Chapter - 3

NATIONAL STOCK EXCHANGE :

ESTABLISHMENT AND GROWTH

The National Stock Market System (NSMS) provides a single, nation-wide

market for securities. It enables an investor in one part of the country to trade at
the best market price with an investor located in any otner part of the country
through the members of stock exchanges and subsequently clear and settle the
trade in an efficient and cost effective manner. The primary objective of a NSMS
is to provide clear opportunity to all investors through out the country to trade in
any security, irrespective of the size of the order or the broker through whom
the order is routed. NSMS provides the facility to execute the buy order at the
lo~vss"orice in the stock r:arket l o c a t ~ dany where in the countr5:2nd sell at thc:
highest price prevailing anywhere in the country without any extra cost to the
investor.

The first country to establish a national stock market system was the United
Kingdom and Republic of Ireland. In such an exchange, investors could access
the market through local brokers or local branches of National brokers and a
variety of electronic information distribution services are available to the various
particarants. There is no physical trading floor in a national stoc!c exchange and
market makers provide two way quotes under the quote driven mechanism for
trading.

In the United States the proposal to have an NSMS was made by the Securities
and Exchange Commission in 1971. In 1975, the Securities Act Amendments
directed the Securities and Exchange Commission (SEC) to facilitate the
establishment of NSMS. In 1977, the New York Stock Exchange developed a
system known as the Inter Market Trading System (ITS). Actual trading in the
ITS commenced on 17th April, 1978 with the linkage of the New York Stock
Exchange and the Philadelphia Stock Exchange. Subsequently, the linkage was
expanded on 7'" August 1978 to include the American Stock Exchange, the
Boston Stock Exchange, the Midwest Stock Exchange and the Pacific Stock
Exchange. Eight regional stock exchanges in the Federal Republic of Germany
were linked in 1989 nationally under SBTS i.e., screen based trading system
where in Frankfurt, which accounts for nearly two third of the turnover of stocks
in Germany was linked to other stock exchanges in Germany.

National Stock Exchange (NSE) in lndia was set up in November 1992. It is a

major stock exchange in lndia with coverage of more than 300 cities and towns
across the country. It provides nationwide access to investors through the
automated screen based trading system. National stock exchange was set up
under the Companies Act 1956 at New Bombay with an equity capital of Rs. 25
crore. It started its operation in Whole Sale Debt Market Segment (which
consists of high value transactions in debt instruments) from June 1994. The
Capital Market Segment (which consists of transactions in equity shares
~pieferorlceshares and con-vertible debentures) of NSE b e c a ~ woperat~onalin
November 1994. This chapter presents genesis, objectives, administrative
structure, membership criteria, trading and settlement system of NSE.

3.1 Genesis of National Stock Exchange

Security Market in lndia has exhibited significant improvements, but it has not
always kept pace with the changing trends and requirements of liberalization
and globalisation of its economy. Particular issues of concern in the securities
market have been excessive paper work, delays in settling transactions,
absence of transparency, lack of fair and accessible trading facilities, under
capitalised trading members, outdated procedures, uncertain settlement cycies.
lack of liquidity of corporate securities, and lack of effective mechanism of
investor protection and so on. Stock exchanges tend to suffer from recurrent
crisis due to several factors such as excessive speculation, default by brokers,
ineffective risk containment measures and various other types of manipulative
practices.

The need for setting up the NSE in 1994 arose from dissatisfaction of investors
with the prevailing state of trading facilities. Despite the increase in the number
of stock exchanges, there were still a large number of regions, where interest in
primary and secondary market was evident, but where access to exchanges
was difficult for a variety of reasons. Poor liquidity in regional exchanges,
absence of broker andlor security house networks and inefficient
telecommunications facilities largely contributed to this problem. Consequently
the further spread of the equity cult was hampered by these factors, with a clear
barrier arising between the primary and the secondary makets.' Despite the
su5sia::iial grc,:~!th 'n th? irapiisl market. exchar~gesesp~ci31Ivthe smaller ones
have found it difficult to meet the objective of liquidity to a reasonable extent. I r
conjunction with other factors this has resulted in poor level of service for small
and regional investors.'

Debt market especially for long dated fixed income securities accounted for
major proportion of the volume of trading in more developed countries. It is this
av;iilahility of secoidary market in debt that has provided thct major impetus to
capital formation in the foreign countries especially in the USA and UK. In case
of India, the secondary market for securities was not developed to the scrips
other than the equity shares. Debt securities were traded either very
infrequently or not traded at all ir the stock exchanges in India.

In view of the foregoing, need for the establishment of new stock exchanges
was felt for setting into place a set of conditions that would ensure that
exc'hanges operates efficiently, are liquid and are financially viable. With the
objectives of improving market efficiency, enhancing transparency, checking
unfair trade practices and bringing the Indian market up to international
standards, Government initiated various reforms measures (see Annexure A.1
for capital market reforms). To ensure effective regulation of the market, SEBl
Act 1992 was enacted to empower SEBl with statutory powers for (a) protecting
the interests of investors in securities (b) promoting the development of the
securities market and (c) regulating the securities market. Its regulatory
jurisdiction was extended over corporate in the issuance of capital and transfer
of securities, in addition to all intermediaries and persons associated with
securities market.
The significant reform that stemmed from the concept of globalisation was the
permission granted to foreign institutional investors ( ~ l l s ) "The
. permission was
also given to large Indian companies to access the bourses overseas through
the issues of Global Depository Receipts (GDRS?. Many Indian companies
succeeded in raising large amounts of capital and got familiar with the dictum of
discipline of the market overseas.

3.1.1 Pherwani Committee

With a view to overcome the problems of existing stock exchanges in lndia, a

High Powered Study Group (popularity known as Pherwani Committee) on
"Establishment of Stock Exchanges " was appointed under the chairmanship of
Mr. M.J Phenvani. The other members of the group were Dr. D.K Bhatia, Dr.
L.C Gupta and Dr. K.U Mada. The Pherwani Committee was appointed with the
following objectives:

To examine the need for establishment for new stock exchanges in lndia
keeping in view of balanced growth of the securities industry in lndia.

To prescribe criteria for the establishment of new stock exchanges.

To suggest minimum requirement for infrastructure, electronic

communication, data processing facilities and professional staff
requirements for qew stock exchange.

To make suggestions on any other matter which is relevant to the

establistlment of new exchanges.

The Committee reviewed the performance of existing exchanges, with a focus

on those that were established between 1980 and 1990. Major areas of
concern were identified, which the Committee believed had directly affected the
interest of the investor and had rendered transactions in the capital market to be
a costly, risky and dialatory affair. 'The Committee identified five major areas of
concern %namely
(i) Lack of liquidity: The explosive growth of the Indian capital market
between 1980 and 1990 had largely been confined to the stock exchanges at
Bombay, Delhi, Calcutta, Madras and Ahmedabad. In most of the other
markets, there was a relative lack of liquidity, in terms of depth and breadth.
This lack of liquidity was reflected by an inadequate supply of stocks / tradable
scrips on the one hand, and inadequate demand on the other.

