion are key priorities within NSE’s market ecosystem.
Service delivery and instrument coverage
Innovative solutions have expanded service delivery channels as well as the coverage of financial instruments. Introduction of internet and mobile platforms for government securities in the primary market addressed challenges related to product awareness while providing an efficient channel for trading members to deliver investment products to clients.
The launch of the Nifty CPSE index and the Nifty BHARAT Bond Index series, facilitated government disinvestment through exchange traded funds (ETFs), providing an additional channel for risk diversification. These initiatives attracted retail investors to ETFs while simultaneously addressing the government of India’s need for efficient divestment strategies.
Growth of ETFs expanded the coverage of instruments. With over 175 ETFs listed on NSE, and a daily average turnover of around US$92 million, the exchange plays a pivotal role in developing and popularising innovative financial products, offering participants diverse and efficient investment options.
Subscribers to IPOs can start trading within three days of the closure of the issue. The exchange’s clear-cut policies, processes and technology solutions, enable greater liquidity, and faster wealth creation.
Technology at its core
As technology leaders, the focus is always on availability, scalability and security. NSE’s technology infrastructure focuses on:
Availability: Exchange’s state-of-the-art infrastructure enables innovation and rapid deployment for capacity augmentation while achieving an ‘always available, reliable, performant, and cyber resilient platform’. It operates on fault-tolerant systems ensuring uptime during trading hours allowing them to operate at five-9s or higher. For example – the DC uses four telecom links to stay connected.
Latency: NSE operates on near zero latency, processing transactions in microseconds, as opposed to other industries where it can be in milliseconds.
Resiliency: The exchange’s infrastructure works on the principle of zero tolerance, ensuring continuous market operations. This includes resiliency with high availability, near disaster recovery site, remote disaster recovery site and more than one-and-a-half times capacity. A robust disaster recovery capabilities ensure seamless continuity and performance.
Scale: NSE’s scalability accommodates fluctuating trade volumes, adapting infrastructure to peak loads with capacity management strategies.
NSE’s in-house developed trading platform, is capable of processing over 10 billion messages daily, from over 4000 locations, over 1500 broking members without any lag. The platform’s scalability ensures optimal resource utilisation, enhancing operational efficiency and providing a seamless trading experience for participants.
Commitment to innovation and transparency
Investment in IT-based intellectual property enhanced NSE’s surveillance systems to deliver a strong customer experience while reinforcing market integrity. NSE also invested in the below to foster a trustworthy ecosystem:
Next generation surveillance system (NGS): A new platform for market surveillance providing features like configurable rule based real time alert engine, data analytics and regulatory reporting, enriched visualisation, and support for complex workflows.
Log application and monitoring application (LAMA): A continued focus on overall resiliency of the entire capital market ecosystem, in the form of a new monitoring platform, consisting of a metrics capture API and monitoring dashboards. This is an industrywide platform for all exchanges and depositories operating in India, for monitoring their respective qualified stockbrokers.
Network resiliency and technology modernisation: NSE invested heavily to ensure the highest level of resilience for critical network links across all sites. NSE migrated to software-defined networking (SDN) based network using Cisco ACI solutions across DC and DR.
Client-level collateral segregation: NSE implemented collateral segregation at the client level. Collaterals placed by clients are tracked through the system. System-based alerts are generated in case of deficiency of adequate collaterals placed by the clients. The monitoring process is implemented for more than 80 million investors.
System for online dispute resolution (ODR): Investor grievances across market infrastructure intermediaries are enabled through a system for online dispute resolution. The mechanism is available to all investors, clients and market participants who register and lodge their dispute through SMART ODR Portal.
The settlement cycles from T+2 to T+1 to T+0
India pioneered T+1 settlement without requiring pre-funding across all sectors in February 2023, setting new standards in global capital markets. Improved funding and liquidity built confidence and transparency enhanced digitisation and standardisation, ultimately leading to wealth creation and attractiveness
NSE, as a market leader, was in a position to ensure the transition was seamless. T+1 settlement cycle was implemented in a phased manner, while T+2 was operative, without causing a glitch in either of the trading systems. All stocks were transitioned based on market capitalisation. This ensured least disruption amongst brokers and investors. Foreign institutional investors from over 60 countries welcomed and acclimatised to T+1.
