STOCK EQUITIES AND DEBENTURES

STOCK MARKET 

EQUITIES

Listing

Listing means admission of securities of an issuer to trading privileges on a stock exchange through a formal agreement. The prime objective of admission to dealings on the Exchange is to provide liquidity and marketability to securities, as also to provide a mechanism for effective management of trading.

Listing on NSE provides qualifying companies with the broadest access to investors, the greatest market depth and liquidity, cost-effective access to capital, the highest visibility, the fairest pricing, and investor benefits. NSE trading terminals are now situated in various cities and towns across the length and breath of India.

Securities listed on the Exchange are required to fulfill the eligibility criteria for listing. Various types of securities of a company are traded under a unique symbol and different series.

Trading

NSE introduced for the first time in India, fully automated screen based trading. It uses a modern, fully computerised trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest.

The NSE trading system called 'National Exchange for Automated Trading' (NEAT) is a fully automated screen based trading system, which adopts the principle of an order driven market.

Clearing & Settlement (Equities)

NSCCL carries out clearing and settlement functions as per the settlement cycles of different sub-segments in the Equities segment.

The clearing function of the clearing corporation is designed to work out a) what counter parties owe and b) what counter parties are due to receive on the settlement date. Settlement is a two way process which involves legal transfer of title to funds and securities or other assets on the settlement date.

NSCCL has also devised mechanism to handle various exceptional situations like security shortages, bad delivery, company objections, auction settlement etc.

Clearing & Settlement (Derivatives)

National Securities Clearing Corporation Limited (NSCCL) is the clearing and settlement agency for all deals executed on the Derivatives (Futures & Options) segment. NSCCL acts as legal counter-party to all deals on NSE's F&O segment and guarantees settlement.

A Clearing Member (CM) of NSCCL has the responsibility of clearing and settlement of all deals executed by Trading Members (TM) on NSE, who clear and settle such deals through them.

DEBENTURES

Listing

All Government securities and Treasury bills are deemed to be listed automatically as and when they are issued. Other securities, issued publicly or placed privately, could be listed or admitted for trading, if eligible, as per rules of the Exchange by following prescribed procedure.

Certain securities like Treasury Bills and other securities issued by Government of India and certain Corporate and PSU debt securities available in demat form are eligible for Repo. Every security in the trading system is given a symbol representative of the security.

The market capitalisation of the securities on the WDM segment has been increasing steadily. The segment has also seen a marked increase in the number of securities available for trading other than the traditional instruments like Govt. securities and T-bills. 

Settlement

Settlement is on a rolling basis, i.e. there is no account period settlement. Each order has a unique settlement date specified upfront at the time of order entry and used as a matching parameter. It is mandatory for trades to be settled on the predefined settlement date. The Exchange currently allows settlement periods ranging from same day (T+0) settlement to a maximum of (T+2) for non-government securities while settlement of all outright secondary market transactions in government securities was standardized to T+1. In case of repo transactions in government securities, first leg can be settled either on T+0 basis or T+1 basis. The above guidelines came into effect from May 24, 2005.(Refer Circular no: NSE/WDM/6313)

In case of government securities, the actual settlement of funds and securities are effected directly between participants or through Reserve Bank of India (RBI). All trades in government securities are reported to RBI-SGL through the Negotiated Dealing System (NDS) of RBI, and Clearing Corporation of India Limited (CCIL) provides settlement guarantee for transactions in government securities including repos. The trades are settled on a net basis through the DvP-III system. In the DvP-III, the settlement of Securities and Funds are carried out on a net basis.

For securities other than government securities and T-bills, trades are settled on a gross basis directly between participants on delivery versus payment basis.

On the scheduled settlement date, the Exchange provides data/information to the respective member/participant regarding trades to be settled on that day with details like security, counter party and consideration.

The settlement details for non-government securities, i.e. certificate no., Cheque no., constituent etc. are reported by the member/participant to the Exchange.

The Exchange closely monitors the settlement of transactions through the reporting of settlement details by members and participants. In case of deferment of settlement or cancellation of trade, participants are required to seek prior approval from the Exchange. For any dispute arising in respect of the trades or settlement, the exchange has established arbitration mechanism for resolving the same.