National Stock Exchange of India 1

Transcription

1 National Stock Exchange of India 1

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3 National Stock Exchange of India 1 Since its inception in 1992, National Stock Exchange of India has been at the vanguard of change in the Indian securities market. This period has seen remarkable changes in markets, from how capital is raised and traded, to how transactions are cleared and settled. The market has grown in scope and scale in a way that could not have been imagined at the time. Average daily trading volumes have jumped from Rs. 17 crore in when NSE started its Cash Market segment to Rs.11,325 crore in Similarly, market capitalization of listed Indian firms went up from Rs.363,350 crore at the end of March 1995 to Rs.2,896,194 crore at end March Indian equity markets are today among the most deep and vibrant markets in the world. This transformation was the result of a number of initiatives led by the Government, market regulators and infrastructure providers like exchanges and depositories. NSE s efforts in this area have included the creation of the first clearing corporation in the country in the form of the National Securities Clearing Corporation Limited (NSCCL). NSCCL today provides central counterparty services and manages settlement risk for multiple products, and is a major factor in the confidence market participants have in the ability of Indian markets to handle extreme shocks without causing any defaults. NSCCL is also the first clearing corporation in the country to receive. NSE has many other firsts to its name, including the first systematic process of member inspections, a sophisticated market surveillance system, and a country wide high capacity data network supporting close to 200,000 dealer terminals. The year was an eventful year for NSE, as it saw the launch of new and important products for the securities market. Introduction of Mini Nifty Futures and Options contracts on S&P CNX Nifty during the year has given retail investors an increased ability to participate in index futures and options trading. NSE also started publishing the first volatility index in the country India VIX *. Market participants now have an important tool to assess volatility and create trading strategies to exploit volatility movements. In May 2008, NSE developed a new trading application, NOW, or NEAT on Web. The NOW platform allows trading members to connect to the exchange through the internet, and has resulted in a significant reduction in both the access cost and turnaround time for providing access. This year also saw a watershed in the Indian currency market in the form of a currency futures contract. NSE was the first stock exchange in the country to launch the contract on August 29, 2008 in USDINR pair. The contract was an instant success, and currently has daily trading volumes in excess of Rs. 2,000 crore and open interest in excess of Rs. 1,000 crore. Other significant developments include Long term Options Contracts on S&P CNX Nifty, Short selling * VIX is a trademark of Chicago Board Options Exchange, Incorporated ("CBOE") and Standard & Poor s has granted a license to NSE, with permission from CBOE, to use such mark in the name of the India VIX and for purposes relating to the India VIX. 3

4 and Securities Lending and Borrowing Scheme, Direct Market Access (DMA), Futures and Options contracts on S&P CNX Defty index and the NSE E-Bids for Debt Segment. Further NSE also ventured into a new segment by promoting a Power Exchange (Power Exchange India Ltd -PXIL) along with NCDEX. Today, NSE offers a wide range of products for multiple markets, including equity shares, Exchange Traded Funds (ETF), Mutual Funds, Debt instruments, Index futures and Options, Stock Futures and Options and Currency futures. Our Exchange has more than 1,400 companies listed in the Capital Market and more than 95% of these companies are actively traded. The debt market has more than 3,954 securities available for trading. Index futures and options trade on seven different indices and on more than 230 stocks in stock futures and options. In currency futures contracts are currently traded in the USDINR pair. Globally, NSE is ranked first in single stock futures in terms of number of contracts traded, and third in stock index futures and stock index options. We also rank third in terms of number of equity shares traded and are the eighth largest derivatives exchange in the world. Incorporation and Management The NSE is owned by a set of leading Indian and International financial institutions, banks, insurance companies, private equity funds, mutual funds, venture capital funds etc. NSE was incorporated in November 1992, and received recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April It is managed by professionals who do not directly or indirectly trade on the Exchange. The trading rights are with trading members who offer their services to the investors. The Board of NSE comprises of senior executives from promoter institutions and eminent professionals, without having any representation from trading members. While the Board deals with the broad policy issues, the Executive Committees (ECs), which include trading members, formed under the Articles of Association and the Rules of NSE for different market segments, set out rules and parameters to manage the day-today affairs of the Exchange. The day-to-day management of the Exchange is delegated to the Managing and CEO who is supported by a team of professional staff. Therefore, though the role of trading members at NSE is to the extent of providing only trading services to the investors, the Exchange involves trading members in the process of consultation and participation in vital inputs towards decision making. Tables 1-1 and 1-2 gives the composition of its Board of s and the Executive Committees. Market Segments and Products NSE provides a trading platform for of all types of securities for investors under one roof Equity, Corporate Debt, Central and State Government Securities, T-Bills, Commercial Paper (CPs), Certificate of Deposits (CDs), Warrants, Mutual Funds (MFs) units, Exchange Traded Funds (ETFs), Derivatives like Index Futures, Index Options, Stock Futures, Stock Options and Currency Futures. The Exchange provides trading 4

