What is the Difference Between NSE and BSE?
Every investor should have a clear understanding of the stakeholders before investing. The primary entities of the share market are stockbrokers, traders, exchanges, and clearing corporations. The intermediary who works with you and the exchange is the broker.
The names of the companies that are willing to raise money through shares are mentioned on the exchanges. The shares are issues through IPO to the investors and after the IPO is over, the company name is listed on the exchange and they can trade in shares.
BSE and NSE are two main national exchanges that exist in India. You can trade by opening a trading or Demat account with a stockbroker. If you are wondering, “what is the difference between nse and bse?” we will give you detailed information about the topic today.
What is NSE?
The NSE full form is the “National Stock Exchange” and it is the youngest stock exchange of India. It was established in 1992. It is the first exchange in the county to provide a fully automated, modern electronic trading system. It offered easy trading facilities to all the investors spread across the country.
With more than US$2.27 trillion in market capitalization, it is the world’s 11th largest stock exchange. NSE brought in transparency in the Indian equity markets. It was NSE who made sure that anyone who was experienced qualified and met the financial requirements was allowed to trade. With the introduction of NSE, the paper-based procedure was replaced by efficient electronic depository-based accounts.
This ensured that the settlement of trades was done on time always. A robust risk management system was set to make certain that the settle guaranteed protected the investors against the default brokers. NSE was initially set up as a tax-paying company in 1992 and was recognized as a stock exchange under the Securities Contracts (Regulation) Act, in 1993.
During that time, P.V. Narasimha Rao was the Prime Minister of India and Manmohan Singh was the Finance Minister. It was set by a group of leading Indian financial institutions with a vision to bring transparency to the Indian capital market.
What is BSE?
The BSE full form is the Bombay Stock Exchange. It is located on Dalal Street in Mumbai. BSE was established in 1875 and it is the oldest stock exchange in Asia. The market cap of BSE is over US$2.8 trillion and that makes it the seventh-largest stock exchange in the world. BSE became the first stock exchange recognized by the Indian Government under the Securities Contracts Regulation Act on August 31, 1957.
The history of BSE dates back to 1850 when five stockbrokers gathered under the Banyan tree in from of the Mumbai Town Hall. After a decade, the brokers shifted their location to another setting, which was under a banyan tree at the junction of Meadows Street. When the number of brokers increased rapidly, they had to move their locations several times.
The brokers found a permanent location at Dalal Street in 1874 and the group of brokers was officially known as “The Native Share & Stock Brokers Association” in 1875. BSE offers various services like risk management, market data services, and CDSL depository services.
BSE works with a vision to emerge as the premier Indian stock exchange with the best practice in technology, customer service, and product innovation. The other important indices apart from Sensex are BSE 500, BSE 200, BSE 100, BSE MIDCAP, BSE Auto, BSE Pharma, BSE Metal, BSE Consumer Durables, BSE PSU, BSE Auto, etc.
Comparison Between NSE And BSE
Some key difference between NSE and BSE are as follows:
- Establishment– BSE came into existence in the 18th century and it is the oldest stock exchange in Asia. On the contrary, NSE came in much later and has been in existence for less than 30 years. BSE stands at the tenth position in the global stock exchange ranking NSE holds the eleventh position.
- Electronic trading– The National Stock Exchange has an upper hand when it comes to electronic trading. Right from the beginning, NSE has been an electronic stock exchange promoting paperless trading. BSE followed the paper-based system for several years and then switched on to electric trading in the year 1995. They introduced BSE On-Line Trading (BOLT) during that time.
- Derivatives– In the segment of derivatives contracts, NSE has a big head start and has monopolized the entire segment virtually. Two of the NSE’s primary indices are Bank BIFTY and BIFTY 50. They are remarkably liquid and have appeared as the highly traded contracts in India. On the other hand, BSE enjoys lower volumes among the traders and investors alike.
- Listed companies– When you compare the number of listed companies in BSE vs. NSE, you will be able to see that BSE is much ahead of NSE. NSE has over 1600 companies listed in the stock exchange, but BSE has more than 5000 companies. The reason behind the difference is that BSE has been in existence for longer than NSE.
- Stock exchange listing– BSE is the only listed exchange in India. It is listed on the platform against the rival stock exchange of NSE. NSE also wanted to be listed on the stock exchange but unfortunately, it was unsuccessful because of various legal hurdles.
Both NSE and BSE are the successful stock exchanges of the world. For the beginners, Bombay Stock Exchange is an ideal platform with more than 5000 companies listed. On the contrary, the National Stock Exchange has an amazing collection of derivative contracts, which makes it a good platform for seasoned experienced traders and investors.
BSE and NSE have different methods to levy tax. If you consider those, NSE is best suited for the lesser turnovers and BSE is perfect for those who experience significant turnovers. If you want to invest in shares of new companies in India, then BSE would be an ideal choice.
For day trading and risking share trading, NSE is a better option. Now that you are aware of the difference and comparison, it will be easier for you to go ahead and start investing in the stock exchange that you find feasible.