Smaller stock exchanges faced considerable difficulties in persuading

companies to list on their exchange. Consequently, these exchanges were
unable to also provide adequate infrastructure and services to their members
and investors. On the demand side, the absence of large institutional players in
the smaller markets affected the liquidity at these exchanges. A further problem
contributing to the lack of liquidity in smaller markets was the absence of
market-making, especially for the medium and small sized companies listed on
the exchange. As a consequence, a large percentage of listed securit~eswerc,
either traded infrequently, or not at all, with volumes concentrated on a relatively
few number of scrips.

ii) Lack of infrastructure facilities: Stock exchanges faced with the

problem of inadequate infrastructure facilities, like adequate office space,
effective computerization, telecommunication systems, etc. Consequently.
exchanges were not able to provide members with the facilities needed for
efficient trading, back-up office for members, library and other administrative
requirements. The level of computerization across stock exchanges had been
inadequate, resulting in lower operational flexibility of stock exchanges and
brokers to handle sudden surges in volumes. The absence of computer
linkages between stock exchanges and its members also hampered effective
inter-market operations, monitoring of trading and post trading operations, as
well as the free flow of information on an intra and inter-exchange basis. This in
turn restricted growth across exchanges, and the ability of exchanges to handle
increasing trading volumes.

(iii) A n inefficient and outdated trading system: The poor infrastructural

facilities at exchanges also resulted in exchanges following inefficient and
outdated trading systems. A major drawback was the absence of on-line
transaction recording systems. This led to a lack of transparency in trading
operations, In addition, it led to delays in settlement, which in turn affected
investor confidence, and acted as an impediment to the spread of the equity
cult.

iv) An outdated settlement system: A major shortcoming of the prevailing

settlement system in 1990's was the need for the physical transfer of stocks.
This had resulted in enormous paperwork, bad and improper delivery of stocks,
and delays in registration and transfer of scrips. Objections raised during
registration of transfers resulted in further delays in settlement. The settlement
system was also grossly inadequate to meet the growing volumes of business,
and led to settlement delays and aggravated the loss in market liquidity.

v) Lack of a single market : Due to the inability of the various stock

exchanges to function cohesively, the growth of business in any one exchange
or region was not been transmitted to other exchanges. The limited inter-market
operations had only increased the costs and risks of investors in the smaller
markets. This problem had been aggravated by the lack of cohesion between
exchanges in terms of legal structure and regulatory framework, trading
practices, settlement procedures, jobbing spreads, etc.

The Pherwani Committee submitted its report in June 1991. It recommended

the establishment of National Stock Exciral~geand other support agencies.

3.1.2 Recommendation for National Stock Exchange in India6

Pherwani committee arrived st the conclusion that the setting up of additional
stock exchanges would not serve the purpose of spreading the equity cult or
enhancing liquidity in the secondary market. The issues of establishing new
stock exchange and the criteria there of could be meaningfully examined only in
the context of streamlining the operations of the existing exchanges. The
problems of the existing stock exchanges could only be addressed with the
emergence of an integrated stock market system with each stock exchange in
the system, streamlined and possessing the necessary telecommunication and
released infrastructure. Indeed the committee submitted that there was an
extremely strong case for the creation of an integrated National Stock Market
system. Under this system all exchanges in the country would be interlinked to
facilitate the easy flow of transactions between them. Within the framework of
nationally integrated stock market system, a liquid market that is viable in terms
of cost, efficiency and sophistication of infrastructure could be provided for
investors.

The Committee further pointed out the International trends towards the lesser
numbers of exchanges due to the extremely efficient communication links and
the high degree of automation available in these countries. In line with the
International trends, that was towards the lesser number of exchanges,
committee was of the view that a large number of stock exchanges working in
isolation would only fragment the market and create investors dissatisfaction
!aading to corlsiOerable inefficiency in the system. It was only a large and liqutd
stock exchange market that could be viable in terms of cost, efficiency and
sophistication of infrastructure needed to provide the quality of service required
by the investors. A liquid market is the only means of providing every investor
the equal opportunity to trade securities and a large number of independent
small exchanges would provide a liquid market but would not by itself provide
the necessary impetus to capital market growth.

In view of the foregoing, the Committee strongly recommended that a new stock
exchange be promoted immediately at new Bombay as a national stock
exchange of India. It would act as a National Stock Exchange in order to
provide nationwide stock trading facilities to investors, to upgrade the trading
facilities and to bring the Indian capital market in line with international market.

3.1.3 Recommendation for Support Agencies

To provide uniform and high quality trading, settlement, clearing and depository
services, the Committee further recommended the establishment of the
following support agencies.
 (i) National Clearing and Settlement System to administer the clearing
and settlement functions at a national level and to arrange for
payments against delivery as a counter guarantor to participating
members. Such a system was proposed to be set up under the aegis
of the Stock Holding Corporation of lndia Ltd. (SHCIL).

(ii) A Central Depository Trust to usher in scrip less trading (to be

organized by SHCIL).

(iii) 'The Securities Facilities Support Corporation, which would be

entrusted with the task of establishing a n d maintaining the network.
All participants ( e . members, stock exchanges, the National
Clearing and Settlement Agency, the Central Depository Trust etc.)
would use the facilities established and maintained by the
Corporation.
FIG. 3.1 PROMOTERS OF NATIONAL STOCK EXCHANGE

FINANCIAL INSURANCE COMMERCIAL Others

INSTITUTIONS INSTITUTIONS BANKS
SBI Caoital Market
lndustrial Insurance State Bank of India Ltd.
Development Dank Co:,roration of lndia
of lndia Infrastl-ucture
General Insurance Bank of Baroda Leasing and
The Industrial Corporation of India ~ i n a n c ~Services
al
Canara Bank LtU.
Finance
Corporation of lridia National lnsurance
Ltd. Company Ltd. Punjab National Stock Holding
Bank Cor~orationof India
The Industrial The New India Ltd.
Credit and Assurance Corporation Bank
Investment Company Ltd. Indian Bank
The Oriental
Corporation of lndia
lnsurance Company Oriental Bank of
Ltd
Ltd. Commerce

United India Union Bank of India

lnsurance Company
Ltd.
* Source NSE Brochure. NSE Publications
On recommendation of Pherwani Committee, the National Stock Exchange of
India Ltd was incorporated as a Public Ltd Company under the Companies Act,
1956, at New Bombay by financial Institutions and banks with lDBl as the nodal
agency on November 27. 1992. The NSE got recognition from the Government
on April 26. 1993."

National Stock Exchange was promoted by financial institutions, insurance

institutions, commercial banks and others {See Figure (3.1)). The majority of the
promoters of NSE are partially I wholly owned by the Government.

