Battle Between BSE NSE

Contemporary Concerns Study

“The battle between the Bombay Stock Exchange and

the National Stock Exchange”

presented to:

Prof. Ashok Thampy and the Jury

On 19 November 2008 by:

Daan Struyven

with significant support of and inspiration provided by

Estelle Cantillon

Indian Institute of Management (IIM)

Bangalore

2

Table of content

1. Need for the proposed work and objectives:............................................................... 3 2. Literature review ......................................................................................................... 3 3. Genesis of NSE ........................................................................................................... 3

a. What were BSE‟s weaknesses before NSE‟s establishment? .............................. 3

b. What was the mid-term context for NSE‟s establishment?.................................. 3 c. What was the short-term trigger for NSE‟s establishment? ................................. 4 d. Policy response to the scam ................................................................................. 4

e. Chronology of NSE‟s genesis .............................................................................. 5 4. Relevant aspects of competition ................................................................................. 5

a. Impact of technology on transaction costs and access ......................................... 5 b. Governance & Management................................................................................. 6

c. Product scope. ...................................................................................................... 6 d. Geographical reach ............................................................................................... 6

5. Overview of key facts and figures over time for both exchanges ............................... 7 6. Hypothesis and analysis ............................................................................................ 14

7. Conclusion ................................................................................................................ 21 8. Sources ...................................................................................................................... 22

a. Websites ............................................................................................................. 22 b. Databases ............................................................................................................ 22 c. Scientific articles ................................................................................................ 22

d. Interviews ........................................................................................................... 22 e. Other sources ...................................................................................................... 22

9. Appendices ................................................................................................................ 24 a. Literature review ................................................................................................ 24

i. E. Cantillon & P. Yin: “Competition between exchanges”................................ 24

ii. Christensen: “The Innovators‟ Dilemma” .......................................................... 27

b. Indian financial sector in the beginning of the nineties ..................................... 29 c. Mehta scam ........................................................................................................ 30 d. Relevant aspects of competition ......................................................................... 32

3

1. Need for the proposed work and objectives:

The National Stock Exchange was launched in 1994. The NSE surpassed BSE in

one year although the “natural monopoly”-character of the liquid stock market. This

study aims to identify the reasons for this shift.

2. Literature review

This study is related to literature on competition between exchanges, the literature on

technology adoption and the literature on competition between networks. I read 3 papers

including the study of E. Cantillon and Pai-Ling Yin: “Competition between exchanges,

Lessons from the Battle of the Bunds”. This paper studies the determinants of traders‟

exchange choice in the DTB-LIFFE case. I tried to incorporate its following aspects:

The methodological steps: related literature, qualitative and historical description

of relevant aspects of competition, key charts, model and hypothesizes, testing of

hypothesizes and conclusion.

The role of vertical and horizontal differentiation, access and product scope.

3. Genesis of NSE

a. What were BSE’s weaknesses before NSE’s establishment?

Since its foundation in the 1850‟s, BSE had always functioned as a “club like”

regional exchange run by powerful groups of Gujarati operating with high margins, low

transparency, bureaucracy and unreliable clearing and settlement systems.

b. What was the mid-term context for NSE’s establishment?1

Until the late 1980‟s Indian state dominated the inefficient financial sector. This

led to rents captured by insiders dominating the market.2 Towards the end of the 1980‟s,

new economic forces, the economic growth and currency crisis emphasized the need for

modernization of the financial system. Government created the Securities and Exchange

Board of India (SEBI) in 1988 whose reforms were blocked by BSE.

1 Based on Susan THOMAS -How the financial sector in India was reformed 2 R. RAJANR, L. ZINGALES(1995). “What do we know about capital structure? Some evidence from international data.” Journal of Finance, 50, 1421–1460.

4

c. What was the short-term trigger for NSE’s establishment?

As shown on chart 1,the Indian stock market crashed in April 1992. Investors like

Harshad Mehta diverted 35 Bn INR3 from the bank system via Ready Forward Deals to

the equity market which they manipulated.

Chart 1: The performance of India‟s main equity index Sensex in 1991-1992:

Source: http://www.bseindia.com/histdata/hindices.asp

d. Policy response to the scam

Minister of Finance Singh stressed “prima facie evidence of a nexus between

brokers and bank officials4” and the need to create competition between exchanges. He

tapped the Industrial Development Bank (IDB)to take the lead of the project of creating

competition for BSE.

