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NSE (National Stock Exchange) Listing Process in India

Overview of NSE (National Stock Exchange)

National Stock Exchange of India Limited is the largest stock exchange of India. Its headquarters is located in Mumbai, Maharashtra. It is owned by insurance companies and many major financial institutions and banks. The National Stock Market was first established in the country in 1992 on the recommendation of the High Powered Study Group as a dematerialized electronics exchange. National Stock Exchange was the first exchange in the country to offer a fully automated screen based electronic trading system. NSE provided ease of trading requests to the country's investors and simplified the way they trade.

The main objective of the NSE is to significantly simplify participation in the stock market and make it more accessible to all interested parties. NSE first started electronic trading in the Indian Stock Exchange market in 1994. National Stock Exchange provides a platform for limited companies to raise capital, which helps the companies to a great extent in raising capital. Investors can easily access currencies, loans and mutual funds on this platform. We can also say that the National Stock Exchange is a financial exchange in India, which provides automated trading facilities throughout the country and its operation is based on the orders of the trading market. During its operation, whoever is the buyer and whoever is the seller remains anonymous.

If we talk about the total market registration of the National Stock Exchange, it was approximately 3.4 trillion US dollars by August 2021, after reaching this market registration, NSE became the tenth largest stock exchange in the world. Nifty 50, a 50 stock index that is widely recognized as a gauge of the Indian capital market by investors in India and around the world, is the flagship index of NSC. According to Vaidyanathan 2016 if we talk, the stock exchanges in India have a share of about 4 percent in the Indian economy or GDP.

Basic Eligibilities for National Stock Exchange Listing:

  • It is mandatory for any company to be registered as a public company under the Companies Act 2013 or under the Companies Act 1956.
  • It is very important for the companies who want to participate in its listing process that those companies should be 3 years old and their 2 years old network should be positive.
  • If we talk about the paid-up capital after incorporation then it should not be more than Rs. 25 crore.

Documents required for National Stock Exchange Listing:

  • Profile of promoters and company management is essential.
  • Whatever project is started, it is mandatory to have a company profile along with the details of the project.
  • Certified copies of annual reports for the last three years.
  • Certified copies of draft offer documents.
  • Authenticated copies of the Articles of Association of the company and also certified copies of its Memorandum.
  • 5 year projected business plan with balance sheet and cash flow.

National Stock Exchange Of India Limited Listing Process:

  1. Application Process: To get listed on the National Stock Exchange, any entrepreneur has to first apply and fill the form by attaching all the necessary documents related to the listing.
  1. Application Submission: When applying for listing on the National Stock Exchange, the applicant has to give complete information about his method and legal details and then submit the application.
  1. Document Verification: All the required documents submitted by the applicant are thoroughly verified by the officials of the National Stock Exchange.
  1. Making Mundi Book: To sell his share among the investors, the entrepreneur has to make Mandi Book, this provides the investors an opportunity to buy shares.
  1. Allotment: For allotment to investors, the entrepreneur has to completely follow all the rules and regulations made by the National Stock Exchange.
  1. Approval: The next step is for your application to be reviewed by officials of the National Stock Exchange. If all the rules are followed as per the instructions then permission for listing is granted.
  1. Payment of Listing Fee: After getting permission for listing from the officials of the National Stock Exchange, the entrepreneur has to pay the prescribed fee for listing.
  1. First Listing: Once listed after the listing fees have been paid, the entrepreneur's company is traded on the National Stock Exchange for the first time.