3.2 Objectives and Features of NSE

The NSE was established with the following objectives:

1. To provide nationwide facilities to capital instruments.

2. To ensure equal access to investors all over the country.

3. To provide fair, efficient and transparent securities market.

4. To enable shorter settlement cycles,

5. To meet the current international standard prevalent in the securities

market.

In addition to the mair: ..)bj~:ctives,

the other ancillary objectives of NSE are:

1. To step towards privatization of public sector units in the country by listing

public sector units also in the Stock Exchange.

2. To reach directly to a wide cross section of potential investors in other

semi urban and rural areas through its available infrastructure.

3. To ensure the development of a new set of professionals in the market by

virtue of its strict selection criteria for members.

4. To create a substantial employment potential through the creation of

additional down stream service units.
The scope of NSE was initially limited to listing only medium sized companies in
order to play a complementary role to the role played by the BSE but later on it
also started listing large sized companies. NSE also focuses on creating a
market for debt instruments- an area that was initially neglected by other
existing exchanges. The Principal features of NSE are:

1. The NSE is promoted by financial Institutions, mutual funds and

commercial banks and is financed on a self-sustaining basis through levy
of membership fees.

2. The ownership and management of Exchange are separated from trading

rights.

3. The Exchange is automated in terms of both trading and settlement

procedures.

4. The Exchange provides nationwide access to investors,

5. In addition to the admission of professionals, corporate members and

institutions, NSE permits representation from across the country and not
only from the city of Bombay.

3.3. Trading System of NSE

The trading systt5-n of the NSE, known as NEAT (blational Exchange for
Automated Trading), is a fully automated screen based trading system that
enables members from across the country to trade simultaneously with ease
and efficiency. In one stroke it depended with the need for people to congregate
on the floor of an exchange to trade and took the exchange floor to the
investors' doorstep. The NSE trading software was originally developed by
TCAM Systems Inc., New York for the Vancouver Stock Exchange.
Subsequently, the system was enhanced and modified for use in several other
exchanges around the world. This software was further modified and thoroughly
customised to suit the requirements of the Indian Markets.
The Exchange provides a facility for screen based trading with automated order
matching. The trading system of NSE is an anonymous order driven system.
This helps orders whether large or small to be placed without the members
being disadvantaged by disclosure of their identity. The trading system operates
on a strict price-time priority. All orders received on the system are sorted with
the best priced order getting the first priority for matching i.e., the one that came
in early gets priority over the later one. Orders are matched automatically by the
c?rnp~\[Link]?g the s;..!?IT~ transparent. ohjective an3 (sir. L"rlhs:e art order
does not find a match, it remains in the system and is displayed to the whole
market, till a fresh order comes in or the earlier order is cancelled or modified.

The trading system provides flexibility to the users in terms of the kinds of
orders that can be placed on the system. Several time related (good-till-
cancelled, good-till-day, immediately-or-cancel), price related (buylsell limit
-rders. stop loss orders and volume related (all-or-none, minimum f;ll, etc )
conditions can easily be built into an order. (See Annexure A.2 for features of
traders workstations of members of NSE) The trading system also provides
market information on-line through various inquiry facilities. The market
screens, at any point of time, provide information on the total offer depth in a
security, the five best buys and sells available in the market, the quantity traded
during the day in that security, the high, the low, the last traded price etc. This
information es updated on-line, on real time basis, enabling a member lo make
better decisio~is.I! is thus possible for investors to know the actual position of
the market before placing orders. Investors can also know the fate of the orders
almost as soon as they are placed with the trading members. The salient
featurus of NEAT system of NSE are :

computerised, automated trading system

strict price-time priority of order execution
no jobber intervention and hence lesser chances of price manipulation
automatic dissemination of trade prices and printing of contract notes
Every time an order enters the NSE system, the system generates a unique
order number for it. This number cannot be meddled with by anybody. When a
trade occurs, a trade confirmation slip is generated and the investor can ask for
his order number and trade number. Since NSE system gives a unique order
number and trade number to each trade, it ensures that the orders and trade
are linked by unique numbers and there is no doubt left in the minds of the
investors about the veracity of the facts given by the stock-brokerg. The
: f x r ! ~ r j n ~n140
e i r r 5 r,;.cords for s ? ' / n l ~ye,?.rr 2nd the investor (;:it1 at
anytime check back with the exchange if he has a suspicion about facts given
by his stock-broker. The system also keep track of the time of orders. In fact
every order is time stamped when it enters. The system keeps tracks of the time
of order entry to the mili second and as soon as the order is placed, an order
confirmation slip automatically gets printed at the broker's printer giving the
order's number and the time of the order placement. When the investors modify
his order or cancel it, each such action also gets time stamped in a similar way.

The trading members are connected to NSE from their work stations to the
central computer located at NSE via satellite using VSATs (very small aperture
terminals). VSATs are relatively small dishes similar to dish system of cable TV.
Table 3.1 presents distribution of VSATs across cities at end of December
1999. By end of December' 99, NSE was operating in 305 cities with 2485
VSATs, where 22 cities had more than 10 VSATs (table 3.1). The members car1
place orders from their office thus, being easily accessible to the investors. The
members can extend their client connectivity through Computer to Computer
Link (CTCL) facility outside their premises. The registered dealers of the
members have remote trading terminals in their offices and trade electronically
on "NSE-NET" trading system through CTCL server installed at the member's
office. This facility gives the trading members control over their entire network
and thereby closely monitors the orders entered by their registered dealers I
branches.
 Table No.3.1 : Distribution of VSATs across cities at the end of Dec. 1999

-~d, I-
~ ~

I No. of VSATs
- ~ - ~
No. of Cities
- ~-
VSATs
I

I
I.
1 125 125

,
I ~~

2 73 146
~~

3 33 99
I
I
~~~

-
4
~

18 72
~~ ~ - ~- ~ ~

I
5 16 80
- ~ ~~

(5-10 18 138 i

,---~ I I 25 I' 2
~~-~
i 9C
[
I
26-50
51-100
~ ~ ~~~~~~

~
4
~

3
~

I ~~
- ~ - - ~ ~~~~~

155
238
~

I
- ~~ ~ ~ ~ ~~~~ -~ ~

> 100 3 1242

~ ~ ~ ~~ ~ p - ~ ~~ ~~ ~

TOTAL 305
~~ ~ ~~~ -- 2485 ~

VSATs : Very small aperture terminals.

Sor~rre: Ipdian Spcurities Market. A review. 2001. NSE Publication

3.4 Clearing and Settlement System of NSE.

The clearing and settlement system in the stock exchange refers to the system
whereby delivery of shares by the seller and the payment by the purchaser is
made. It determines the time within which the investor receives funds or shares
for trade. The clearing and settlement operations of the National Stock
Exchange are managed by its wholly awned subsidiary; the National Clearing
Corporation Limited (NSCCLI. The deals on the Exchange are settleid in two
sub-segment of Capital Market Segment narnely

a) Regular market sub-segment

b) Book entry sub-segment

a) Regular market sub-segment : NSE conforms to a 7-day trading period

(weekly) in settlement of securities in Regular market sub-segment and 1 day
trading period in settlement of securities in Book entry sub-segment of capital
market segment. Table 3.2 presents the settlement cycle of Regular market
sub-segment.
 Table 3.2 : NSE's Settlement Cycle : Regular market sub-segment

-4
-~ ~~~~ -~--- ~ ~~~~ ~~ ~- -~

1-7 Wednesday
I r r d a y
1 Activities
Tradinq
~~

- . period st&
Tradingperiod ends.
~

--~

- ~ ~~~ ~ ~ ~

8 Wednesday ~ r o k e r sor custodians report trade whlch they will not settle to
~~~ ~ ~~~ ~ the c m-house.
- -~ ~ ~ ~~ ~~