5 in 4 different segments viz., Wholesale Debt Market (WDM) segment, Capital Market (CM) segment, Futures & Options (F&O) segment and the Currency Derivatives Segment (trading on which commenced on August 29, 2008) The Wholesale Debt Market segment provides the trading platform for trading of a wide range of debt securities which includes State and Central Government securities, T-Bills, PSU Bonds, Corporate debentures, CPs, CDs etc. However, along with these financial instruments, NSE also launched various products e.g. FIMMDA-NSE MIBID/MIBOR owing to the market need. A reference rate is said to be an accurate measure of the market price. In the fixed income market, it is the interest rate that the market respects and closely matches. In response to this, NSE started computing and disseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter-Bank Offer Rate (MIBOR). Owing to the robust methodology of computation of these rates and its extensive use, this product has become very popular among the market participants. Keeping in mind the requirements of the banking industry, FIs, MFs, insurance companies, who have substantial investments in sovereign papers, NSE also started the dissemination of its yet another product, the Zero Coupon Yield Curve. This helps in valuation of sovereign securities across all maturities irrespective of its liquidity in the market. The increased activity in the government securities market in India and simultaneous emergence of MFs (Gilt MFs) had given rise to the need for a well defined bond index to measure the returns in the bond market. NSE constructed such an index, NSE Government Securities Index. This index provides a benchmark for portfolio management by various investment managers and gilt funds. The average daily turnover in the WDM Segment is Rs.1,394 crore (US $ million) during The Capital Market (CM) segment offers a fully automated screen based trading system, known as the National Exchange for Automated Trading (NEAT) system. This operates on a price/time priority basis and enables members from across the country to trade with enormous ease and efficiency. Various types of securities e.g. equity shares, warrants, debentures etc. are traded on this system. The average daily turnover in the CM Segment of the Exchange during was Rs. 11,325 crore. (US $ 2,223 million). Futures & Options (F&O) segment of NSE provides trading in derivatives instruments like Index Futures, Index Options, Stock Options, Stock Futures. The futures and options segment of NSE has made a mark for itself globally. In the Futures and Options segment, trading in S&P CNX Nifty Index, CNX IT index, Bank Nifty Index, CNX Nifty Junior, CNX 100 index, Nifty Midcap 50 index, S&P CNX Defty and single stocks are available. The average daily turnover in the F&O Segment of the Exchange during was Rs.45,311 crore (US $ 8,893 million). Currency Derivatives Segment (CDS) at NSE commenced operations on August 29, with the launch of Currency futures trading in US Dollar-Indian Rupee (USD- INR). On the very first day of operations a total number of 65,798 contracts valued at Rs.291 crore were traded on the Exchange. Since then trading activity in this segment has been witnessing a rapid growth. During August 29, 2008 to March 31, 2009 the segment reported a trading value of Rs.162,272 crore (US $ 31,849 million). A total 5

6 number of 518 trading members which includes 22 banks have taken membership in this market segment as at end March Trading Value (Rs.crore) Segment/Year CM 1,569,558 1,945,287 3,551,038 2,752,023 F&O 4,824,250 7,356,271 13,090,478 11,010,482 CDS* 162,272 WDM 475, , , ,952 Total 6,869,332 9,520,664 16,923,833 14,260,729 * Trading in Currency Futures on Currency Derivatives Segment (CDS) commenced on August 29, 2008 the trading value is from August 29, 2008 to 31 st March Market Segments Indicators- Trading Volume Market Capitalisation (As at end March) (Rs.crore) Segment/Year Mar-06 Mar-07 Mar-08 Mar-09 CM 2,813,201 3,367,350 4,858,122 2,896,194 WDM 1,567,574 1,784,801 2,123,346 2,848,315 Total 4,380,775 5,152,151 6,981,468 5,744,510 6

7 Market Segment Indicators- Market Capitalisation NSEs Worldwide Ranking in 2008 (Jan-Dec) NSE Ranks 3 rd in Number of Trades in Equity Shares. NSE Ranks 2 nd in terms of Number of Contracts traded in Single Stock Futures. NSE Ranks 3 rd in terms of Number of Contracts traded in Stock Index Futures. NSE Ranks 4 th in terms of Number of Contracts traded in Stock Index Options. NSE is the 8 th Largest Derivatives Exchange in the World. Source:WFE & FIA NSEs Worldwide Ranking for the period Jan-April 2009 NSE Ranks 1 st in terms of Number of Contracts traded in Single Stock Futures NSE Ranks 3 rd in terms of Number of Contracts traded in Stock Index Futures. NSE Ranks 3 rd in terms of Number of Contracts traded in Stock Index Options. NSE Ranks 4th in Number of Trades in Equity Shares. Source:WFE & FIA 7

