The Bombay Stock Exchange is the oldest stock exchange in Asia and was set up in 1875. Comparatively, the National Stock Exchange became operational only in 1994. The idea of creating the NSE was to have an exchange that was totally driven by technology. Today, both the exchanges are almost the same in terms of speed, execution and other capabilities. However, there are also some key differences between the two principal exchanges to be noted.
Key differences between the NSE and the BSE
BSE or the Bombay Stock Exchange has been around for more than 100 years and for a long time was the default stock exchange in India. NSE came into existence much later in 1993 and began operations only in 1994.
The NSE began as a complete electronic exchange where the trades were entirely anonymous and operated on the basis of price-time priority. The BSE continued with its open-cry system of trading for a long time before it finally shifted to BOLT trading in 1995. Today both the exchanges are fully electronic.
The NSE is represented by the Nifty 50 which is an index of 50 most liquid stocks and is taken as a representation of the market as a whole. The Nifty uses 1995 as the base year. The BSE is represented by the Sensex which is an index of 30 most liquid stocks. The Sensex was formally launched in 1986 and uses 1979 as its base year.
The BSE has more than 5,000 stocks that are listed on the exchange. In terms of number of stocks listed, the BSE is the largest in the world. The NSE has relatively fewer stocks with just about 1,600 stocks listed. The BSE continues to be a preferred exchange for mid cap and small cap stocks.
The NSE has moved much faster on the derivatives segment. Its key indices like the Nifty 50 and the Bank Nifty are among the most liquid contracts in India. Relatively, BSE does lower volumes in futures and options. Today, both the exchanges offer futures and options on indices and on specific stocks.
The BSE is the only listed stock exchange in India while the NSE had to put off its plans for listing on the bourses. Currently, NSE and BSE both offer equity, F&O, currency trading, IRF, debt and commodity trading on their trading platforms.
In terms of ownership, the NSE was formed as a demutualized stock exchange and is largely held by domestic and global institutions. Most of its shareholders are banks. The BSE on the other hand, is still 40% owned by the brokers but the balance is held by premier investors which includes marquee names like the Deutsche Boerse, SGX Singapore Exchange, Caldwell, Atticus, Acacia, SBI, LIC and Bajaj Holdings, among others.
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