3 Samir BARUA and Jayant VARMA,”Securities Scam: Genesis, Mechanics and Impact,” Journal of the Indian Institute of

Management,18, no.1 4 http://parliamentofindia.nic.in/lsdeb/ls10/ses4/2004089210.htm -last access on 23rt October 2008

5

e. Chronology of NSE’s genesis

NSE has been incorporated in November 1992. It started with trading on the

Wholesale Debt Market in June 1994 and it launched the Capital Market Segment in

November 1994.

Table 1: Timeline of NSE‟s genesis

Event Date Time elapsed (years)

First proposal idea June 1991 0

Mehta scam induced crash April 1992 0,8

NSE Incorporation November 1992 1,3

Managerial team in place January 1993 1,5

Regulatory recognition as exchange April 1993 1,8

Market design and B-plan readied May 1993 1,9

Trading Debt Market June 1994 2

Trading Equity Market November 1994 2,3 Sources: NSE facbook 2007 and www.nseindia.com

4. Relevant aspects of competition

a. Impact of technology on transaction costs and access5

Trading system. NSE‟s trading system was cost-efficient, order driven, electronic and

based on satellites which reached locations all over India which resulted in a conversion

rate6 of 90% vs. 30% for BSE, 4 times lower membership costs and spreads narrowed by

75%.

Table 2 : Trading system timeline

Event Exchange Date

Start electronic trading NSE Debt Market NSE June 1994

Start electronic trading system BOLT BSE 1995

Launch website NSE NSE May 1998

Launch website BSE BSE 2000

Launch online trading NSE February 2000

Launch online trading system(BOLT) BSE 2002 Sources: http://www.bseindia.com/about/st_key and http://www.nseindia.com/

Customer oriented clearing and settlement. NSE reduced effective delivery lags from

1 month to +- 7 working days and eliminated counterparty risk with the establishment of

NSCCL.

5 Figures based on Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press

(Penguin Asia) and http://www.businessweek.com/archives/1996/b3490154.arc.htm -access on 22th October 2008 6 In this context, conversion rate is defined as the percentage of orders which result in transactions.

6

b. Governance & Management

Governance NSE. NSE started as a limited liability tax-paying company owned by

public sector financial institutions with a management separate from owners and brokers.

Governance BSE. “BSE had always functioned as a club like run by powerful groups of

Gujarati and Marwari businessmen7” with entry barriers to membership and governance.

In 2005 BSE has been corporatized and demutualised.

c. Product scope.

Today, both stock exchanges trade equity, bonds, options & derivatives. NSE first

entered the bond and equity market in June and November 1994. NSE & BSE introduced

simultaneously options and derivatives between June 2000 and November 2002. The

O&D segment was contested from June 2000 until July 2001 before NSE‟s quasi

monopoly. During the period of shifting, options and derivatives were not traded yet.

Hence, product scope cannot be the uttermost factor explaining NSE‟s victory.

Table 3: product scope timeline

Sources: http://www.bseindia.com/about/st_key and http://www.nseindia.com/

d. Geographical reach

Access of brokers to BSE was restricted to Bombay until 1995 with the introduction

of the Bombay Online Trading System (BOLT) system.

7 Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia)

Event Exchange Date

Launch of Bonds NSE June 1994

Launch of Equity Stock NSE November 1994

Launch of Derivatives trading (Index futures) NSE June 2000

Launch of Derivatives trading (Index futures) BSE June 2000

Launch of Index Options NSE June 2001

Launch of Index Options BSE June 2001

Launch of individ. securities Options NSE July 2001

Launch of individ. securities Options BSE July 2002

Launch of individ. securities Futures NSE November 2001

Launch of individ. securities Futures BSE November 2001

7

5. Overview of key facts and figures over time for both exchanges

Chart 2: Equity market share measured as share in total Indian equity turnover

NSE increases its markets share-defined as NSE‟s average daily equity turnover

divided by the sum of NSE‟s and BSE‟s average daily equity turnovers- from 2% in

November 1994 to 59% in November 1995.

Sources: http://www.bseindia.com/about/st_key and http://www.nseindia.com/

8

Chart 3: O&D market share measured as share in total Indian equity

turnover

Source: Prowess database and NSE factbook 2007

9

Chart 4: Market capitalizations of traded companies

Rather than obtaining listings, NSE announced from the beginning a list of stocks

in which trading was “permitted”-which was facilitated by Indian law8. Since this list

contained almost all the most valuable companies, market capitalizations for traded

companies at each exchange are almost equal from November 1994 until now.

