National Stock Exchange of India
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| National Stock Exchange of India (NSE) | |
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| Founded | 1992 |
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| Headquarters | Mumbai, India |
| Key People | Managing Director Ravi Narain |
| Products | S&P CNX Nifty index |
| Corporate Website | www.nse-india.com |
The National Stock Exchange of India (NSE) became the country's largest stock exchange soon after its launch in the early 1990s and hosts India's main equities benchmark, the S&P CNX Nifty. The NSE also lists derivatives, where it holds a near-monopoly of the Indian market, and it is now the world's largest exchange for single-stock futures trading on its integrated electronic trading platform. In mid-2010 the NSE intends launching a transparent platform to allow short-selling of its listed securities.
According to the annual Futures Industry Association's survey of the world's leading derivatives exchanges in 2010, the National Stock Exchange of India was ranked as the world's fifth-largest derivatives exchange by contract volume, putting it below NYSE Euronext and above BM&FBOVESPA. [1] The report released in March of 2011 states that the number of futures and options traded on NSE jumped 75.9 percent from 2009, to over 1.6 billion contracts. The survey also notes that the exchange's growth was driven mainly by financial contracts and in particular foreign exchange contracts.
Background
The NSE was created in 1992 by a consortium of Indian banks including State Bank of India, Union Bank of India and ICICI Bank but ownership was broadened in 2007 by selling 5 percent stakes each to international investors NYSE Euronext, Goldman Sachs, General Atlantic Partners and Softbank Asian Infrastructure Fund. It began trading the equities and debt in 1994 and launched futures and options trading in 2000.[2] The popular single stock futures contracts were launched in 2002 while currency futures were added in 2008, followed a year later by interest rate futures.[3]
The NSE handles around twice as many trades as its nearest Indian stock-market rival, the Bombay Stock Exchange, an edge attributed to the NSE's superior single trading platform, Bloomberg reported recently.[4] However, it has recently been challenged by the launch of MCX Stock Exchange (MCX-SX), an offshoot of the rapidly growing Multi Commodities Exchange (MCX), which also intends to trade stocks and was granted a licence to do so by the Securities and Exchange Board of India (SEBI) in mid-2009.[5] The NSE's total income jumped around 40 percent between September 2007 and September 2008 while pre-tax profit rose over the same period by more than 50 percent,[6] which likely encouraged the new entrant.
In May 2011, it was reported that the Oman Investment Fund, the national sovereign wealth fund for that country, agreed to purchase a 5 percent stake in the National Commodity & Derivatives Exchange (NCDEX) from NSE. And unnamed hedge fund also agree to take a 1.1 percent investment in NCDEX. In May 2011, the deal was still pending final approval.[7]
Key Product
The NSE's S&P CNX Nifty index is owned by the India Index Services and Products Ltd. (IISL), which is in turn part-owned by the NSE. The Nifty benchmark consists of 50 stocks across 21 sectors and represented 62.5 percent of the free float market capitalization of the NSE at September 30, 2009.[8] It has been computed on a free-float basis since June 2009 and total traded value of Nifty stocks for the six months to September 30 was about 54 percent of total stock-trading value on the NSE. On October 14, 2009 the Nifty index closed at 5,118 points - its highest level in 16 months when it closed at 5,157 in May 2008 - as Indian markets continued their sustained 2009 rally.[9]
Key People
Managing director and chief executive officer Ravi Narain has been with the NSE since it began trading in 1994 after serving a stint as deputy general manager at IDBI bank.[10] He also serves as chairman of clearinghouse operator the National Securities Clearing Corporation Ltd. (NSCCL), subsidiary of NSE, and as a director of the National Securities Depository Ltd. and the National Commodity & Derivatives Exchange Ltd.[11] The board of NSE is currently seeking a new 3-year term in the top job for Narain after his current term expires in March 2010. He is a graduate of Cambridge University and the Wharton School of Business at the University of Pennsylvania.