8 Achievements/Milestones Month/Year Event November 1992 Incorporation April 1993 Recognition as a stock exchange. June 1994 WDM segment goes live. November 1994 CM segment goes live through VSAT. October 1995 Became largest stock exchange in the country. April 1996 Commencement of clearing and settlement by NSCCL. April 1996 Launch of S&P CNX Nifty. November 1996 Setting up of National Securities Depository Ltd., first depository in India, co-promoted by NSE. December 1996 Commencement of trading/settlement in dematerialised securities. December 1996 Launch of CNX Nifty Junior. May 1998 Promotion of joint venture, India Index Services & Products Limited (IISL) (along with CRISIL) for index services. May 1998 Launch of NSE s Web-site : July 1998 Launch of NSE s Certification Programme in Financial Markets (NCFM) October 1999 Setting up of NSE.IT Ltd. June 2000 Commencement of Derivatives Trading (in Index Futures). June 2001 Commencement of Trading in Index Options July 2001 Commencement of Trading in Options on Individual Securities November 2001 Commencement of Trading in Futures on Individual Securities January 2002 Launch of Exchange Traded Funds (ETFs). August 2003 Launch of Futures and Options on CNX IT Index June 2005 Launch of Futures & Options on BANK Nifty Index August 2006 Setting up of NSE Infotech Services Ltd. December 2006 Derivative Exchange of the Year, by Asia Risk magazine March 2007 Launch of Gold BeES- Exchange Traded Fund (ETF).(First Gold ETF) June 2007 Launch of Futures & Options on CNX 100 and CNX Nifty Junior contracts. October 2007 Launch of Futures & Options on Nifty Midcap 50 January 2008 Launch of Mini Nifty derivative contracts March 2008 Launch of long term option contracts on S&P CNX Nifty Index. April 2008 Launch of Securities Lending & Borrowing Scheme April 2008 Launch of - India VIX* The Volatility Index April 2008 Direct Market Access (DMA) June 2008 Setting up of Power Exchange India Ltd. July 2008 Launch of NOW Neat on Web August 2008 Launch of Currency Derivatives Segment with commencement of trading on Currency Futures on August 29, September 2008 Launch of ASBA (Applications supported by Blocked Amount) December2008 Launch of derivative contracts in DEFTY index February 2009 Cross Margining Benefit in CM and F&O Segment March 2009 Launch of NSE E-Bids for Debt Segment 8

9 Developments during the year. The year was a significant year wherein major securities market reforms and launch of new products took place. April 2008 Launch of India VIX * Volatility Index is a measure of market s expectation of volatility over the near term. Volatility is often described as the rate and magnitude of changes in prices and in finance often referred to as risk. Volatility Index is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualised volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options. India VIX is a volatility index based on the Nifty 50 Index Option prices. From the best bid-ask prices of Nifty 50 Options contracts, a volatility figure (%) is calculated which indicates the expected market volatility over the next 30 calendar days. April 2008 Launch of Securities Lending & Borrowing Scheme A Securities Lending & Borrowing mechanism allows market participants to take short positions effectively with less cost. It also provides the holder of idle securities with an alternative to earn a return on such holdings without risk. The Exchange launched a Securities Lending & Borrowing Scheme (SLBS) on April 21, The Exchange provides automated, screen based, order matching platform to participants to execute lending and borrowing transactions. Securities available for trading in F&O segment of the Exchange have been initially permitted to trade in this segment. The SLBS was revised from December 22, 2008 to increase the trading time & the lending/borrowing period. April 2008 Direct Market Access During April 2008, Securities & Exchange Board of India (SEBI) allowed the direct market access (DMA) facility to the institutional investors. DMA allows brokers to offer clients direct access to the exchange trading system through the broker s infrastructure without manual intervention by the broker. DMA facility gives clients direct control over orders, help in faster execution of orders, reduce the risk of errors from manual order entry and lend greater transparency and liquidity. DMA also leads to lower impact cost for large orders, better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools/algorithms for trading. * VIX is a trademark of Chicago Board Options Exchange, Incorporated ("CBOE") and Standard & Poor s has granted a license to NSE, with permission from CBOE, to use such mark in the name of the India VIX and for purposes relating to the India VIX. 9