13 ond day---^ p a y i n of securit~esand delivery of documents b y the selling

b r g e p r custodian t o w e a r i n g house. -~ ~ ~

14 Tuesday Pay-in of funds by the buying broker or custodian to the clearing

h o l ~ s ethrough a clearing bank.
-- ~-~~~ ~
The clearing house [Link] short del~ver~es. ~~~ ~~~ ~ ~~~ ~~~~~~~ ~ ~~ ~ ~

15 Wednesday Pay-out day for securities and funds

I ! A.:'rtion.~for short deliveries.
i
~~ ~

1 Friday Fay-in u l secur~tiesand funds auctio~iediorshort del~veries.

he buying broker or custodian reports bad deliveries (11any) to
the clearing house. and the clearing house in turn intimates Into
~ . ~

Saturday funds auctioned for short deliveries.

The selling broker or custodian picks up the bad deliveries for
~.. ~~
p~~ ~~ ~~

Monday broker or custodian rectifies or replaces the bad

1 deliveries. - . . -~~ ~ ~ ~

--

Wednesday Auction
- for
. bad
~- deliveries not rec&ifg I replaced.
124 Friday Eay,j"of securities auctioned for bad deliveries. ~ ~ ~ ~-

I 25 j ? ~ t u r d ~ - i-"?y-out of securi!~es~auctione for kc!d ~ l t v e r i e ~ , ~~~~

NSCCL operates an account period or a periodic settlement cycle in regular

market sub-segment of NSE. Trading period (in regular market sub-segment)
starts on Wednesday (Day 1) and ends on Tuesday (Day 7) of the followin5
week. All trades executed during this particular trading period are then settled
during the subsequent week.

At the end of the trading period, the NSE multilaterally nets members delivery
obligations and generates delivery statement (settlement statements) for its
members. On Monday (Day 13) following the trading oeriod, the selling brokers
who are clearing members of the clearing house pay in securities to the clearing
house. On Tuesday (Day 14), the buying brokers pay in funds to the clearing
house through a clearing bank. The clearing house pays out both funds and
securities to the selling brokers and the buying broker respectively, on
Wednesday (Day 15). The settlement is completed in eight days from the end of
the last day of the trading period.
All clearing members are required to open accounts with a designated branch of
any one of the clearing banks'' exclusively for settlement purpose. The bank's
branch is electronically connected to the NSCCL and electronic fund transfers
are effected for pay-in and pay-out on the instructions of the NSCCL.

On Monday (Day 13). the selling broker notifies the NSCCL which securities it
will or will not be able to deliver. The clearing house identifies short deliveries
on Tuesday (Day 14) and then auctions them off on Wednesday (Day 15)
through the NSE's on-line trading system. Pay-in for the auction takes place on
Thursday (Day 14) and pay-out on Friday (Day 17).

In the event of a buy-in-action, the value of undelivered shares at the closing

price on Friday (Day-10) is debited to the selling brokers who fail to deliver
securities. If the auction price is higher than the debited price, the selling
brokers are required to pay the difference. Profit arising out of the auction of
shares is credited to the Investor Protection Fund of the Exchange." Any short
delivered shares that are still left unmatched after the auction are closed out a:
the highest price between the first day of the trading period or Wednesday (Day
1) and the day of the closing out or Wednesday (Day 15), or 20% over the
closing price on the auction day or Wednesday (Day 15), whichever is higher.

[Link], a buying broker is required to report bad deliveries (deliveries wh~ch

are prima facie defective (e.g.. those > ~ h i cdo
h not contain a broker's stamp) to
the clearing house by Frioay (Day 17,: Tile selling broker has to rectify these
within two days, i.e., by Monday (Day 20); otherwise the clearing house
auctions them off on Wednesday (Day 22). Shares auctioned for bad delivery
are paid-in on Friday (Day 24). Finally, shares auctioned for bad delivery are
paid out on Saturday (Day 25). The cost of the auction and the closing out in
respect of bad deliveries is paid by the NSCCL and is then charged to the
selling member in the same manner as that of short deliveries with a time lag of
one week.

b: Book entry sub-segment: NSE trades dematerialised securities in

segment termed as the Book entry sub-segment. The settlement in the Book
entry sub-segment of the NSE is much simpler than that in the Regular market
sub-segment. The settlement for funds and securities in Book entry sub-
segment takes place on the fifth working day from the trade day (T+5) on a
daily rolling basis.

SEBI introduced rolling settlement on voluntary basis from January 1998 on all
scrips which were available in the Book entry sub-segment. Subsequently,
SEBI, in a phased manner introduced compulsory rolling settlement in 163
scrips. Stocks not under rolling settlement were also brought under T+5 rolling
settlement w.e.f July 2, 2001.12 For arriving at the settlement day in T+5
settlement, all intervening holidays as announced by the clearing house
including bank holidays, NSE holidays. Saturdays and Sundays are excluded.
For example, a trade carried out on Monday typically settles on the following
Monday, Tuesday's trade settled on the next Tuesday and so on. The
settlemeiit cycle ;r,k..;ol< enrcy sub-segment is Sh(;Wra in !able 3.3.

Table 3.3: NSE's Settlement Cycle : Book entry sub-segment

1 Trade day. Every day the exchange is open for trading is a trading period.
---- -
I

-1- -
~ ~ ~~ p -~ ~ ~ ~

Investi~rscnnfirm their trades with their custodians.

~ -~ - ~ ~ - -

Custodiar.:, .;onilrm trades with their client investors.

-- ~ -~

I- -
~ ~ ~

At or befor:: 13:50 Pay in of securities; delivery of docunients by the

delivering members of the Clearing House.
- - - - ~

--

At of after 17:30
---

Auction for short delivery.

--
I
At or before 1 5 ~ 5 0 Pay-in of funds by member through the clearing Bank.
~ ~ p

through the Clearing Banks.