Sources: Prowess database and NSE factbook 2007

8 Ayay SHAH and Susan THOMAS, “David and Goliath: displacing a primary market: How the start-up NSE surpassed India‟s largest stock market BSE in only one year “, Global Financial Markets, 2000

10

Chart 5: number of traded/listed companies

In the beginning NSE opted for the system of permitting companies to be traded

rather than being listed. That‟s why data for the number of listed companies at NSE are

only available since April 1999.

Sources: http://www.bseindia.com/about/st_key and http://www.nseindia.com/

11

Chart 6: distribution of listing places

Source: Prowess Database

12

Chart 7: number of members

For NSE, we have the yearly number of members from March 1995 until March

2002 after which we have monthly data until March 2007.For BSE, we have monthly

data for 1994 and 1995 from the “Key Statistics from the Mumbai Exchange for the year

1995” and from January 1999 until now from BSE‟s website.

Sources: http://www.bseindia.com/about/st_key ,http://www.nseindia.com/ and “Key Statistics from the

Mumbai Exchange for the year 1995”

13

Chart 8: city distribution of trade volumes in March 1995

Sources: Annual Report NSE 1995 and www.nseindia.com

14

6. Hypothesis and analysis

Chicken & egg problem

Our research question gives rise to the chicken & egg problem: to attract investors and

brokers, an exchange should have a large base of traded companies, but these will be

willing to be traded/listed only if they expect many investors or brokers to trade.

Scheme 1: the 4 actors at the core of the multiple market

Hypothesizes

We can breakdown the research question: “Why did NSE surpass BSE in 11 months on

the equity segment of the stock exchange market?” into 3 mutually exclusive9

hypothesizes:

1. NSE surpassed BSE primarily because NSE was more successful than BSE in

attracting traded companies;

2. NSE surpassed BSE primarily because NSE was more successful than BSE in

attracting brokers(category of intermediates);

3. NSE surpassed BSE primarily because NSE was more successful than BSE in

attracting investors and traders ( category of end-users).

9 Theoretically, we could imagine that attracting 2 or even 3 of those actors is equally critical.

15

Suppose now the 2nd

hypothesis10

is true. Since not all the brokers started trading

at NSE at the same moment (chart 7),one could wonder:

“Which types of brokers started trading at NSE first and why did they do so?”

To answer this question we have to:

analyze sources of heterogeneity among brokers (SOH);

understand key exchange decision factors for brokers (KEDF);

analyze which key exchange decision factors convinced brokers to trade at NSE

rather than at BSE.

Scheme 2: three hypothesizes

10 Similar reasoning for hypothesizes 1 and 3 can be developed.

16

Hypothesis elimination

There is some evidence for eliminating the 1st hypothesis since almost all valuable

companies were double traded from day 1 and since the system of permitted trading

allowed exchanges to trade shares without having to convince the companies to list.

2nd

and 3rd

hypothesis cannot be directly eliminated since the attraction of critical

masses of brokers, traders and investors was relatively slow and since NSE and BSE

were heterogeneous with respect to several key exchange decision factors for brokers and

brokers.

Five stories

According to the 1st story (vertical differentiation 1- economic factor–

liquidity), traders and/or investors with low liquidity needs were predominantly attracted

by the fee structure and customer oriented clearing-, settlement- and dematerialization

processes of NSE. Investors with high liquidity needs - being involved in high volume

trades with high market-impact costs –are the domestic institutional investors (banks,

mutual funds, insurance companies) and FII‟s.

According to the 2nd

story (horizontal differentiation 2- non economic factor -

ethnicity), non-Gujarati brokers, traders and/or investors with low needs to be part of the

Gujarati financial community were predominantly attracted by the fee structure and

customer oriented clearing-, settlement- and dematerialization processes of NSE.

According to the 3rd

story (vertical differentiation 3- dynamic economic and

political factors), traders, investors and public policy makers with a important long-run

financial and/or political interest to transform the Indian equity market into a

competitive and attractive market were predominantly attracted by the fee structure and

customer oriented clearing-, settlement- and dematerialization processes of NSE.

According to the 4rd

story (geographical access) traders and/or investors -who

originally used brokers -became member of NSE because of the possibility to trade

electronically outside Bombay.

According to the 5th

story (vertical differentiation- economic factor- arbitrage

needs) traders and/or investors with high needs to participate in risk-free arbitrage

17

transactions -occurring because of price differences for equal securities between BSE

and NSE- were among the 1st to execute a part of their orders at NSE.