10 April 2008 CBCS - Corporate Bond Clearing and Settlement CBCS is a corporate bond reporting and integrated clearing system. The platform supports trade reporting system where both sides of a corporate bond trade report the deal to the platform. The deal can then be cleared through a settlement system if required. CBCS fills an important need in the corporate bond clearing and settlement space. As transaction volumes rise in the corporate bond market, participants will need to use common clearing and settlement facilities in order to reduce risks and increase settlement efficiency. July 2008 NOW Neat on Web NSE is also offering internet based trading services to NSE members. This facility is branded as NOW Neat on Web. NOW provides an internet portal for NSE members and their authorized clients to transact orders and trades to the various market of NSE viz. CM, F&O and Currency. The members can also access NOW through their existing VSAT/Leased line, in addition to internet links. The various features provided by NOW are: (a) Comprehensive Administration features (b) Flexible Risk Management System (c) High speed dealer terminals (d) Online trading facility for investors August 2008 Launch of Currency Futures On August 29, 2008, NSE launched trading in currency future contracts for the first time in India. To start with 12 monthly future contracts on the USD-INR pair have been made available for trading. The minimum lot size has been kept small at USD 1000 and applicable margins are also comparably very low due to the less volatile nature of the underlying. September 2008 ASBA Application supported by blocked amount ASBA is an application for subscribing to an issue, containing an authorisation to block the application money in a bank account. The ASBA process is available in all public issues made through the book building route. An ASBA investor has to submit an ASBA physically or electronically through the internet banking facility, to the SCSB with whom the bank account to be blocked, is maintained. The SCSB then blocks the application money in the bank account specified in the ASBA, on the basis of an authorisation to this effect given by the account holder in the ASBA. The application money remains blocked in the bank account till finalisation of the basis of allotment in the issue or till withdrawal/ failure of the issue or till withdrawal/ rejection of the application, as the case may be. The application data is thereafter uploaded by the SCSB in the electronic bidding system through a web enabled interface provided by the NSE. 10

11 December 2008 Launch of derivative contracts on S&P CNX DEFTY index The Exchange introduced trading in futures and options contracts of S&P CNX Defty index from December 10, S&P CNX Defty is S&P CNX Nifty, measured in US dollars. February 2009 Cross Margining Benefit On February 9, 2009, Cross margining was made available for positions across index futures to stock/stock futures and stock futures to stocks. It is available to all categories of market participant and benefit is computed on online real time basis. March 2009 NSE e-bids NSE e-bids, NSE s latest offering for credit markets, is an open bidding platform for FIIs to bid for allotments under the overall FII debt limits. After a one time signup, FIIs can bid for allotments and get updates of results. FACTS AND FIGURES The growth in the stock market activity across the different market segments and products is visible from records reached as at the end of March 2009 as cited in the table below : Facts & Figures upto March 31, 2009 Sr. No. Parameter Date Magnitude Capital Market Segment 1. Number of Members March 31, , Number of Securities available for trading March 31, , Number of VSATs March 31, , Number of Cities covered March 31, Settlement Guarantee Fund March 31, 2009 Rs.4, crore (US $ million) 6. Investor Protection Fund March 31, 2009 Rs crore (US $ 56 million) 6 Record number of trades January 7, ,959,510 7 Record daily turnover (quantity) January 7, , lakh 8. Record daily turnover (value) November 01, 2007 Rs.28, cr. (US $ 7, mn.) 9. Record market capitalisation January 07, 2008 Rs.6,745, cr. (US $ 1,687, mn.) 10. Record value of S&P CNX Nifty Index January 08, Record value of CNX Nifty Junior Index January 04, Contd... 11

