What are BSE and NSE?
Every day we keep hearing words like Sensex, Nifty, Stocks, and more. But do we know where they originated from? These terms are often used in the world of the stock exchange, but wait! What actually is the stock exchange?
The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the two leading stock exchanges in India. Both of them play a crucial role in the Indian stock market. And in this blog, we will compare BSE vs NSE on various parameters.
5 key differences between BSE and NSE
1. History and Origin:
BSE is the oldest stock exchange in Asia and was established in 1875. It was initially known as the Native Share and Stock Brokers Association and started as a small group of brokers. The BSE is now located in Mumbai and has over $2 trillion market capitalization.
NSE, on the other hand, was founded in 1992 and was India’s first electronic stock exchange. It is located in Mumbai and has a market capitalization of over $2.5 trillion.
2. Trading Mechanism:
BSE operates on a traditional trading mechanism, where buyers and sellers meet on the trading floor to buy and sell stocks. This trading mechanism is called “open outcry,” where traders physically shout out their bids and offers. However, BSE has also adopted an electronic trading mechanism called BSE Online Trading (BOLT) for faster and more efficient trading.
On the other hand, NSE operates entirely electronically and has no physical trading floor. Trading is done through a computerized order matching system called NEAT (National Exchange for Automated Trading). This trading mechanism allows for a fair and transparent trading system.
3. Index:
BSE has two key indices, the BSE Sensex, and the BSE 500. The Sensex comprises 30 of the most actively traded stocks on the BSE, while the BSE 500 includes the top 500 companies listed on the BSE.
NSE has two primary indices, the Nifty 50, and the Nifty 500. The Nifty 50 comprises 50 of the most actively traded stocks on the NSE, while the Nifty 500 includes the top 500 companies listed on the NSE.
4. Trading Hours:
BSE and NSE have the same trading hours, which are from 9:15 am to 3:30 pm (IST), Monday to Friday. However, both exchanges have a pre-opening session that starts at 9:00 am, where traders can place orders to buy or sell stocks.
5. Listing Criteria:
BSE has a minimum market capitalization requirement of Rs. 25 crores ($3.4 million) for companies to list on its exchange. Companies must also meet other requirements like a minimum net worth, a minimum public float, and a track record of profitability.
NSE has a minimum market capitalization requirement of Rs. 500 crores ($68 million) for companies to list on its exchange. Companies must also meet other requirements like a minimum public float, a track record of profitability, and a minimum net worth.
Conclusion:
In conclusion, both BSE and NSE are crucial stock exchanges in India and offer investors a wide range of trading opportunities. While BSE operates on a traditional trading mechanism, NSE operates entirely electronically.
Both exchanges have their own indices, trading hours, and listing criteria. It is important for investors to research and understand these differences before choosing which exchange to trade on.