11

In table 5 the idea is to formalize how exchange features can create and/or destroy

investor value generated by a transaction in which an investor buys a security. The core

idea is to breakdown the net present value generated by a security transaction into costs

and incomes cashed and discounted over time. For the monetary costs, we illustrate that

liquidity (see chart 2) and pricing policies (see 4.a and 9.d) impact customer value. For the non-

monetary costs, opportunity costs of time arise from the transaction ,clearing, settlement

and dispute resolution (see 4.a and 9.d). On the income side, we distinguish on the one hand

cash-flows linked to the ownership of the security- which exchanges cannot impact- and

on the other hand future incomes which can be expected to rise from better market

conditions such as lower margins, lower spreads, etc. By buying a security at an

exchange which offers those „transformational perspectives‟ competition is fostered. The

discount factor depends on the one hand on the risk-influenced by the degree of coverage

of counterparty risk by the clearing house (see 4.a and 9.d). - and on the other hand on the

timing of cash-flows influenced by the clearing- and settlement policies.

11 Construction arbitrage cannot explain tipping because an arbitrage transaction generates the same volume on both exchanges. But significant volumes created a new market on both exchanges.

18

Table 5 : Linkages between transaction value creation and features exchanges

NPV building block

Element 1st

Break-Down

Element 2nd

Break-Down

Element 3rd

Break-Down

Value Driver Exchange Feature

Total Cost monetary costs =price for investor

margin broker -

Price for broker Midmarket rate -

1/2 spread -

market –impact- cost Liquidity

Exchange fee Pricing

Clearing margin Pricing

Non monetary costs

Opportunity cost time transaction t/ succesf. order time/order Trad. system

Trad. tech

Conv. rate Trad. tech

t (clearing) Clear. policy

t(settlement) Set. policy

Op cost t. (disp.) unit price time Disp. Res. P.

Total Income

Y(ownership security ) -

Y(transf. market) Tranf pers.

DCF risk risk (Y(own security)) -

risk (trans.) risk (non deli.) non deli. rate technology

risk policy

risk(Y(transf M)) Transf persp

discount period avg t(Y own secur) -

avg t(deliv) Theo. t (deliv) Set. policy

avg t(delay) delay rate Set. policy

Avg. cond. delay Set. policy

Table 6: Legend for Table 5:

Abreviation Meaning Abreviation Meaning Abreviation Meaning

avg. average disp. dispute set. settlement

clear. clearing M market succesf. succcesful

cond. conditional p. policy trad. trading

conv. conversion res. resolution transf. transforming

deli. delivery sec. security Y income

19

Evidence for 5 stories

The 1st story would be supported by data showing that:

a) Initial liquidity12

and fees13

are lower at NSE;

b) Brokers/investors with low liquidity needs -with small transactions-start trading at

NSE (rejected since India‟s biggest financial institutions were at the basis of NSE‟s

creation. Moreover, interviews show that FIIS, investment funds and insurance

companies shifted early).

Because of lack of support by b), the 1st story is not the most plausible story.

The 2nd

story would be supported by data showing that:

a) Initial liquidity and fees are lower at NSE;

b) Share of Gujarati traders/investors in transactions at NSE is much lower than at

BSE14

.

The 2nd

story is thus supported by a) and b).

The 3rd

story would be supported by data showing that:

a) Initial liquidity and fees are lower at NSE;

b) Historical evidence proving the dynamic motives of the actors having created

NSE to transform the Indian equity market to be better off in the long run;15

c) A dynamic financial/political model proving the positive net present value for

NSE‟s main investor and public shareholding banks/policy makers like Mr. Singh

to execute/encourage NSE transactions –which are more expensive today than

similar ones at BSE- knowing that this would contribute to the creation of long-

run liquid, efficient and competitive Indian equity market- which would result in

long-run positive impacts on future transactions. This model should also take into

12 Supported by chart 2: Equity market share on p. 7 assuming that NSE‟s lower initial equity turnover is a good proxy for its lower

initial liquidity and higher initial market-impact cost. 13 Supported by part 4.a) on p.5 (and Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia) 14 Supported by paper “Ayay SHAH and Susan THOMAS, “David and Goliath: displacing a primary market: How the start-up NSE

surpassed India‟s largest stock market BSE in only one year “, Global Financial Markets, 2000” and by interviews with Finance Phd students with trading experience Vishwesh MEHTA and Lakshman MUDDU. 15 Khanna confirms that the finance Minister Singh and senior decision makers of public banks like Nandkari, the chairman of IDBI,

committed themselves to support NSE by providing liquidity to NSE in a coordinated manner in “Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia)”.