~

~-
-
--

--

Auction pay-in and pay-out day for securities and funds.

~
-

~
~

Pay out of securities through the Depository and funds

-

~~~~~
~ ~

~ -- -- ~~~ --
Every short delivery is first debited or credited to the clearing members of the
clearing house directly at the closing price of the short-delivered shares on the
previous trading day to the settlement day. Then, it is auctioned off on the next
trading day and settled on a T+2 basis. Finally, short deliveries that are left
unmatched are closed out at the highest price prevailing on the NSE from the
trade day till the day of closing out, or 20% above the official closing price on
the auction day, whichever is higher.

3.5 Administrative Structure I [Link] NSE

Historically the trading members, who provided broking services also owned,
controlled and managed the stock exchanges. This model was designed to
serve exchanges which were essentially regional in character. This model apart
from facing a severe handicap of a perceived conflict of interests is considered
~~nsuitable
for electronic exchanges which have trading members spread all
over the country, NSE represented a paradigm shift on that, for the first time in
the country, the ownership and management of the Exchange have been
separated from trading rights.'"

The NSE is owned by promoter institutions, and the affairs of NSE are
administered by a Board of Directors and an Executive Committee (EC). The
Board comprises of senior executives from the promoter institutions and banks,
eminent professional: in the field of law, accountancy etc.. three nominees of
SEBl includir~ga senicir executive director of SEBl and 2 full time executives.
The majority of the NSE's Board is represented by institutions affilrated to or
under material-influence of the Central Government. Also the managing
directors and the deputy managing directors of NSE are not the ones who are
elected from member brokers instead are professionals hired from financial
institutions.

NSE started with the concept of independent Governing Body without any
broker representation. Composition of NSE's board is significantly different from
that of the other stock exchanges. It consists of no elected member broker. The
Governing Bodies of the other stock exchanges are however dominated by
stock brokers. Executive directorlpresident is expected to ensure strict
compliance by all members of the exchanges regarding rules, bye laws, margin
regulations and trading restrictions. Moreover they themselves do stock trading
activities. In reality, the position of executive director in these stock exchanges
can not be expected to be very strong because if he really tries to be strict this
may bring him into conflict with influential broker members who may also be on
the exchanges Governing Board. It is not human nature to displease one's
a~~)oi'ltir!<j
auiko:iticr-.

To discipline brokers and cure typical stock market ills such as price rigging and
conflict of interests, it was considered necessary for stock exchanges to have a
professionally managed environment. It was specified in 1993 that the
Governing Boards of stock exchanges must have 5O0/0 non-brokers members,
and that on committees handling matters of discipline, default etc., brokers
would be in minority All stock sxchanges were mandated to appoint a non-
broker executive director who would be accountable to SEBl for implementing
the policy directions of the Central Government / SEBI.

The president, vice-president and treasurer of NSE are not allowed to do any
proprietary trading themselves or in their family's names. Iri addition, the other
elected directors have to disclose their trades to SEBl and the stock exchange.
Incidence of ev~lsof brokers dominated Board could be evidenced from the
massive price riggirg in certain scrips during May-June 1998'~, and
investigations findings of SEBl thereon, leading to suspension of high Officials
such as president I executive directors of concerned exchanges. The Model
followed by NSE where ownership and trading rights are divorced may be
emulated by other exchanges to avoid conflict of interests.

The NSE Board is empowered to make Regulations, subject to the provisions of

the Securities Contract (Regulation) Act, 1956 and Rules there under, the
Securities and Exchange Board of India Act 1992 and any directions there
under and the regulations which RBI may prescribe from time to time for money
market instruments, for all or any of the following matters:
(a) Conditions for admission to membership of the Exchange;

(b) Conduct of business of the Exchange;

(c) Conduct of trading members with regard to the business of the Exchange;

(d) Penalties for disobedience or contravention of the Rules, Bye Laws and
Regulations of the Exchange or of general discipline of the Exchange,
inrl~
~rlirlqexpulsion or suspension of the tmrling members;

(e) Declaration of any trading member as a defaulter or suspension or

resignation or exclusion from trading membership of the Exchange and
consequences thereof;

(f) Conditions, levy for admission or subscription for admission or

continuance of trading membership of the Exchange;

(g) Charges payable by trading members for transactions in such scrips as

may be laid down from time to time;

(h) Investigation of the financial condition, business conduct and dealings of

the trading members;

(i) Appointment of Committee or Committees for any purpose of the

Exchange:

(J) Such other matter in relation to the Exchange as may be prescribed under
the provlslons oi the Articles of Association, Bye Laws or these Rules or
as may be necessary or expedient for the organisation, maintenance,
control, management and regulat~onof the operations of the Exchange.

While the Board deals with the broad policies issue, day-to-day management of
the exchange is delegated to managing director who is assisted by team of
professional staff. Decisions relating to market operations are delegated by the
Board to an Executive Committee which include representative from trading
members, public and the Management. (See figure 3.2 for organisation
structure of NSE).
Fig. 3.2 Organisational Structure of National Stock Exchange
(Hierarchy levels)

1 Board of Directors I
1 Executive Cornmillee
. . ~ -
1
( Managing Director 1
1 Deputy Managing Director 1
*
1-Senior Vice Presidents
- 1
7---
-.
Managers 1
I Assistant Managers 1
Officers
--
7-
I Jun~orOfficers i
NSE accommodates a member's involvement, support and contribution through
several key Committees and also through formal and informal interactions.
Major Committees of the NSE are :

Executive Committee : This Committee manages the overall day to day

operations of the Exchange. Presently this committee consists of 10 non-
trading members and 4 trading members.

Cornrr~itteeo n Settlement lssucs : It providu; yiil;idr:;e cr, seitlelnerit

related issues which crop up during the day to day functioning of the
Exchange. Its includes 25 members.^

Dispute Resolution Committee : Its object is to resolve disputes relating

to good 1 bad delivery and other related settlement issues.

Committee o t ~Trade Related Issues iCi'?Tl) : Its object is to PI-cvirlt-

guidance on trade related issues which crop up during the day to day
functioning of the Exchange.

Committee for Development of the Debt Market: It provides guidance

on issues relating to debt market.

Advisory Committee: This Committee is sub-committee of the executive

comm~tte?of NSE. Its object is to advice NSE on (i) the suitability :.~f the
companies r.3r listing on the Exchdnge within the parameters set out III the
listing agreement (ii) to ensure that the applicant company has complied
with all the conditions set out in the listing agreemefit as well as other
formalities, SEBl regulation etc. and (iii) systems and procedures to be
adopted for listing of securities

The NSE has made different departments on the basis of functions to be

performed e.g., Department of 'Capital Market Trading' manages the functions

relating to equity shares, System and Telecom Department undertakes all the
hard technology related functions of the exchange and Surveillance Department
monitors the share prices and exposures of its members (See figure 3.3. for
functional departmentation of NSE).

Figure 3.3 Functional Departmentation of National Stock Exchange

P~D
iI"?:vs
L 2 a g-i n g --1Director
- 1

-L
I Deputy Managing Director 1
Membership Dept.
1 - 1
Inspection Dept.
-~

~~

Administration and Accounts Dept.

Capital Market Trading

Future and Option Segment

--..- 7
. . - . -

i o r p o r a t ~ o nLimited (NSCCL)'
Funds Departnient
1
Clearing House
.- -- . .. -1
1
NSE along with U'TI and ID81 is one of the promolers of NSDL. It undertakes the funct~onof
dernater~alizationol securities and their lransfer through electronic book entry.
fl NSCCL is a wholly owned subsidiary of NSE. It nlanages the clearing and settlenient operations of the
Exchange Funds department of NSCCL rnanagc?sthe funds pay-ln and pay-oul, and clearmy house
~denlificsshort delivcry and manages delivery pay-in and pay-out.
 3.6 Membership of NSE

In reflection of the need to upgrade professional standards of market

intermediaries, the admission standards of trading membership laid down by the
NSE stresses on factors such as capital adequacy, experience etc. NSE is
different from most stock exchanges in India where membership on an
exchange also meant ownership of the exchange. The Ownership and
Manaaement of the NSE are completely separate from the right of a trading
member to trade on the NSE. The eligibility criteria for the NSE's trading
members are summarized in table 3.4

Table 3.4 NSE membership eligibility criteria for Capital Market Segment
~ - ~ ~~ - ~ - - ~~
- p ~ ~ ~ ~ ~ ~ ~~ ~ ~~

Legal Individual. Reg~steredfirm bodies, Corporate and Institutions

Constitution
~ -~ -~ - ~~

,'ii!,:-iul.- ,?d~li?tion;l quzlif;cdli~onof graduation 2nd t\wi. yrar experience

must be tulfilled by

I At least two directors for a body corporate

I
1 At least two partners for a partnership firm
The ind~vidualfor an individual
I
~- ~~ ~~

Rs. 7.5 millions for individuals and firms, Rs. 10 nill lions for corporate
Adequacy
~ - ~ ~ ~
~ p - ~ p ~~.~
- .~ ~ ~~~p~
--

Source : Cornplieti from the NSE Brochure

The appl~tantmust be engaged solely in the business of securities and must

not be enyrqed in any fund based activity. Admission for the trading ir~einbers
in NSE, is a t w stage
~ process with applicants requiring to go through a written
examination followed tiy an ir~terview. Candidates are interviewed by a
committee consisting of experienced people from the industry to assess the
applicants capability to operate as an Exchange member. The capital adequacy
requirement stipulated by NSE is substantially higher than the minimum
statutory requirement of Rs. 5,00,000 and also in comparison to those
stipulated by other exchanges. This reflects a conscious effort by the Exchange
to improve the membership standards so as to further strengthen confidence in
the Exchange operations. Every trading member is directly and wholly liable in
accordance with the Bye-Laws, Rules and Regulations of the Exchange to
 every other trading member with whom, such trading member effects any deal
on the exchange for due fulfillment of the deal whether such deal be on account
of the trading member effecting it for account of a constituent.

Corporate membership in NSE and other stock exchanges

Traditionally brokerage firms in lndia have been proprietary or partnership
concerns with unlimited liabilities. This restricts the amount of capital that such
firms can raise. The growing volumes of transactions made it imperative for
such firms to be well capitalised and professional. The necessary legal changes
were effected to open up the membership of stock exchanges to corporate
membersq5with limited liability, so that a brokerage firms may be able to raise
capital and retain earnings. In recognition of the fact that trading members in
lndia were in general under capitalised, NSE encouraged setting up of
corporate trading members with higher capitalisation. At the end of December
11)09, 768 n~err~hers
obr 21 total of E91 were corporate members and they
handled about 90% of tradesq6The distribution of membership in different
segments and their constitution is presented in Table 3.5.

Table 3.5 Distribution of membership in NSE as on 31" March 2000

~ ~

Const~tutlonof Members
1' Corporate ~

96 771
p~
~-

I Individuals-
~~ ~~~~~ ~

I
Partnership flrms
-
~~ -~

1 Total
Notes. ~ ~~

<:M Capital Market Segment.

WIIM Wi~olesaleDebt Ma-ket Segment.
Source : NSF News. March 2000. NSE Publications.

In order to boost the process of corporate membership in Stock exchanges,

capital gains tax payable on the difference between the cost of the individual's
initial acquisition of membership on the date of transfer to the corporate entity
was waived. In response, an increasing number of brokerage firms were
recognised themselves into corporate entities. 'The share of corporate members
to total members has increased in all stock exchanges over the years. The
percentage of total corporate members to total members in all stock exchanges
 was 22.0% in 1995-96, which increased to 26.6% in 1996-97 and to 34.9 O/O in
1998-99 (Table 3.6).

Table 3.6 Corporate membership in NSE and other stock exchanges

I ~

I S. 1 Stock
No Exchange CM to

205 1 4'J
155

104 14.9 313 27.1 310 29 3

~~ ~.-~
188 5.8 191 10.4 107 12.8
Pradesh
--

230 24.3 242 35.9 24 1 39 8

~

8.9 492 57 11.5 491 67 13 6

I lttar Pra'+??l- 507 79 7 R
~~~~
,
14.2 201

