Difference Between BSE and NSE Explained

The stock exchange is a market where securities can be traded between investors/traders with the help of brokers. The BSE and the NSE are the main stock exchanges in the Indian market.

BSE stands for “Bombay Stock Exchange” and NSE stands for “National Stock Exchange.”

Although everyone knows that both the BSE and the NSE are related to financial instruments such as stocks, bonds, etc., very few know what the exact definition of these stock exchanges is and how they differ.

Bombay Stock Exchange (BSE)

BSE is an Indian exchange located on Dalal Street, Mumbai.

It was founded by Premchand Roychand, who was one of the most influential businessmen in India in the 19th century.

He was a man who made a fortune in the stock market and became known as the King of Cotton, the King of Bullion, or the Great Bull.

BSE is the oldest stock exchange in Asia. Previously it was known by the name of “Native Association of Stock Brokers and Stocks” in the year 1875.

But the history of BSE dates back to 1855 when 22 stockbrokers were gathering under the banyan trees in front of Mumbai City Hall. The location of these meetings changed several times to accommodate an increasing number of corridors.

The group finally moved to Dalal Street in 1874.

In 1957, the BSE was officially recognized by the Central Government of India as the main stock exchange in the country, under the Securities Contracts Regulation Act of 1956.

In 1986, Sensex was introduced as the first equity index to provide a basis for identifying the top 30 trading companies on the stock market, in more than 10 sectors.

In 1995, the BSE Online Trading System (BOLT) was put into service.

BSE offers various services such as market data services, risk management, CDSL (Central Depository Services Limited) deposit services, etc.

Furthermore, BSE is the 10th largest stock market in the world with an overall market capitalization of more than $ 2.3 trillion, as of April 2018.

In addition to Sensex, other important EEB indices are BSE 500, BSE 100, BSE 200, BSE MIDCAP, BSE SMALLCAP, BSE PSU, BSE Auto, BSE Pharma, BSE Fast Moving Consumer Goods (FMCG), BSE Consumer Durables (SYMBOL: Cons Dura), BSE Metal, etc.

BSE Vision

BSE operates with the vision of “emerging as India’s leading stock exchange with the best global practice of its kind in technology, product innovation, and customer service”.

National Stock Exchange (NSE)

NSE is the youngest stock exchange in India which entered the scene in the year 1992.

NSE was the first exchange in India to provide the latest, modern, fully automated screen-based e-commerce system. It offered an easy trading facility to investors spread across the country.

Mr. Vikram Limaye is MD and CEO of NSE.

For the first time in the year 1992, in India, NSE introduced the advanced e-commerce system which eliminated the paper settlement system from the merchant.

A year later, in 1993, NSE was created as a tax company that was subsequently registered as a Stock Exchange in accordance with the Securities Contracts Regulation Law.

In 1995, National Securities Depository Limited (NSDL) was formed to provide depository services to investors.

NSDL enables investors to hold and securely transfer their stocks and bonds electronically. Along with this, it also allows investors to hold and trade with just one share or bond.

NSDL’s security system, combined with the transparency, efficiency, and lower transaction prices offered by NSE, greatly increased the attractiveness of the Indian stock market for domestic and international investors.

In the same year, Nifty 50, the popular benchmark index, was introduced by the NSE. List the top 50 companies listed on the NSE stock market.

NSE’s trading systems are a cutting edge platform and have made a big leap in technology in these 20 years.

In 1994, when stock trading began, NSE technology handled 2 orders per second. In 2001, this has increased to 60 orders per second.

Today, NSE can handle around 1,60,000 requests per second, with an infinite ability to scale on short notice at the request of investors.

He has continually worked to shorten the liquidation cycle. As a result of which, the settlement cycle has been shortened from T + 3 days to T + 2 days or even T + 1 day for some financial products.

Besides Nifty, other important NSE indices are: CNX Nifty Junior, CNX 100 (S&P CNX Nifty + CNX Nifty Junior), S&P CNX 500 (CNX 100 + 400 major players in 72 industries in India), CNX Midcap, etc.

NSE vision

NSE operates with a vision of “Continue to be a leader, establish a global presence, facilitate the financial well-being of people.”

BSE vs NSE: difference

Here are some of the key differences between BSE and NSE:

Basis for comparisonBSENSE
Brief IntroductionIt is the oldest stock exchange marketplace not just for the India but Asia as well, which offers high speed trading to its customers.It is the biggest stock exchange marketplace of the India along with a front runner in the introduction of the fully automated, electronic trading system across the country.
Founded in18751992
Benchmark indexSensex 30Nifty 50
Total listed companies57491696
Market CapitalizationAround 2.3 trillionAround 2.27 trillion
Global Rank10th11th
NetworkOver 450 citiesOver 1500 cities
LiquidityComparably lower than NSEIn case of liquidity, NSE is a clear winner, since volumes traded in NSE are much higher compared with BSE.
Source: Groww.in

On which exchange should investors trade?

It totally depends on the companies in which you are looking to invest.

The participation of some companies may be listed on the BSE and not on the NSE. For those companies, a stock exchange option is not required.

However, whether the shares of any company are listed on both the BSE and the NSE, it is entirely up to the investor’s choice as both are the best stock market in India.

Both the BSE and NSE stock exchanges are an important part of the Indian financial market.

Every day hundreds of thousands of brokers, traders and investors trade on these stock exchanges.

The main motives of both BSE and NSE is to facilitate financial trading service to investors across India.

Happy Learning!

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