20

account the free-rider and coordination-costs problems. Game theory, finance and

strategic economics could be combined provided sufficient data;

d) Historical evidence proving the tremendous progress of the efficiency of the

Indian equity market- equivalent to the long-run pay-out of the initial market

impact cost investment16

- and evidence for the control of the coordination

problem17

.

Overall support for the 3rd

story seems relatively strong.

The 4th

story can be supported by a snapshot on the 1st March of 1995 of the

geographical scope of both exchanges.18

NSE allows trade in 5 cities through 233 VSATS

with already more than 50% of trade outside of Mumbai whereas BSE is still a monocity

exchange.

The 5th

story is supported by literature. “In the mid 90‟s huge volumes were due

to arbitrage across the exchanges”19

. The initially large price differences- running up to

10 INR on a Reliance base price of 300 INR- resulted in very high net returns in a week

between 1 to 3 % and then dropped because the risk free arbitrage attracted more and

more participants.

16 The paper “Susan THOMAS -How the financial sector in India was reformed” gives an impressive overview of how reforms of the

financial market led to higher transparency, higher liquidity, higher rate of diffusion of innovations, etc. 17 Government intervention- described in“Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia)” – has been dynamic factor behind the solution of the coordination problem. 18See also chart 8: city distribution of trade volumes in March 1995, p.13 19 A. JOGANI,K. FERNANDES, “Arbitrage in India: past, present and future”, October 11, 2002

21

7. Conclusion

NSE surpassed BSE on the equity segment in only 12 months because of 4 main

raisons.

First of all, non-Gujarati traders and/or investors with low needs to be part of the

Gujarati financial community were predominantly attracted by the fee structure and

customer oriented clearing-, settlement- and dematerialization processes of NSE.

Secondly, traders, investors and public policy makers with a important long-run

financial and/or political interest to transform the Indian equity market into a competitive

and attractive market were attracted by this potential to reshape the market and by the fee

structure and the customer oriented clearing-, settlement- and dematerialization processes

of NSE.

Thirdly, traders and/or investors -who originally used brokers -become member of

NSE because of the possibility to trade electronically outside Bombay.

Fourthly, price differences attracted arbitrage traders who supported liquidity at both

exchanges.

On the other hand, we could wonder why order flow did not completely drop to

nearly zero-levels20

once spreads at NSE were much more narrow. The strength of the

relationships build during the former decades between intermediaries and investors is

probably part of the explanation.

The synthesis is that the governmental intervention in this inefficient market was

successful because of BSE‟s weaknesses (unfavorable transaction costs, customer

processes and narrow geographical scope) and because of visionary market design-,

technology- and governance innovations implemented by a strong NSE management.

20 Which happenend in the DTB-liffe Case

22

8. Sources

a. Websites

www.business-standard.com

www.financialexpress.com

www.sebi.gov.in http://parliamentofindia.nic.in/lsdeb/ls10/ses4/2004089210.htm

www.nseindia.com

http://www.bseindia.com/about/st_key

http://www.businessweek.com/archives/1996/b3490154.arc.htm

http://news.oneindia.in/2007/04/12/bse-receives-overwhelming-interest-for-41-per-cent-stake-1176386869.html

b. Databases

CMIE Prowess Database

c. Scientific articles

Samir BARUA and Jayant VARMA,”Securities Scam: Genesis, Mechanics and Impact,” Journal of the Indian Institute

of Management,18, no.

E. CANTILLON, P. YIN: “Competition between exchanges: Lessons from the battle of the Bund.”February 2008

B. CAILLAUD, B. JULLIEN: “Chicken & Egg: competition among service providers”. Rand Journal of Economics,

Vol.94, No.2,Summer 2003 p.900-928

C.M.CHRISTENSEN: “The Innovators‟ Dilemma :When New Technologies Cause Great Firms to Fail”, Harvard

Business Review Press, 1997

A. JOGANI,K. FERNANDES, “Arbitrage in India: past, present and future”, October 11, 2002

R. RAJANR, L. ZINGALES(1995). “What do we know about capital structure? Some evidence

from international data.” Journal of Finance, 50, 1421–1460.