12 Contd... Sr. No. Parameter Date Magnitude Clearing & Settlement Record Pay-in/Pay-out (Rolling Settlement): 1 Funds Pay-in/Pay-out October 23, 2007 * Rs.4, cr. (US $ 1, mn.) 2 Securities Pay-in/Pay-out (Value) December 31, 2007 * Rs.9, cr. (US $ 2, mn.) 3 Securities Pay-in/Pay-out (Qty) January 12, 2009 * 3, lakhs * Settlement Date Derivatives (F&O segment) 1. Number of Members March 31, , Number of Contracts available for trading March 31, ,480 a 3. Settlement Guarantee Fund March 31, 2009 Rs.23, crore (US $ 4, million) 4. Investor Protection Fund March 31, 2009 Rs crore (US $ 9.94 million) 5. Record number of trades January 7, ,874, Record daily turnover (value) October 18,2007 Rs. 110,564 crore (US $ 27, mn.) 7. Record Number of Contracts Traded January 7, ,757,297 Currency Derivatives Segment (Currency Futures) 1. Number of Members March 31, Record Daily turnover March 20, 2009 Rs.3,911 crore 3. Record number of trades March 20, , Record number of contracts March 20, ,75,933 Wholesale Debt Market Segment 1. Number of Members March 31, Record daily turnover (value) August 25,2003 Rs.13, cr. (US $ 3, mn.) a No. of contracts available for trading in F&O segment as on 31st March 2009 includes 3 Nifty index Futures, 3 CNX IT Futures, 3 Bank Nifty Futures, 3 CNX 100 Futures, 3 Nifty Junior Futures, 3 Nifty Midcap50 futures, 3 Mini Nifty Futures, 3 Defty Futures, 700 stock futures, 768 Nifty index options, 110 CNX IT options, 152 Bank Nifty options, 114 CNX 100 options, 132 Nifty Junior index options,86 Nifty Midcap50 options, 114 Mini Nifty Options, 126 Defty Options, 17,136 stock option and 18 interest rate futures contracts Technology Technology has been the backbone of the Exchange. Providing the services to the investing community and the market participants using technology at the cheapest possible cost has been its main thrust. NSE chose to harness technology in creating a new market design. It believes that technology provides the necessary impetus for 12

13 the organisation to retain its competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact that technology will continue to redefine the shape of the securities industry, NSE stresses on innovation and sustained investment in technology to remain ahead of competition. NSE is the first exchange in the world to use satellite communication technology for trading. It uses satellite communication technology to energize participation from about 2,648 VSATs from nearly 201 cities spread all over the country. Its trading system, called National Exchange for Automated Trading (NEAT), is a state of-the-art client server based application. At the server end all trading information is stored in an in-memory database to achieve minimum response time and maximum system availability for users. It has uptime record of 99.7%. For all trades entered into NEAT system, there is uniform response time of less than 1.5 seconds. NSE has been continuously undertaking capacity enhancement measures so as to effectively meet the requirements of increased users and associated trading loads. NSE has also put in place NIBIS (NSEs Internet Based Information System) for on-line real-time dissemination of trading information over the Internet. As part of its business continuity plan, NSE has established a disaster back-up site at Chennai along with its entire infrastructure, including the satellite earth station and the high-speed optical fibre link with its main site at Mumbai. This site at Chennai is a replica of the production environment at Mumbai. The transaction data is backed up on near real time basis from the main site to the disaster back-up site through the 2 mbps high-speed link to keep both the sites all the time synchronised with each other. The various application systems that NSE uses for its trading as well clearing and settlement and other operations form the backbone of the Exchange. The application systems used for the day-to-day functioning of the Exchange can be divided into (a) Front end applications and (b) Back office applications. In the front office, there are 6 applications: (i) (ii) NEAT CM system takes care of trading of securities in the Capital Market segment that includes equities, debentures/notes as well as retail Gilts. The NEAT CM application has a split architecture wherein the split is on the securities and users. The application runs on two Stratus systems with Open Strata Link (OSL). The application has been benchmarked to support 15,000 users and handle more than 3 million trades daily. This application also provides data feed for processing to some other systems like Index, OPMS through TCP/IP. This is a direct interface with the trading members of the CM segment of the Exchange for entering the orders into the main system. There is a two way communication between the NSE main system and the front end terminal of the trading member. NEAT WDM system takes care of trading of securities in the Wholesale Debt Market (WDM) segment that includes Gilts, Corporate Bonds, CPs, T-Bills, etc. This is a direct interface with the trading members of the WDM segment 13