206
Mangore 147 ,
193 5 07
1.3 594
15 64
- .
~~~ -- -

- ~

21.8 27.3
-~~~~ ~ ~ - ~ - ~ ~-

~~~ --- -
167

~~

ICSE : Interconnected Stock Exctianae, It became o~erationalin 1999.

TM : Total members in the stock exchange as on arch31 of the respective year
CM : C o r ~ o r a t rn~ernbersin the stock axchanae as on March 3 i of the resoective vear
Source : SEBl ~ n n u iReport
l 1995 - 96 and other issues, compiled from SEBl ~ u b l i c ~ t i o n s

The share of corporate members in total members in the NSE ranged between
84.87% which was highest among all the stock exchanges in India. This reflects
a conscious effort by NSE to improve the corporate membership so as to further
strengthen confidence in Exchange operations. The members in corporate form
could raise more funds and have the better infrastructure setup leading to better
liaisoning between the exchange and the clients.
 References and Notes
Pllr~wa~
Report.
ii Government of lndia. June 1991, Chapter -2
Pherwani Report. Govern~iientof lndia. June 1991. Chapter - 3

Financ~alInstitutions corrirnenced their operalions in lndia in January. 1993, Report on

Currency and Fi~lnrlce1998-99. RBI Publications, Page - VII 15

lndlan companies were allowed to access International markets through GDR issues
(Global Depository Receipt) In 1992, Ecoriornic Survey, 1994-95, Government of lndia.
Page - 67.