Kaolo RAO, The Banker, Asia: India - Decade Of Reform - India's Securities Went From Third To First World In

Record Time. But Is T+1 A Step Too Far,.(T+1, securities settlement system), 2004

Susan THOMAS -How the financial sector in India was reformed

Ayay SHAH and Susan THOMAS, “David and Goliath: displacing a primary market: How the start-up NSE surpassed

India‟s largest stock market BSE in only one year “, Global Financial Markets, 2000

d. Interviews

Interviews with IIMB Finance Phd students with trading experience ;Vishwesh MEHTA and Lakshman MUDDU on

15th and 25th of September 2008.

e. Other sources

NSE facbook 2007

“Key Statistics from the Mumbai Exchange for the year 1995”

Annual Report NSE 1995

India‟s Securities Markets- A brief history, ABN AMBRO Publications, 2007SRINIVISAN, From brokers club to

world-class exchange... -- BSE's tale of transition ,Business line investment World, 14 May 2000

VAIDYANATHAN, The Coming of Dematerialization- Business Line Financial Daily- 6 February 2000

23

24

9. Appendices

a. Literature review

i. E. Cantillon & P. Yin: “Competition between exchanges”

Introduction This paper studies the determinants of traders‟ exchange choice in a

famous 8 year-lasting episode. In this case the market for future on the Bund moved

entirely from LIFFE, the incumbent London-based derivatives exchange, to DTB, the

entering Frankfurt-based exchange. The paper tries to understand why both exchanges-

trading the same products- could co-exist although LIFFE‟s liquidity advantage. The

starting point is that trader heterogeneity must be part on any explained since dynamic

market share charts show that some traders shifted earlier than others. The paper builds a

model of exchange membership choice that clarifies the relationship between the decision

of where to trade and the decision of joining an exchange as member when membership

is not required for trading.

Relevant aspects of competition Firstly, the paper presents relevant aspects of

competition. LIFFE is portrayed as a member-owned exchange open outcry exchange

who launched automated trading in 1989. DTB is portrayed as member-independent

exchange where trading was conducted electronically from establishment in 1990 where

clearing was provided by DKV, a German company.

DTB‟s volumes were very low until mid-1991 where leading German banks with

a stake in DTB signed a Gentlemen‟s agreement to support liquidity on DTB by acting as

market makers. DTB and LIFFE competed in the product space by launching options,

futures and new services such as simultaneous trading.

DTB realized early that access of trading firms was critical. By signing

agreements with the French exchange MATIF(1993) and the Dutch regulatory authorities

(1994) and thanks to the Investments Services Directive(1996), EU-based trading firms

could have remote access to DTB. Contrarily, LIFFE members were forced to have staff

in London because of the open outcry feature of LIFFE for most of 1990s.

Finally, the “electronic trading versus open outcry-debate “, the macro-

economically driven growth of the bund future market and mergers were also relevant

aspects of competition.

25

Exchange choice model In the exchange choice model, traders decide to be

members of DTB, LIFFE, both exchanges or neither of them. Members are assumed to

take choice decisions function of the profits of those 4 options. Membership profits

consist of a fixed component- that does not vary with trader‟s trading in the Bund-, a

variable component, and an admission cost to the exchange.

Variable profits are the product of traded volumes and profits per contract. The

profits per contract depend on the average revenue on each contract, the transaction fee

paid to the exchange, the margin deposited at the clearing house (which has an

opportunity cost) and the impact cost –which is negatively correlated with liquidity- and

a broker fee paid if he‟s not member. This model has two distinctive features: exchange

membership is not necessary to trade on a market and traders can become members of

both exchanges.

Four hypothesizes According to the 1st story (vertical differentiation), traders with low

liquidity needs were predominantly attracted by the fee structure and market organization

of DTB.

According to the 2nd

story (access and adoption costs), traders who originally used

brokers become member of DTB because of the geographically determined access costs

who decreased because of access deregulation in the EU and because of electronic

trading at DTB.

According to the 3rd

story (horizontal differentiation 1), DTB was more dynamic

in broadening its product portfolio.

According to the 4rd story (horizontal differentiation 2- non economic factors), political

nationalistic factors pushed German banks to trade on DTB.

Data The novel panel dataset contains individual trading firms‟ membership status at

each exchange together with other firm characteristics, and pricing, marketing and

product portfolio strategies by each exchange.

The authors check to what extent the increase in membership of DTB is due to

newcomers or to traders switching from DTB to LIFFE. Since newcomers chose DTB at

a ratio of 4 to 1 and since the size of the market for exchange members increased

significantly, the battle of the Bund is a story of newcomers rather than switchers.

26

Cumulative distribution functions of the time at which groups joined DTB proof

that the country (driving degree of access deregulation)and business type of the groups

matter: German, Dutch and French groups –who can have early access- and investments

banks switch earlier.

