National Stock Exchange (NSE)

Until the 1990s, Indian share trading ran on open outcry, a broker-owned exchange, and paper certificates. NSE, born from a 1991 committee report, replaced the shouting with screens. It is now the world’s largest derivatives exchange by contracts traded.

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Indian Economy · IndEco0157

National Stock Exchange (NSE)

India’s largest exchange by volume, built electronic from day one

1991

The Pherwani Committee recommends a new, transparent national exchange.

27 Nov 1992

NSE is incorporated, then recognised by SEBI as a stock exchange in April 1993.

30 Jun 1994

Trading begins, with the Wholesale Debt Market segment.

3 Nov 1994

The Equities segment launches — India’s first fully electronic stock trading.

22 Apr 1996

The NIFTY 50 index launches, tracking 50 large companies across sectors.

1999

NSE fully phases out manual trading, first among Indian exchanges to do so.

12 Jun 2000

The Derivatives segment begins trading, covering futures and options.

Built electronic, not converted to it

Unlike older exchanges that later upgraded their trading floors, NSE was designed from its 1992 founding to run on screens, not shouting brokers — a design choice that reshaped the whole industry.

mcqquestion.com · Indian Economy

Timeline

• 1991: The Pherwani Committee recommends creating a new, transparent national stock exchange.
• 27 November 1992: NSE is incorporated. SEBI recognises it as a stock exchange in April 1993.
• 30 June 1994: Trading begins, with the Wholesale Debt Market segment.
• 3 November 1994: The Equities segment launches. This is India’s first fully electronic stock trading.
• 22 April 1996: The NIFTY 50 index launches, with a base value of 1,000.
• 1999: NSE fully phases out manual trading, the first Indian exchange to do so.
• 12 June 2000: The Derivatives segment begins trading, covering futures and options.

Must Know

• The National Stock Exchange (NSE) is India’s largest stock exchange, by trading volume.
• It was incorporated on 27 November 1992. SEBI recognised it as a stock exchange in April 1993.
• It grew out of the 1991 Pherwani Committee’s recommendations, meant to bring transparency to Indian equity markets.
• It began trading in phases: the Wholesale Debt Market on 30 June 1994, then Equities on 3 November 1994.
• NSE was the first Indian exchange to offer fully electronic trading. This replaced the older open-outcry floor system.
• Its benchmark index, the NIFTY 50, launched on 22 April 1996. It tracks 50 large companies across sectors.
• Today, NSE ranks among the world’s top 5 exchanges by market capitalisation. It is also the world’s largest derivatives exchange, by number of contracts traded.

Good to Know

• By 1999, NSE had fully phased out manual trading. It was the first Indian exchange to do so.
• Its Derivatives segment began trading on 12 June 2000, covering futures and options contracts.
• NSE’s depository partner, the National Securities Depository Limited (NSDL), was India’s first securities depository. It holds investors’ shares electronically, in “dematerialised” form.
• Unlike the older, broker-owned BSE, NSE was set up as a demutualised exchange from the very start. Its ownership and trading membership were kept separate from day one.
• In 2023, NSE launched India’s Social Stock Exchange, a platform for social enterprises and non-profits to raise funds.
• By late 2024, NSE’s market capitalisation had crossed $5 trillion, ranking it among the world’s top 5 exchanges.
• NSE Indices Limited manages the NIFTY 50 and its many sector and thematic index variants.

Test Yourself

Please wait…

1. The National Stock Exchange (NSE) was incorporated in 1992, following the recommendations of which committee?

The Narasimham Committee

The Pherwani Committee

The Malegam Committee

The Bhagwati Committee

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Great to Know

• In 2019, SEBI ordered NSE to disgorge over ₹624 crore, in the “co-location” case. Some brokers had allegedly gained preferential, faster access to trading servers. Fines followed for several former NSE executives.
• See Polity0121 — SEBI, the regulator that oversees NSE and every other Indian stock exchange.
• R.H. Patil, deputed by IDBI to help design the exchange, is widely credited as the architect behind NSE’s original blueprint.
• NSE was built for speed and transparency from its very founding. India’s much older exchange, the Bombay Stock Exchange (BSE), had to adapt its own century-old floor-trading model later, to compete.
• NSE is headquartered at the Bandra-Kurla Complex, in Mumbai.