In early 2024, India further innovated by introducing a same-day (T+0) settlement cycle for a select group of stocks. Starting 28 March 2024, NSE started the T+0 settlement with 25 stocks. This initiative of SEBI towards shortened settlement aims to enhance cost efficiency, transparency in charges for investors, and bolster risk management at clearing corporations and the overall securities market ecosystem.
Stakeholder management
With SEBI’s far-sighted vision for the growth of the Indian capital markets and the clear roadmap that was available from time to time, NSE has played a pivotal role in bringing various stakeholders together in helping the achievement of various milestones. On the one hand we have the issuers – the companies whose equities and bonds are listed on NSE’s platform, and on the other the investors, who with the help of various intermediaries, trade on these products on the NSE platform.
With SEBI’s far-sighted vision for the growth of the Indian capital markets and the clear roadmap that was available from time to time, NSE has played a pivotal role in bringing various stakeholders together in helping the achievement of various milestones. On the one hand we have the issuers – the companies whose equities and bonds are listed on NSE’s platform, and on the other the investors, who with the help of various intermediaries, trade on these products on the NSE platform.
These channels allow stakeholders to voice concerns, enable a robust governance structure, provide feedback, and collaborate on key issues ranging from policy-related matters, regulatory and compliance issues, servicerelated matters, and query resolution and assistance.
NSE IX
NSE has played an important role in the Gujarat International Finance Tech-City (GIFT City) project, by setting up NSE International Exchange, which now already offers several derivatives products, including the popular GIFT Nifty Futures. The NSE IX – SGX partnership, which helps international investors trade various products on NSE IX via the GIFT Connect, is playing its part in fostering cross-border connectivity. This project has strengthened ties between international and domestic participants as well as facilitated the ‘onshoring’ of NIFTY derivatives products, marking a significant milestone in crossborder collaboration.
The launch of GIFT Connect has seen an increase in participation, with GIFT Nifty witnessing a total cumulative volume of over 15 million contracts, comprising a total cumulative turnover of US$612 billion as of 31 March 2024. GIFT Nifty has reached multiple back-to-back single-day record peak volumes of 532,783 contracts, and notional turnover of US$22.88 billion on 23 January 2024. It achieved the highest open interest of more than 330,000 in terms of number of contracts, with its value of US$14.6 billion as of 26 March 2024.
NSE Emerge and Social Stock Exchange (SSE)
NSE has set up NSE Emerge and Social Stock Exchange (SSE) as a separate segment, in line with the vision of the regulators.
NSE Emerge platform, catering to micro, small and medium enterprises (MSMEs), has been instrumental in unlocking value and bringing good quality issues, leading to growth, employment generation and capital formation. Since 2019, 501 companies across multiple sectors have collectively raised over US$1.41 billion on NSE Emerge, with a resulting market capitalisation of US$21 billion. The average IPO size increased nearly three-fold to US$4.5 million in FY2024-25 (YTD).
Within 15 months of its launch, SSE has witnessed over 70 NPOs registrations, with nine raising over US$1.5 million for their projects in education, skilling, agriculture, art and heritage, and many more.
In conclusion
As NSE celebrates its 30th anniversary in November 2024, it is very clear that the core NSE values of integrity, customer-focused culture, trust, respect & care for the individual, passion for excellence and teamwork have helped build an extraordinary institution of national importance, with fine international repute. Team NSE looks forward to continuing the journey of shaping India’s capital markets in times to come.
From a market capitalisation of US$120 billion in 1994, to the market capitalisation surpassing US$5 trillion, the journey for NSE has just begun. This journey of wealth creation was facilitated with the listing of over 2500 companies.
The role of the Securities and Exchange Board of India (SEBI) has also been instrumental in spearheading financial inclusion, ensuring a secure investment environment helping the overall development of the securities market. SEBI, as well as the ecosystem of the early 1990s, propelled the creation of NSE India Annual 202419 Stock Exchange anchored by the values and purpose to contribute to the country’s progress.
The World Federation of Exchanges (WFE) in 2024 recognised NSE as the largest derivatives exchange for the fifth consecutive year based on the number of trades, and the world’s largest exchange by the number of orders and trades processed daily. It ranks as the third largest equity exchange globally.
