Top Differences Between NSE and BSE

The stock exchange is an intermediary that facilitates an investor purchasing and selling shares, bonds, debentures, and other financial instruments. BSE (Bombay Stock Exchange) and NSE (National Stock exchange) are India’s eminent and vital stock exchanges.

What is BSE?

BSEBSEThe full form of BSE is the Bombay Stock Exchange. It is Asia’s oldest stock exchange, founded in 1875 as the Native Shares and Stock Broker’s Association and is the first exchange in India to be recognized by the government in 1957 under the Securities Contract (Regulation) Act.read more was established as ‘the Native Share & Stock Brokers’ Association’ in 1875 and has been the oldest stock exchange in Asia. This stock exchange provides a transparent and systematic mechanism for trading in equity, currencies, debt instruments, derivatives, and mutual funds. The other facilities provided by the exchange involve clearing, settlement, risk management, market data services, and education. The S&P BSE SENSEX, which we term as the SENSEX, is the benchmark index that comprises the 30 most actively traded and financially strong Indian companies listed on BSE.

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What is NSE?

NSE was incorporated in 1992 and was recognized as a stock exchangeStock ExchangeStock exchange refers to a market that facilitates the buying and selling of listed securities such as public company stocks, exchange-traded funds, debt instruments, options, etc., as per the standard regulations and guidelines—for instance, NYSE and NASDAQ.read more in 1993 under the Securities Contracts (Regulation) Act, 1956. This leading stock exchange of India caters to a variety of services to the capital market participants that include trading, clearing, and settlement in equity, equity derivativesEquity DerivativesEquity Derivative is a class of derivatives whose value is connected to the price variations of the underlying asset & it is generally used for hedging risk or speculating moves in indexes. It has 4 major types, i.e., Forwards & Futures, Options, Warrants, & Swaps. read more, debt, and currency derivatives segments. The benchmark index of NSE is NIFTY, which represents a weighted average of the 50 most highly liquid and frequently traded Indian companies listed on NSE.

BSE vs. NSE Differences Infographics

Here we provide you with the top 12 differences between NSE and BSE.

BSE and NSE Key Differences

It is important to gauge the key difference between NSE and BSE. This will give us additional clarity on the subject matter.

  • BSE is Asia’s oldest stock exchange and has been recognized as the fastest stock exchange globally. Incorporated in 1875, BSE has been the first to be granted permanent recognition under the Securities Contract (Regulation) Act, 1956. The exchange had designed the screen-based automated trading mechanism termed the BSE On-Line Trading (BOLT) in 1995. NSE has been affiliated with being the country’s leading stock exchange and was the first to have launched an electronic screen-based automated trading system in 1994.The benchmark index of BSE, named SENSEX, includes the top 30 well-established companies. The index of NSE, termed Nifty, depicts the 50 most actively traded companies. The stocks belong to diversified sectors such as FMCGFMCGFast-moving consumer goods (FMCG) are non-durable consumer goods that sell like hotcakes as they usually come with a low price and high usability. Their examples include toothpaste, ready-to-make food, soap, cookie, notebook, chocolate, etc.read more, Banking and Finance, Auto, Healthcare, Oil & Gas, etc. The Sensex is currently trading at a P/E ratio of 22.03x. The Nifty is trading at a P/E ratio of 24.83x as of October 2018.Some of the top traded companies on BSE with high market capitalizationMarket CapitalizationMarket capitalization is the market value of a company’s outstanding shares. It is computed as the product of the total number of outstanding shares and the price of each share.read more are Reliance Industries Ltd, Tata Consultancy Services Ltd, HDFC Bank Ltd, ITC Ltd, Hindustan Unilever Limited, etc. Some of the actively traded securities on NSE as per the October 2018 transactions involve Indiabulls Housing Finance Ltd, Reliance Industries Ltd, HDFC Ltd, Infosys, etc.BSE provides various facilities such as depository services through the Central Depository Services Ltd. (CDSL), risk management, clearing, and settlement. The BSE Institute Limited is the exchange’s acclaimed capital marketCapital MarketA capital market is a place where buyers and sellers interact and trade financial securities such as debentures, stocks, debt instruments, bonds, and derivative instruments such as futures, options, swaps, and exchange-traded funds (ETFs). There are two kinds of markets: primary markets and secondary markets.read more educational institute. NSE played a vital role in establishing the first depository in India called the NSDL (National Securities Depository Limited). The clearing and settlement process of NSE transactions is undertaken by National Securities Clearing Corporation Ltd. (NSCCL).Arbitrage is a strategy implemented by traders to use the price difference between two or more markets to earn a profit. The price of a security may differ on BSE vs. NSE. An arbitrageur will buy the security in the exchange where it is quoted at a lower price and simultaneously sell the same in the other exchange where it is traded at a higher price. The trader must follow the rules outlined for engaging in arbitrage.

BSE and NSE Head to Head Differences

Let’s now look at the head to head difference between NSE and BSE

Final Thoughts

Though BSE has been the oldest stock exchange in India, NSE was the first to launch an automated electronic screen-based trading system in India. The Securities and Exchange Board of India (SEBI) has recognized the stock exchanges. The corporate offices of BSE and NSE the exchanges are located in Mumbai. BSE and NSE have a nationwide existence and cater to customers located across the globe.

BSE and NSE both play an extremely crucial role in providing an effective, formalized, and transparent mechanism to the market participants for trading in diversified financial securities. The processes have been designed to provide high-quality services, protect the market ethics, and drive the development of the Indian capital market.

This has been a guide to the top difference between NSE and BSE. We also discuss the BSE vs. NSE key differences with infographics and a comparison table. You may also have a look at the following articles –

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