Benefits of National Stock Exchange Listing:

National Stock Exchange listing has a variety of benefits which are as follows:

  1. Trading Market: If we talk about National Stock Exchange, it is a mixed product concept, it deals in various securities like equity, debt and derivatives. The entire workflow has been designed using latest technology to facilitate trading efficiency, research and settlement services. The National Stock Exchange provides market data feed to investors as well as education.
  1. Large Scale of Operations: If we talk about order execution, the National Stock Exchange is capable of executing a large number of orders on a real-time basis, and its risk management systems are also of world class star. In terms of infrastructure, the National Stock Exchange is overall very fast and automated.
  1. High Visibility: National Stock Exchange trading system is very useful and visible to all the people. It educates the investor to know about the trends of the markets to a large extent. The upcoming details of the listed company such as financial result announcement are available on the National Stock Exchange trading platform.
  1. Largest Exchange: If we talk about the world, the fourth largest exchange in the world is the National Stock Exchange.
  1. Unprecedented Reach: In terms of network, Stock Exchange is at number one position in the whole of India, its network is widely spread all over India. If we talk about the present time, National Stock Exchange has more than 180000 terminals and each of its terminals is supported by VSAT.
  1. Settlement Guarantee: National Stock Exchange offers 100% settlement guarantee in case of guarantee so that you are free from all trading clearing risks.
  1. High Level Broadcast Facility for Announcement: National Stock Exchange has developed NEAT system for publishing corporate announcement through broadcast mode. Announcements of merger, acquisition, book closure, rights issue, bonus issue etc. are broadcasted across the country so that pricing can be reworked or the scope for misuse can be reduced.
  1. Dedicated Investor Service Centre: Keeping in mind the problems of investors, National Stock Exchange has developed 24×7 Customer Service Centre, if investors or any customer faces any problem then he can solve his problem with its help.
  1. Business Data for Listed Companies: Provides data, trend and industry analysis for all the companies listed on the National Stock Exchange.

Trading Process of National Stock Exchange of India Limited:

  • Trading in National Stock Exchange of India Limited is mainly done through market orders and to match it, trading computers are used. Market makers or experts are not involved in the trading process. When any investor places a market order, the trading computer immediately matches it with a limit order and gives it a unique number to the investor whereas if we talk about sellers and buyers, it keeps them anonymous.
  • If no match is found, the order is added to the list of orders to be matched in sequence which is determined by price time priority. If we talk about orders with the same price, then the older order is given priority while the order with the best price is given higher priority.
  • Order driven regulation displays every sell and buy order in the market system, thus providing transparency to investors. Broker can provide online trading facilities to clients who place orders in the trading system. If we talk about its availability, the exchange market is available 5 days a week from Monday to Friday, excluding the holidays declared by the National Stock Exchange.

Functions of National Stock Exchange:

  • National Stock Exchanges function as communication networks providing equal opportunity to investors to participate in the trading system.
  • It meets the global standards set for financial regulation markets.
  • Its main function is to seamlessly enable the book entry settlement system and provide shorter trade settlement period.
  • To establish a trading facility for investors across debt, equity and other asset classes across the country.
  • Transferring bought and sold shares in a short period of time.

Market Segments of National Stock Exchange:

  1. Whole Sale Credit Market Division:

The first National Stock Exchange section is the entire trading red market section which provides all the traders with a trading system for various different fixed instruments. Treasury bills, government securities, certificates of deposits, commercial papers and other securities come under this category.

  1. Capital Market Division:

The Capital Market of the National Stock Exchange provides traders with an excellent means of trading in securities including debentures, equities, share preferences, stock exchange traded funds and retail government securities.

Conclusion

Listing on the National Stock Exchange of any company is considered an important milestone towards becoming a publicly traded entity. Basically this process is often started through an initial public offering and it involves several important steps. After getting listed on the National Stock Exchange, the enterprises get many types of benefits. They get a lot of information about the business. If we talk about India, then listing on the National Stock Exchange in India represents the offering of BHIM applicant engagement. Their main objective is to provide companies with access to capital markets and fundamentally increase their visibility and credibility, and to include investors in their growth story and provide them with the opportunity to participate.

Listing on the National Stock Exchange gives companies the opportunity to leverage value creation and get expanded access to a wider investor base. Listing on the National Stock Exchange plays an important role in India's capital market ecosystem by facilitating capital formation, wealth creation and economic growth.

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