NSE has many firsts to its credit:
First demutualised stock exchange
First exchange to commence automated screen based electronic trading •
First to offer dematerialisation of shares
First to promote India’s depository, National Securities Depository Limited (NSDL), as well as establishing the first clearinghouse, NSE Clearing.
NSE introduced APIs to enable its members to build their own platforms and expand their reach. NSE services over 1300 trading members covering 100 million unique registered investors across 99.85 per cent of the 19,300 pin codes in India. It continues to work towards achieving leadership built on trust, security and inclusiveness. It also facilitates participation of foreign portfolio investors from 61 countries. In 2024, fund mobilisation through NSE exceeded US$166Billion.
NSE’s multidimensional nature, covering multiple asset classes and wide customer segments, serve the multiple roles of: being an exchange; a front-line regulator; index provider; technological solutions provider; educator; and market developer. Technology, innovation, and transparency and inclusion are key priorities within NSE’s market ecosystem.
Service delivery and instrument coverage
Innovative solutions have expanded service delivery channels as well as the coverage of financial instruments. Introduction of internet and mobile platforms for government securities in the primary market addressed challenges related to product awareness while providing an efficient channel for trading members to deliver investment products to clients.
The launch of the Nifty CPSE index and the Nifty BHARAT Bond Index series, facilitated government disinvestment through exchange traded funds (ETFs), providing an additional channel for risk diversification. These initiatives attracted retail investors to ETFs while simultaneously addressing the government of India’s need for efficient divestment strategies.
Growth of ETFs expanded the coverage of instruments. With over 175 ETFs listed on NSE, and a daily average turnover of around US$92 million, the exchange plays a pivotal role in developing and popularising innovative financial products, offering participants diverse and efficient investment options.
Subscribers to IPOs can start trading within three days of the closure of the issue. The exchange’s clear-cut policies, processes and technology solutions, enable greater liquidity, and faster wealth creation.
Technology at its core
As technology leaders, the focus is always on availability, scalability and security. NSE’s technology infrastructure focuses on:
Availability: Exchange’s state-of-the-art infrastructure enables innovation and rapid deployment for capacity augmentation while achieving an ‘always available, reliable, performant, and cyber resilient platform’. It operates on fault-tolerant systems ensuring uptime during trading hours allowing them to operate at five-9s or higher. For example – the DC uses four telecom links to stay connected.
Latency: NSE operates on near zero latency, processing transactions in microseconds, as opposed to other industries where it can be in milliseconds.
Resiliency: The exchange’s infrastructure works on the principle of zero tolerance, ensuring continuous market operations. This includes resiliency with high availability, near disaster recovery site, remote disaster recovery site and more than one-and-a-half times capacity. A robust disaster recovery capabilities ensure seamless continuity and performance.
Scale: NSE’s scalability accommodates fluctuating trade volumes, adapting infrastructure to peak loads with capacity management strategies.
NSE’s in-house developed trading platform, is capable of processing over 10 billion messages daily, from over 4000 locations, over 1500 broking members without any lag. The platform’s scalability ensures optimal resource utilisation, enhancing operational efficiency and providing a seamless trading experience for participants.
Commitment to innovation and transparency
Investment in IT-based intellectual property enhanced NSE’s surveillance systems to deliver a strong customer experience while reinforcing market integrity. NSE also invested in the below to foster a trustworthy ecosystem:
Next generation surveillance system (NGS): A new platform for market surveillance providing features like configurable rule based real time alert engine, data analytics and regulatory reporting, enriched visualisation, and support for complex workflows.
Log application and monitoring application (LAMA): A continued focus on overall resiliency of the entire capital market ecosystem, in the form of a new monitoring platform, consisting of a metrics capture API and monitoring dashboards. This is an industrywide platform for all exchanges and depositories operating in India, for monitoring their respective qualified stockbrokers.
Network resiliency and technology modernisation: NSE invested heavily to ensure the highest level of resilience for critical network links across all sites. NSE migrated to software-defined networking (SDN) based network using Cisco ACI solutions across DC and DR.
Client-level collateral segregation: NSE implemented collateral segregation at the client level. Collaterals placed by clients are tracked through the system. System-based alerts are generated in case of deficiency of adequate collaterals placed by the clients. The monitoring process is implemented for more than 80 million investors.