14 of the Exchange for entering the orders/trades into the main system. There is a two way communication between the NSE main system and the front end terminal of the trading member. (iii) (iv) (v) (vi) NEAT F&O system takes care of trading of securities in the Futures and Options (F&O) segment that includes Futures on Index as well as individual stocks and Options on Index as well as individual stocks. This is a direct interface with the trading members of the F&O segment of the Exchange for entering the orders into the main system. There is a two way communication between the NSE main system and the front end terminal of the trading member. NEAT IPO system is an interface to help the initial public offering of companies which are issuing the stocks to raise capital from the market. This is a direct interface with the trading members of the CM segment who are registered for undertaking order entry on behalf of their clients for IPOs. NSE uses the NEAT IPO system that allows bidding in several issues concurrently. There is a two way communication between the NSE main system and the front end terminal of the trading member. NEAT MF system is an interface with the trading members of the CM segment for order collection of designated Mutual Funds units. NEAT- CD system is trading system for currency derivatives. Currently, currency futures are trading in the segment. The exchange also provides a facility to its members to use their own front end software through the CTCL (computer to computer link) facility. The member can either develop his own software or use products developed by CTCL vendors. In the back office, the following important application systems are operative: (a) (b) NCSS (Nationwide Clearing and Settlement System) is the clearing and settlement system of the NSCCL for the trades executed in the CM segment of the Exchange. The system has 3 important interfaces OLTL (Online Trade loading) that takes each and every trade executed on real time basis and allocates the same to the clearing members, Depository Interface that connects the depositories for settlement of securities and Clearing Bank Interface that connects the 13 clearing banks for settlement of funds. It also interfaces with the clearing members for all required reports. Through collateral management system it keeps an account of all available collaterals on behalf of all trading/ clearing members and integrates the same with the position monitoring of the trading/clearing members. The system also generates base capital adequacy reports. FOCASS is the clearing and settlement system of the NSCCL for the trades executed in the F&O segment of the Exchange. It interfaces with the clearing members for all required reports. Through collateral management system it 14

15 keeps an account of all available collaterals on behalf of all trading/clearing members and integrates the same with the position monitoring of the trading/ clearing members. The system also generates base capital adequacy reports. (c) (c) (d) (e) (f) (f) (g) (h) CDCSS is the clearing and settlement system for trades executed in the currency derivative segment.through collateral management system it keeps an account of all available collateral on behalf of all trading /clearing members and integrates the same with the position monitoring of the trading/clearing members. The System also generates base capital adequacy report. Surveillance system offers the users a facility to comprehensively monitor the trading activity and analyse the trade data online and offline. OPMS the online position monitoring system that keeps track of all trades executed for a trading member vis-à-vis its capital adequacy. PRISM is the parallel risk management system for F&O trades using Standard Portfolio Analysis (SPAN). It is a system for comprehensive monitoring and load balancing of an array of parallel processors that provides complete fault tolerance. It provides real time information on initial margin value, mark to market profit or loss, collateral amounts, contract-wise latest prices, contractwise open interest and limits. The system also tracks online real time client level portfolio base upfront margining and monitoring. PRISM-CD is the risk management system of the currency derivatives segment. It is similar in features to the PRISM of F&O Segment. Data warehousing that is the central repository of all data in CM as well as F&O segment of the Exchange. Listing system that captures the data from the companies which are listed in the Exchange for corporate governance and integrates the same to the trading system for necessary broadcasts for data dissemination process and Membership system that keeps track of all required details of the Trading Members of the Exchange. The exchange operates and manages a nationwide IP network of over 2500 VSATs and 2169 Leased Lines. In the new IP network, members have an advantage of a more generic and latest IP protocol and an overall better design, in terms of bandwidth and resilience. NOW NSE is also offering internet based trading services to NSE members. This facility is branded as NOW NEAT on Web. NOW provides an internet portal for NSE members and their authorized clients to transact orders and trades to the various market of NSE viz. CM, F&O and Currency. The members can also access NOW through their 15

16 existing VSAT/Leased line, in addition to internet links. The various features provided by NOW are: (a) (b) (c) (d) Comprehensive Administration features Flexible Risk Management System High speed dealer terminals Online trading facility for investors NSE Family NSCCL The National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned subsidiary of NSE, was incorporated in August 1995 and commenced clearing corporation in April It was the first clearing corporation in the country to provide novation/settlement guarantee that revolutionized the entire concept of settlement system in India. It was set up to bring and sustain confidence in clearing and settlement of securities; to promote and maintain short and consistent settlement cycles; to provide counter-party risk guarantee, and to operate a tight risk containment system. It carries out the clearing and settlement of the trades executed in the equities and derivatives segments of the NSE. It operates a well-defined settlement cycle and there are no deviations from the same. It also operates Subsidiary General Ledger (SGL) for settling trades in government securities for its constituents. It is the first clearing corporation in the country to establish the Settlement Guarantee Fund (SGF) in June It has been managing, clearing and settlement functions since its inception without a single failure or clubbing of settlements. NSCCL has also introduced the facility of direct payout to clients account on both the depositories viz., NSDL and CDSL. Today NSCCL settles trades under the T+2 rolling settlement. It has the credit of continuously upgrading the clearing and settlement procedures and has also bought Indian financial markets in line with international markets CRISIL has assigned its highest corporate credit rating of AAA to the National Securities Clearing Corporation Ltd (NSCCL). AAA rating indicates highest degree of strength with regard to honouring debt obligations. NSCCL is the first Indian Clearing Corporation to get this rating. The rating reflects NSCCL s status as Clearing Corporation for NSE, India s largest stock exchange. The rating also factors in NSCCL s rigorous risk management controls and adequate settlement guarantee cover. NSDL Prior to trading in a dematerialized environment, settlement of trades required moving the securities physically from the seller to the ultimate buyer, through the seller s broker and buyer s broker, which involved lot of time and the risk of delay somewhere along the chain. Further, the system of transfer of ownership was grossly inefficient as every 16