Volumes
2010
The FIA, report released in March of 2011, futures and options volume on NSE jumped 75.9 percent from 2009, to over 1.6 billion contracts. The FIA report notes that the exchange's growth was driven mainly by financial contracts, and in particular foreign exchange contracts.[12]
2009
The National Stock Exchange of India ranked as the world's seventh-largest derivatives exchange by contract volume in 2009, according to the annual Futures Industry Association's survey of the world's leading derivatives exchanges. [13] The FIA report, published in early April 2010, notes that the number of futures and options traded on NSE leapt 52 percent to 918.5 million contracts. Its best performing contract was the S&P CNX Nifty Options, which ranked fifth on the FIA's Top-20 list of equity-index derivatives contracts by volume, jumping almost 113 percent to over 321 million contracts traded in 2009.
Latest News
The NSE is expected to do better than both domestic and international competition as India's economy continues to expand following its recovery from the 2008 financial crisis, according to Palo Alto, CA-based investor Norwest Venture Partners, which recently acquired a 2.11% stake in the NSE.[14] Norwest expect Indian markets to grow faster than its global rivals and expects NSE's dominance in derivatives to drive its growth faster still. The NSE is the world's third-largest exchange in equities trades and fourth-largest in index futures as well as the world's leader in single stock futures, Norwest officials noted.
NSE entered into a significant cross-listing partnership with the CME Group, the world's largest derivatives-exchange operator, in March of 2010, involving benchmark stock indexes in the two countries. Futures contracts on the NSE's benchmark S&P CNX Nifty Index (better known as the Nifty 50) are listed on CME Group, denominated in local currency.[15] In return, the NSE lists the CME Group's S&P 500 and Dow Jones Industrial Averages stock index contracts, denominated in Indian rupees. The contracts commenced trading on July 19, 2010 along with two new contracts as part of its NSE partnership, the E-mini and E-micro S&P CNX Nifty (Nifty 50) futures.[16]
The NSE intends announced a short-selling platform in the summer of 2010 to allow traders to borrow and lend shares transparently on the exchange to meet "huge demand", CEO Ravi Narain told Bloomberg in late May.[17] Narain expects that offering exchange-based shorting will attract foreign investors at a time when the strategy is under attack in some western markets. China allowed short selling on its exchanges in March 2010 while Germany reversed course in early May and outlawed naked shorts on some listed securities.
In July 2010, the exchange launched the India Volatility Index (India VIX) on a real-time basis; it previously only tracked end-of-the-day changes. India VIX is based on the index option prices of the benchmark Nifty. On July 19, 2010 NSE applied with SEBI to start futures and options on the index, after it has been tracked for a suitable period.[18]
References
- ↑ 2010 Annual Volume Survey. Futures Industry.com.
- ↑ The Organisation. National Stock Exchange of India.
- ↑ Proposed stock exchange set to challenge NSE’s near-monopoly. Livemint.com.
- ↑ Bombay Bourse Hires Bank of America’s Madhu Kannan. Bloomberg.
- ↑ Proposed stock exchange set to challenge NSE’s near-monopoly. Livemint.com.
- ↑ Profit & Loss Statement. NSE.
- ↑ Oman Sovereign Wealth Fund to Buy 5% in NCDEX. The Economic Times.
- ↑ S&P CNX Nifty. NSE.
- ↑ Nifty, Sensex at new peak, end near 17-month highs. NDTV.
- ↑ Narain set to get 3-year extension as NSE chief. Business Standard.
- ↑ Mr Ravi Narain. NFCGIndia.com.
- ↑ 2010 Annual Volume Survey. Futures Industry.com.
- ↑ 2009 Annual Volume Survey. FIA magazine.
- ↑ National Exchange to Gain as Indian Economy Grows, Norwest Says. Bloomberg.
- ↑ National Stock Exchange of India and CME Group Announce Cross-Listing Relationship. PRNewswire-FirstCall.
- ↑ Press Release. NSE.
- ↑ National Stock Exchange Plans New Short Sales Within Weeks to Lure Funds. Bloomberg.
- ↑ Press Release. NSE.