The empirical model contains several sources of variation. Traders vary by

geographical presence, headquarter locations and business models. There are also three

sources of variation over exchanges and time: (1) access deregulation (time-and country

specific) , (2)exchange fees, margins, liquidity and volatility (time- and exchange

specific) and (3) product scope (time- and exchange specific). The empirical model

estimates the variables in the trader‟s profit functions with a multinomial logit model

wherein trading reoptimize every period.

Geographically-determined access costs are highly significant and explain most of

the variation in the data.

Linking the results to the four stories For 1st story (vertical differentiation-liquidity),

regression results show that traders took liquidity into account. However, which traders

variable signals value for liquidity? For the 2nd

story (access and adoption costs), the

figures- showing that it‟s a newcomers rather than a switchers‟ story- suggest that DTB‟s

success was due to its ability to attract new members and that this ability was related to

deregulation.

For 3rd

story (horizontal differentiation 1),econometric results are mixed. For the 4rd

story (horizontal differentiation 2- non economic factors), there is no evidence that

German headquartered traders were biased in favor of DTB.

Conclusions Liquidity matters but national regulation, product portfolio and user

convenience all provide scope for differentiation. The battle of the Bund is a story of

newcomers rather than switchers. Geographical presence is a key determinant of adoption

time, and it is clearly linked to the timing of access deregulation.

Lessons for this case: I would like to incorporate the following aspects of this excellent

paper in my study:

The methodological algorithm: related literature-> qualitative and historical

description relevant aspects of competition -> key charts -> model and

hypothesizes -> testing hypothesizes -> conclusion.

27

The role of vertical differentiation

The role of access costs: NSE‟s remote access and the relative densities of the

exchanges‟ office networks across India

The role of product scope: NSE market domination in the O&D segment is

overwhelming

The role of service scope: NSE has always been 1st mover in IT-applications and

user convenience

Interview sessions with E. Cantillon, Lakshman Vijay Muddu21

and Vishwesh Mehta,

highlight the following extra dimensions and/or differences:

A multiple stock exchange is three-sided market linking not only traders and

investors but also listed companies.

The inefficiencies before NSE‟s entry which were the trigger for the

governments‟ intervention to open the market

The role of official and unofficial membership requirements: the Gujarati- and

club-based membership model of BSE vs. the open model of NSE

The role of dematerialization, technology and the clearing- and settlement

agencies as key drivers behind NSE‟s cheaper, faster and more efficient service

a. Christensen: “The Innovators’ Dilemma”

Objectives and introduction Christensen wants to solve the puzzle of why well

managed companies – that are competitive, listen to their customers and invest

aggressively in new technologies- fail to stay atop their industries when they confront

certain types of markets and technological changes.

His research began with a study of the collapse at the end of the 80‟s of Digital

Equipment, the leading manufacturer of minicomputers. The decisions to consider Unix

as unimportant and to consider the personal computer as an architecture not to worry

about led to the demise of this company and were made when everyone thought that is

was one of the best run companies in the world.

Threat, opportunity of disruptive technology The disruptive technologies model has

three pieces. The first concept – the performance that customers can absorb- suggests

that there is a trajectory of improvement in the product or service that the customers can

28

absorb over time. This line is a distribution of customers around a median that varies

from demanding customers to undemanding customers.

The second concept- the improvement trajectory- is a separate trajectory of

improvements that innovators make available by introducing new and improved product

generations generation after generation. This curve slopes upward faster than the ability

of customers to absorb it: companies targeting demanding customers often overshoot

their customers absorptive ability.

The third concept relates to the difference between sustaining technological

improvements and disruptive technology. Sustaining technologies make much better

products for the best customers that could be sold for higher margins. Disruptive

technologies bring to the market something that is worse, in terms of performance valued

by the mainstream customers. Disruptive technologies are simple and missed by

established companies because their customers don‟t use them.

Management of sustainable and disruptive technologies The successful use of

disruptive technologies begins in the low-end, low-profit market segments and then

moves as quickly as possible into the mainstream markets by coming in at the bottom of

the markets in terms of desirable niches of the mainstream market. Examples of

disruptive technologies are minimills in the steel industry, self-administered distance

education programs and internet telephony.

When new, disruptive technologies are first on the horizon, there are two strategic

tracks that can be taken in commercializing those technologies. The first track is to

stretch the technology until it can be used in the existing market segment, with existing

customers. The second track is to find or create a new market segment. Those

companies know the technology is not good enough, but they create a market that will

value the attributes of the technology as it exists today. Only companies who follow the

2nd

track succeed. The ability of on organization to succeed using disruptive technologies

depends on whether or not corporate resources, values and processes give the

organization capabilities to properly frame the question of whether the disruptive

technology is a marketing rather than a technological problem.