17 transfer involved physical movement of paper to the issuer for registration, with the change of ownership being evidenced by an endorsement on the security certificate. In many cases, the process of transfer took much longer than stipulated in the then regulations. Theft, forgery, mutilation of certificates and other irregularities were rampant. All these added to the costs and delays in settlement, restricted liquidity. To obviate these problems, NSE to promote dematerialization of securities joined hands with UTI and IDBI to set up the first depository in India called the National Securities Depository Limited (NSDL). The depository system gained quick acceptance and in a very short span of time it was able to achieve the objective of eradicating the paper from the trading and settlement of securities, and was also able to get rid of the risks associated with fake/forged/stolen/bad paper. Dematerialized delivery today constitutes almost 100% of total of the total delivery based settlement. NSE Infotech Services Ltd NSE Infotech Services Ltd Information Technology has been the back bone of conceptualization, formation, running and the success of National Stock Exchange of India Limited (NSE). NSE has been at the forefront in spearheading technology changes in the securities market. It was important to give a special thrust and focus on Information Technology to retain the primacy in the market. Towards this a wholly owned subsidiary M/s. NSE Infotech Services Limited (NSETECH) was incorporated to cater to the needs of NSE and all it s group companies exclusively. NSE.IT NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated in October 1999 to provide thrust to NSE s technology edge, concomitant with its overall goal of harnessing latest technology for optimum business use. It provides the securities industry with technology that ensures transparency and efficiency in the trading, clearing and risk management systems. Additionally, NSE.IT provides consultancy services in the areas of data warehousing, internet and business continuity plans. Amongst various products launched by NSE.IT are NEAT XS, a Computer-To-Computer Link (CTCL) order routing system, NEAT ixs, an internet trading system and Probos, professional broker s back office system. NSE.IT also offers an e-learning portal, finvarsity (www. finvarsity.com) dedicated to the finance sector. The site is powered by Enlitor - a learning management system developed by NSE.IT jointly with an e-learning partner. New initiatives include payment gateways, products for derivatives segments and Enterprise Management Services. IISL India Index Services and Products Limited (IISL), a joint venture of CRISIL and NSE, was set up in May 1998 to provide indices and index services. It has a licensing and marketing agreement with Standard and Poor s (S&P), the world s leading provider of investible equity indices, for co-branding equity indices. IISL is India s first specialized company focusing upon the index as a core product. It provides a broad range of 17

18 services, products and professional index services. It maintains over 96 equity indices comprising broad-based benchmark indices, sectoral indices and customised indices. Many investment and risk management products based on IISL indices have developed in the recent past, within India and abroad. These include index based derivatives on NSE and on Singapore Exchange, India s first exchange traded fund, a number of index funds, and Licensing of the Index for various structured products. DOTEX INTERNATIONAL LTD. The data and info-vending products of NSE are provided through a separate company DotEx International Ltd., a 100% subsidiary of NSE, which is a professional set-up dedicated solely for this purpose. DotEx data provides products like : On-line streaming data feed, Intra-day Snapshot data feed, end of day data and Historical Data. NCDEX NSE joined hand with other financial institutions in India to promote the NCDEX which provides for a world class commodity exchange platform for Market Participants to trade in wide spectrum of commodity derivatives. Currently NCDEX facilitates trading of 48 agro based commodities, 2 precious metal, 6 base metal, 3 energy products and 3 polymers. NCCL National Commodity Clearing Limited (NCCL) is a company promoted by National Stock Exchange of India Limited (NSEIL). It was incorporated in the year One of the objectives of NCCL is to provide and manage clearing and settlement, risk management and collateral management services to commodity exchanges. NCCL is having the requisite experience and exposure in providing clearing and settlement facility, risk and collateral management services in the commodities market including funds settlement with multiple clearing banks. Currently NCCL is providing clearing and settlement services to NCDEX. PXIL A National Level Power Exchange by the name of Power Exchange India Limited (PXIL) has been set up through a Joint Venture by India's two leading Exchanges, National Stock Exchange of India Ltd (NSE) and National Commodity & Derivatives Exchange Ltd (NCDEX). PXIL has got the in-principle approval from CERC to set up and operate the power exchange and will operate as a National Level electricity exchange covering the entire Indian electricity market. 18