Pherwa~iiReport Governnient of lndia. June 1991. Chapter - 2, Pages 5-9

Pherwani Report, Government of Indla. June 1991. Chapter-3, Pages 10-12

Ibid., Page IV

NSE Brochure, NSE Publication

The Indian law defines a stock broker as a member of recognlsed stock exchange.
Therefore a registered share broker holds the membership of at-least one of the
recognised Indian stock exchanges. No stock broker is allowed to buy, sell or deal in
secbritles, unless t~t: slle holds a cert;;,cb:e yrantcti by SEBI, secliorf 2(e), + ( a ) and (3)
of the SEBI/Stock Urokers and Sub-brokers R111es. 1992.

By December 200 , , there were 4 clear~ngbanks for settlement of funds at NSE T h e w

included, Canara Bank, HDFC bank, Global Trust bank and lnduslnd bank.

The Econornic Trrnes, May 14, 1999

T+5 cycle for [Link] settlement has been reduced to T+3 cycle froni Aprll, 2002

Indian Sec~rritiesMarket: A Review, NSE Publication. 2001. Page-78

The SEBI sackea. BSE President. Jasw:~ntlalChhota Lal Parekh follow~nginvestigation

into price manipulation of BPL. Videc::on lnternat~onaland Sterlite Ind~lst:lal Shares in
May 1998. The Economic: Tirnes, Marcn 3.1999.

A notification issued by Investment Division, Depsrtment of Economic Affairs. Ministry of

Finance on 13 November. 1992 amending the S e c ~ ~ r i f i eCs~ n t r a c t s(Regulations) Rules
1957 provldes that a company as defined in the Companies Act, 1956 shall also be
eligible to be elected as a member of a slock exchange.

tnd~anSecurities Market, A Review. NSE Publlcation, 2001, Page 37

 Annexure A . l
CAPITAL MARKET REFORMS (Since 1992-93)

Capital Issues (Control) Act was repealed in May 1992 and control over price and
premium of shares was removed.
Securities and Exchange Board of India was gtven statutory powers in January
1992 througti enactment of S E B l Act 1992.
Bankers to issue. Merchant bankers, primary and secondary market
intermediaries were brought under the regulatory framework of SEBI.
With a view to maintatn~ngi n t e g r ~ t yand ensurlng safety of the market various risk
containment measures were initiated such as mark-to market margin, intra-day
trading limit. exposure limit and s e t t ~ n gup of trade guarantee fund.
Disclosure standards were strengthened. Issues of capital, apart from disclosing
information on various aspects, such as track record o f profitab~lity,rlsk factors,
etc. at the time of issuing capital are also required to be disclosed under (he
listing agreement. All listed companies are required to furnish to the stock
exchanges and also publish un-audited financial results on a quarterly basis.
Disclosure of material informallon which would have a bearing on the performance
I operations o f a company is required to be made available to the public. Listing
agreement of stock exchanges should include provisions to ensure that a listed
company f u r n ~ s h e sannual statement to the stock exchanges showing variat~ons
between f ~ n a n c i a projections
l and projected ut~lisation.
In 1992, SEBl formulated the Insider Tradlng Regulations p r o h i b ~ t ~ n insider
g
Trading and making it a criminal offence punishable in accordance with the
provisions under the S E B l Act 1992. Regulations are also made for takeover and
substantial acquisition of shares to make the takeover process more transparent
and t o protect the interests of minority share holders.
Code o f advertisement for public issues was introduced by SEBl for ensuring fair
and truthful disclosures.
Indian companies were allowed to access international market through issue o f
Global Depository Receipt (GDR) in 1992.
Scheduled commercial banks and public financial institutions were allowed to set
u p Money Market Mutual Funds (MMMFs) i n 1992.
Foreign Institutional investors were allowed to operate in the lndian Market in
1993.
P r o ~ i i o l ~ oofn private mutual funds was permitted. All riiutual funds were allowed to
uriderwrilc, ~ ~ r l b l issues.
ic
 Badla system was discontinued in December 1993 In March 1994, SEBl decided
to percent carry forward factlity in specified shares under modified carry forward
systerrl
Mitiistry o f Finance lssued a directive in September. 1995, requiring all listed
s a pait1 up capital o f more than Rs. 50 million to list their shares (or
c o ~ n p a i ~ i ewith
have their shares permitted to trade) o n another additional recognised stock
exchange in India.)
In October 1996, SEBl allowed exparision o f trading terminals of stock exclianges
to a c ~ t ywhere another stock exchange existed.
T h e National Securities Depository Ltd. (NSDL); the first depository in lndia, was
promoted by NSE. IDBl and UTI and became operation in October 1996.
T h e stock lending scheme came into force on February. 1997.
Central Depository Service Limited (CDSL), the second depository after NSDL.
became operational iri February 1999.
Securities Law (Amendment) Bill was passed by Parliament in December 1999 to
include derivatives i n the definition of 'securities'
The norm for Initial public offer (IPO) was relaxed by stipulating 'ability to pay' in
place o f 'actual payment' of dividend i n 1999.
The concept o f equity issue through book-building was introduced in 1999
Companies were allowed to buy back their own shares in 1998 for capital
restructuring subject to the condition that buy back does not exceed 25 percent of
the paid up capital and free reserves of the company concerned.
SEBl dispensed with the requirement to issue shares with a fixed par value of Rs.
10 and Rs. 100 and gave freedom to companies to determine par value of shares
to be issued by them i n 1999.
SEBl introduced compulsory rolling settlement in 1 0 scrips i n January 2000
Derivative trading was started in 2000
T h e companies (Amendment) Bill was passed in 2000. Salient features of Act
included
- SEBl will a d m i n s t e r all provisions concerning issue and transfer of
securities and non-payment of dividends i n case of listed public

- companies.
Dematerialised form w ~ l be l compulsory for listed companies making IPO of

- any security for a sum of R s . 10 crore or more.

The Report of Board of Directors should include a statement or1 Director's

. responsibility
A small depositor is defined as one who has deposited in a financial year a
sun1 of not exceeding R s . 20,000 in a company.

- - ~ ~- ~ -

Sourc e : C o r n j > l r d f r w n R r p i , r l ari Currency and F ~ n a n c efor dlffeient years, R e s c r v e Bank ul llldlil
 Annexure A.2

FEATURES OF TRADERS WORKSTATION IN NSE

Tlie trader workstation is the lernlinal from which the member accesses the trading system.
Each trader has a unique identification by way of Trading Member ID and User ID ttirougl>
whlch tie is able to log on to the system for trading or inquiry purposes. A member can have
rnore than one identification allotted to liini by which he can have more than one employee
using the system concurrently The Exchange may also allow a Trading Member to set up a
network of dealers in different cities all of whom are provided connection to the NSE central
computer. Tradirlg member can define a hierarchy of users of the system with Corporate
Manager at the top followed by Branch Manager and Dealers. Orders are matched on a
continuous basis on trader Workstation Screens. The Trader Workstation screen of the
Trading Member 1s divided Into the following major windows:

Title Bar
Tool Bar
Ticker Window
lndex
Market Watch Window

Inquiry Window

Snap Quote Ordermrade Window

Message Window lndex

Screen Facilities : The screeris provide the following facilities to the Trading Members:

Title Bar : The title bar displays the current time, Trading System riame and date.

