BSE vs. NSE: The points of disparity
A stock exchange is a centralized forum to link buyers with salespeople. Bonds do not only deal with shares but with a variety of financial instruments – stocks, derivatives, commodities, etc. While you are trading through a broker, the connection between exchanges and companies and the way the exchanges protect the investors’ interests must be understood.
There are 23 stock exchanges in India; the major ones are BSE and NSE. Since both exchanges are stock market facilitators, many investors wonder about the difference between NSE and BSE.
BSE (Bombay Stock Exchange):
BSE was founded in 1875 and is India’s oldest stock exchange. This is the first exchange under the Securities Contract (Regulation) Act of 1956 to be legally acknowledged. Entered into operation in 1986, the S&P BSE SENSEX reflects the weighted average of the 30 top-rated BSE companies.
The stocks include automobiles, banking, and finance, FMCGs, and healthcare. In an efficient, transparent, and secure way, BSE provides trading and associated services such as clearing, settlement, and repository (via the CDSL).
When BSE trading online was launched in 1995, it accounted for 8 million transactions a day. BSE is the fastest BSE exchange in the world at a speed of 6 microseconds.
National Stock Exchange (NSE):
In 1994, NSE was set up. The NSE benchmark index Nifty 50 launched two years later (1996) and acted as a basis to classify the top 50 stocks listed on the bourse. Similar to BSE, NSE also provides various trading and related services, such as market information, indices, clearing and resolution, depository (via NSDL), and education.
In the country, NSE developed an electronic exchange program. NSE is the largest stock exchange in India based on the average daily total turnover.
BSE vs. NSE Key Differentiators:
The BSE was founded as the oldest stock exchange in Asia back in the 18th century. NSE was set up a lot later, by comparison. BSE is 10th in the worldwide stock market list, and NSE is 11th.
- Electronic trading:
The National Stock Exchange takes the upper hand in automated trading when it comes to technology adoption. The NSE was always a fully electronic stock exchange right from the beginning, and the paper trade system was slowly removed. On the other hand, until 1995, BSE had switched to the BSE Online Trading (BOLT) system; it had run on paper.
- Derivatives contracts:
NSE now has a monopoly in the derivatives contract market, and the introduction of derivatives trading on the exchange has begun at an early point. Yet, BSE enjoys much lower volumes among traders and investors.
- The number of listed companies:
The BSE currently includes over 5000 more businesses when compared with NSE 1600 + businesses.
The benchmark index for BSE is S&P BSE SENSEX, while for NSE, it is Nifty 50.
- The volume of trade:
Although the number of BSE companies is much higher than NSE, the rates of trade are different. The average amount of trading in the NSE is much higher. As enormous quantities are traded on NSE, it is easier to discover rates.