19 Table 1-1 : Board of s* 1 Mr. S. B. Mathur Former Chairman, Life Insurance Corporation of India 2 Mr. Ravi Narain National Stock Exchange of India Ltd. 3 Ms. Chitra Ramkrishna National Stock Exchange of India Ltd. 4 Mr. C. Achuthan Former Presiding Officer, Securities Appellate Tribunal 5 Mr. Anjan Barua Chief General Manager ( Global Markets), State Bank of India Chairman Managing Deputy Managing 6 Rear Admiral Madan Mohan Chopra AVSM (Retd.) 7 Mr. A. P. Kurian Chairman, Association of Mutual Funds in India 8 Dr. Rajiv B. Lall Managing & CEO, Infrastructure Development Finance Company Limited 9 Mr. Lawrence Leibowitz Group EVP, Head of US Markets & Global Technology NYSE Euronext 10 Mr. Anand G. Mahindra Vice Chairman & Managing, Mahindra & Mahindra Ltd. 11 Mr. Y. H. Malegam Chairman Emeritus, M/s. S.B. Billimoria & Co. Chartered Accountants 12 Prof. (Dr.) K. R. S. Murthy Professor & Former, Indian Institute of Management, Bangalore 13 Dr. R. H. Patil Chairman, The Clearing Corporation of India Limited 14 Ms. Bhagyam Ramani General Manager, General Insurance Corporation of India 15 Dr. V. A. Sastry 16 Mr. Onkar Nath Singh Former Chairman & Mananging Industrial Investment Bank of India Ltd. 17 Mr. Justice B.N.Srikrishna (Retd.) Former Judge, Supreme Court of India 18 Mr. T. S. Vijayan Chairman Life Insurance Corporation of India * As on May 19,

20 Table 1-2 : Executive Committees* I CM & WDM SEGMENTS 1 Mr. Ravi Narain MD &CEO, National Stock Exchange of Chairman India Limited 2 Mr. Ashok Kumar Agarwal Chairman, Globe Capital Market Ltd. Trading Member 3 Mr. D. C. Anjaria, International Financial Solutions Pvt. Ltd. 4 Mr. Vimal Bhandari Country Manager India AEGON International NV. 5 Mr. C. J. George Managing, Geojit Financial Services Ltd. 6 Mr. Vivek Agarwal,M/s. East India Securities Limited 7 Mr. Mayank Shah,M/s. Anagram Capital Limited Public Representative Public Representative Trading Member Trading Member 8 Mr. Y. H. Malegam Chairman Emeritus, S.B.Billimoria & Co. Public Representative Chartered Accountants 9 Ms. Chitra Ramkrishna Deputy Managing, National Stock Exchange of India Ltd Other Nominees 10 Mr. P. M. Venkatasubramanian Ex-Managing, GIC Other Nominees 11 Mr. Gagan Rai Managing & CEO, National Securities Depository Limited Other Nominees II F&O MARKET SEGMENT 1 Mr. Ravi Narain MD &CEO, National Stock Exchange of Chairman India Limited 2 Mr. D.C.Anjaria, International Finance Solutions Pvt. Ltd. Public Representative 3 Prof. V. Ravi Anshuman Indian Institute of Management, Bangalore Public Representative 4 Mr. Sunil Godhwani Managing, Religare Securities Trading Member Ltd. 5 Mr. Shailesh Haribhakti Executive Chairman and Managing Public Representative Partner, BDO Haribhakti 6 Mr. Ketan Marwadi Managing, Marwadi Shares and Trading Member Finance Limited 7 Mr. A.V. Rajwade Forex and Treasury Management Public Representative Consultant 8 Mr. M. Raghavendra Ex-General Manager, General Insurance Other Nominees Corporation of India 9 Ms. Chitra Ramkrishna Deputy Managing, National Stock Exchange of India Ltd Other Nominees 10 Ms. T. S. Jagadharini Vice President, National Stock Exchange Other Nominees of India Limited III CDS SEGMENT 1 Mr. Ravi Narain Managing & CEO, National Chairman Stock Exchange of India Limited 2 Mr. V. Srikanth Managing, Head of Markets, Trading Member Citibank N.A. 3 Dr. R. H. Patil Chairman, The Clearing Corporation of Public Representative India Limited 4 Mr. M. G.Bhide Former Chairman, Bank of India Public Representative 5 Mr. Suresh Senapaty Chief Financial Officer &,Wipro Public Representative Limited 6 Ms. Chitra Ramkrishna Deputy Managing, National Stock Exchange of India Limited Other Nominees * As on May 19,