Tool Bar : A window with different icons which provides quick access to various functions
such as Market By Order, Market By Price. Market Movement. Market Inquiry. Auction
Inquiry. Snap Quote, Market Watch, Buy order entry. Sell order entry, Order Modification.
Order Cancellation, Outstanding Orders. Order Status, Activity Log, Previous Trades, Net
Position. Online Backup, Supplementary Menu, Security List and Help All lhese functions
are also available on the keyboard. Ticker - The ticker displays information about a trade as
and when it take3 place

Market Watch : The Market Watch window is the main area of focus for a Trading Member.
The purpose of Market Watcli is lo view market information of pre-selected securities thal
are of interesl lo the trading Member. To monitor various securities, thf lrading mernber can
set t l i e n ~ by typing tlie Security Descriptor consisling of a Symbol f ~ l and
d a Series f~eld

Securil~escall also be set LIP by irivokill$j lilt. Security List and seleclrlq tile securities fro111
the witidow i h c Symbol field incorporates the Compar~y name and the Series field

1 symbol
1 ACC
I
I Series -4
capturcts the segnientIinstrunienI type. A third field indicates the market type. For example

:ark&
~ ~

Type i
i
Company Gtinyt TYpe
1 Normal Market
I1
For each security in the Market Watch window, market information is dynamically updated
on a real time basis The market information displayed is for the current best price orders
available in the regular lot book For each security, the corporate action indicator (e g , Ex
or cum dividend, interest, rights etc.), the total buy order quantity for the best buy price, best
sell price, total sell order quanlity for the best sell price, the Last Traded Price (LTP), the last
traded price change indicator ('+' if last traded price is better than the last traded
price and '-' if it is worse) and the no delivery indicators are displayed. If the security is
suspended. "SUSPENDED" appears in front of the security

Inquiry Window - In this window the inquiries such as Market by Order, Market by Price,
Prev~ousTrades, Outstanding Orders, Activity Log, Order Status and Market lnqu~rycan be
v~ewed

Market B y Order (MBO) : The purpose of Market by Order is to enable the

user to view outstanding orders in the trading books in
the order of priceltime priority.

The information is displayed for each order. Stop Loss orders, which are not
triggered will not be displayed on the window. Buy orders Introduction are
displayed on the left side of the window and Sell orders on the Planslright side.
The orders are presented in a priceltlme priority with the Publication "best
priced" order at the top.

Market b y Price (MBP) : The purpose of Market By Price 1s to enable the

Trading Member to view aggregate orders waiting in the book at given prices

Previous Trades (PT) : The purpose of this window is to provide Introduction

information to users for there own trade.

Outstanding Orders (00) : The purpose of Outstanding Orders is

to enable a Trading Member to view hislher own outstanding buy or sell orders
for a security An outstanding order will be an order that was entered by the
user. 11\11 is not yet completely traded or
cancellcrl.
 Activity L o g (AL) : The A c t ~ v ~ lLog
y Shows the act~vltiesw h ~ c hhave been
performed on any order of the Tradlng Member such as whether the order has
beer1 traded against fully or partially, it has been rnotl~fiedor has becn
cancelled It displays inforniatlon only of those orders in which some activity
has taken place It does not display orders, which have entered the books but
have not been matched (fully or partially) or mod~fiedor cancelled.

Order Status ( 0 s ) : Order Stalus enables the user to look lnlo the status of a
spec.~f~c
order Current status of the order anc! other order deta~lsare displayed
In case the order IS traded, the trade details are also displayed

Market Inquiry (MI) : Markel lnquiry enables the user to view the market
statistics like Open. High, Low, Previous close. Last traded price change
indicator, Last traded quantity, date and time etc. A user rnay flnd inquiry
screens like Market Movement. Most Active Securities and Net Position useful.
These are available in the supplementary menu.

Market Movement (MM): The Market Movement screen provides Information

to the user regarding the movement of a security for the current day. It gives
details of the movement of the scrip for a time interval. The details include total
buy and sell order quantity value. Open, High, Low. Last traded price etc.

Most Active Securities : This screen gives a list of the securities

with the highest traded value during the day and the quantity traded for each of
thern.

Net Position : This functionality enables the user to interaclively view his net
~os~tio
for
n all securities in which he has traded,

Snap Quote - The Snap Quote feature allows a Trading Member to get instantaneous
market information on any desired security. This is normally used for securities that are not
already on display in the Market Watch window. The informalion presented is the same as
that of Markel Watch window. Order Entry Window - Order entry mechanisms enable the
Trading Member to place orders in the market The system accepts orders from all Trading
Members and provides them equal access. The system will also request reconfirmation of
an order so that the user is cautioned before the order is finally released into the market.
Orders once placed on the system can be modified or cancelled till they are matched. Once
orders are ni;itched they cannot be modified or cancelled. There is a lacility to generate
online orderltrade corif~rmatiorisllps as soon as an order is placed or a trading is done. The
order confirmatior1 slip contains among othcr things, order no., sec~irily name, price,
qunntlty, ortlcr c o f r d t ~ r like
~ ~ ~disclosed
s or r i i ~ ~ i ~ r i ifill
u nqualitity
i c t c Tlic trade c o ~ i f ~ r r ~ ~ a l i o n
slip cot>tains the order and trade no , dale, trade time, price ar~d,quanllty traded, amount
etc. Orders and trades are ~dentif~ed
and l~nkedby unlque numbers so that the investor can
check his order and trade detr~~[Link] Messages Window: T h ~ swindow is used to
vlew messages from the Exchange to all spec~ficTrading Members.

Supplementary Menu : Some of the supplementary features in the NEAT system are :

On line back u p - An On Line Backup facllity is provided which the user can Invoke
to take a backup of all order and trade related information l h e r e 1s an option to
copy the file to any drive of the computer or on a floppy diskette. Trading members
find t h ~ sconvenient in their back office work.

-
Off Line Order Entry A member IS able to make an order entry in the batch mode.

On- line lndex and lndex lnquiry - With every trade in a security participating in
Index. the user has the informalion on the current value of the Nifty. This value is
d~splayedat the extreme right hand corner of the ticker wiridow.

lndex Inquiry gives information on Close. Open. High, Low and current index values
at the time of invoking thls inquiry screen.
-~
~pp
~ ~~~- ~~ -pp-p

Source: NSE-Website, nse-~[Link]