System for online dispute resolution (ODR): Investor grievances across market infrastructure intermediaries are enabled through a system for online dispute resolution. The mechanism is available to all investors, clients and market participants who register and lodge their dispute through SMART ODR Portal.
The settlement cycles from T+2 to T+1 to T+0
India pioneered T+1 settlement without requiring pre-funding across all sectors in February 2023, setting new standards in global capital markets. Improved funding and liquidity built confidence and transparency enhanced digitisation and standardisation, ultimately leading to wealth creation and attractiveness
NSE, as a market leader, was in a position to ensure the transition was seamless. T+1 settlement cycle was implemented in a phased manner, while T+2 was operative, without causing a glitch in either of the trading systems. All stocks were transitioned based on market capitalisation. This ensured least disruption amongst brokers and investors. Foreign institutional investors from over 60 countries welcomed and acclimatised to T+1.
In early 2024, India further innovated by introducing a same-day (T+0) settlement cycle for a select group of stocks. Starting 28 March 2024, NSE started the T+0 settlement with 25 stocks. This initiative of SEBI towards shortened settlement aims to enhance cost efficiency, transparency in charges for investors, and bolster risk management at clearing corporations and the overall securities market ecosystem.
Stakeholder management
With SEBI’s far-sighted vision for the growth of the Indian capital markets and the clear roadmap that was available from time to time, NSE has played a pivotal role in bringing various stakeholders together in helping the achievement of various milestones. On the one hand we have the issuers – the companies whose equities and bonds are listed on NSE’s platform, and on the other the investors, who with the help of various intermediaries, trade on these products on the NSE platform.
With SEBI’s far-sighted vision for the growth of the Indian capital markets and the clear roadmap that was available from time to time, NSE has played a pivotal role in bringing various stakeholders together in helping the achievement of various milestones. On the one hand we have the issuers – the companies whose equities and bonds are listed on NSE’s platform, and on the other the investors, who with the help of various intermediaries, trade on these products on the NSE platform.
These channels allow stakeholders to voice concerns, enable a robust governance structure, provide feedback, and collaborate on key issues ranging from policy-related matters, regulatory and compliance issues, servicerelated matters, and query resolution and assistance.
NSE IX
NSE has played an important role in the Gujarat International Finance Tech-City (GIFT City) project, by setting up NSE International Exchange, which now already offers several derivatives products, including the popular GIFT Nifty Futures. The NSE IX – SGX partnership, which helps international investors trade various products on NSE IX via the GIFT Connect, is playing its part in fostering cross-border connectivity. This project has strengthened ties between international and domestic participants as well as facilitated the ‘onshoring’ of NIFTY derivatives products, marking a significant milestone in crossborder collaboration.
The launch of GIFT Connect has seen an increase in participation, with GIFT Nifty witnessing a total cumulative volume of over 15 million contracts, comprising a total cumulative turnover of US$612 billion as of 31 March 2024. GIFT Nifty has reached multiple back-to-back single-day record peak volumes of 532,783 contracts, and notional turnover of US$22.88 billion on 23 January 2024. It achieved the highest open interest of more than 330,000 in terms of number of contracts, with its value of US$14.6 billion as of 26 March 2024.
NSE Emerge and Social Stock Exchange (SSE)
NSE has set up NSE Emerge and Social Stock Exchange (SSE) as a separate segment, in line with the vision of the regulators.
NSE Emerge platform, catering to micro, small and medium enterprises (MSMEs), has been instrumental in unlocking value and bringing good quality issues, leading to growth, employment generation and capital formation. Since 2019, 501 companies across multiple sectors have collectively raised over US$1.41 billion on NSE Emerge, with a resulting market capitalisation of US$21 billion. The average IPO size increased nearly three-fold to US$4.5 million in FY2024-25 (YTD).
Within 15 months of its launch, SSE has witnessed over 70 NPOs registrations, with nine raising over US$1.5 million for their projects in education, skilling, agriculture, art and heritage, and many more.
In conclusion
As NSE celebrates its 30th anniversary in November 2024, it is very clear that the core NSE values of integrity, customer-focused culture, trust, respect & care for the individual, passion for excellence and teamwork have helped build an extraordinary institution of national importance, with fine international repute. Team NSE looks forward to continuing the journey of shaping India’s capital markets in times to come.
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