Understand NSE in Stock Market
2018-07-05, By: System Administrator
National Stock Exchange also called NSE, is a leading stock exchange in India. It is located in Mumbai and was established in November 1992. It is the first electronic trading platform in India.
How to trade on NSE?
NSE is an electronically enabled stock exchange. You and other buyers, enter your trades (shares you wish to buy), on the trading terminals of your broker. Your trades are then transmitted, across the entire trading network of the stock exchange. It is compulsory for you to deal with a registered stock broker, if you want to buy/sell shares on the NSE. The electronic system then matches the buy order, so that your buy order is executed, at the price you specify or lower. If your buy order is higher than other investors, it is matched first.
When you are interested to sell trade in that case you and other sellers, enter your trades on the trading terminals of your broker. Your trades are then transmitted, across the entire trading network of the NSE. The electronic system of the NSE, then matches the sell order, so that your sell order is executed, as per your required price. If your sell order is lower than other investors, it is matched first. When you buy or sell shares on the NSE, your identity is kept a secret.
In case you execute your NSE as same price of another investor. In that case if your order placed first, then your order gets executed first.
What is clearing corporation of the NSE?
If in case you want to buy shares which are listed on the NSE, then keep the money ready for buying these shares. If you are selling shares, you need to keep them ready for delivery. This is known as the pay-in process. After the pay-in process, you have what is the pay-out. According to it when you buy shares listed on the NSE, you are given these shares. If you sell shares, you get the money for these shares.This process of exchanging money and shares is called settlement. A clearing corporation takes care of the settlement process. The National Securities Clearing Corporation Ltd (NSCCL) is the clearing house of the NSE. The clearing house is nothing but a counterparty, to avoid any defaults. It functions as a buyer to the seller and a seller to a buyer. The clearing house collects money from you, called margin money, to avoid any defaults. If you default (do not pay for the shares you buy), NSCCL uses the margin money you have provided, to settle your commitments. NSE offers capital raising abilities for corporations and a trading platform for equities, debt, and derivatives including currencies and mutual fund units. It allows for new listings, initial public offers (IPOs), debt issuances and Indian Depository Receipts (IDRs) by overseas companies raising capital in India.S&P CNX Nifty is the benchmark index introduced by NSE. The exchange offers clearing and settlement services through its wholly-owned unit, the National Securities Clearing Corporation set up in 1995. The other main subsidiaries/ associate companies of NSE include the National Commodity Clearing, National Securities Depository (which is the repository of all securities in electronic form), and National Commodity and Derivatives Exchange.
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