The probability of a company surviving one of these transitions by trying to address it

from within the main company, or somehow by trying to change the main company so it

29

can be competitive in the next wave, is zero. However, successful cases such as the

creation of a separate IBM pc organization and the shifts from Charles Schwab over

Merrill Lynch to E-trade prove that setting up a new organization rather than trying to

transform the old one can allow the established groups to stay at the top in their

profoundly changed market.

Lessons for this case Electronic trading could be considered as a disruptive technology

for which challenger NSE creates a new market for traders and investors outside

Mumbai. The technological aspect in this case should not be neglected. Nevertheless,

analogy is not complete since BSE in 1994 could not be considered as a well managed

company for which Christensen‟s theories explain failure.

b. Indian financial sector in the beginning of the nineties

Until the late 80‟s Indian state dominated the inefficient financial sector

through22

:

Outdated state-owned banks;

the enforced purchase of government bonds for banks, pension funds and

insurers;

the absence of a developed derivatives market;

control of financial transactions by the RBI( setting interest rates on

various products) and the Ministry of finance (price control at security

issuing);

entry-barriers in sectors of banks, mutual funds, brokerages firms,

insurance company and securities exchanges;

capital controls such that Indian households and companies had to limit

their funding to the domestic market;

This inefficient way of organizing markets in emerging economies-which are

especially vulnerable to the risk of being captured by vested interests 23

- led to rents

captured by insiders dominating this market.

22 Susan THOMAS -How the financial sector in India was reformed 23 R. RAJANR, L. ZINGALES(1995). “What do we know about capital structure? Some evidence from international data.” Journal of Finance, 50, 1421–1460.

30

Towards the end of the 1980s, new economic forces emphasized the need for

modernization of the financial system:

1. The higher economic growth and boom in IPO‟s underscored the

limitations of the BSE club-based market practices;

2. The balance of payments crisis in 1990 pushed policy makers to attract

FDI and portfolio flows by making market design more appealing to

Western investors.

Both financial institutions and policy were facing the dilemma of choosing

between creating new institutions and reforming existing ones. When Mr. Manmohan

Singh came to Government in June, 1991 he appointed within a few weeks the”

Narasimhan Committee to look into the financial aspect when he was introducing his

macro-economic restructuring”24

.

The problems in the secondary equity market liquidity led domestic financial

institutions to create the Over the Counter Exchange of India,Ltd (OTCEI). “OCTCEI

was inspired by the NASDAY system of using multiple, competing market makers.”25

This national market trading shares that had very low liquidity on BSE was unable to

create a liquid market. This case showed that international market design cannot always

be transplanted and “raised the level of complacency among the incumbent exchanges

and brokers”.26

Government created the Securities and Exchange Board of India (SEBI) in 1988. The

independence and the clear and sole focus on regulation of securities markets were the

first modern elements in India‟s financial architecture. SEBI imposed some focused

reforms reducing freedom of existing exchanges (e.g.; unbundling the brokerage free

from the price for a share when a broker issued a contract note to a customer). Those

reforms were blocked by BSE which persuaded policy makers that incremental reform

was not feasible and that a new exchange should be created

c. Mehta scam

The short-term trigger for the creation of NSE was the Harshad Mehta scam.in

1992. This scandal led to the crash of the Indian stock markets in April 1992. Harshad

24 http://parliamentofindia.nic.in/lsdeb/ls10/ses4/2004089210.htm -last access on 23rt October 2008 25 Susan THOMAS -How the financial sector in India was reformed 26 Susan THOMAS -How the financial sector in India was reformed

31

Mehta – “poster boy of the new can-do attitude of the Indian investor”27

- and other

brokers had manipulated the Indian banking system to siphon off the funds from the

banking system and builded large stock positions. They diverted funds to the “tune of

over 35 billion INR28

” from at least ten major Indian commercial banks, foreign banks

like Citibank, Standard Chartered PLC and ANZ Grindlays and the National Housing

Bank-which is a subsidiary of Reserve Bank of India- during the period April 1991 to

May 1992.

The used mechanism was the Ready Forward Deal (or repurchase agreement); in

essence a secured short term inter bank loan done against government securities.

Normally, the borrowing bank sells the securities to the lending bank and buys them back

at the end of the loan period at a higher price-which represents the interest on the loan.

During the scam the RF was transformed from a secured inter bank loan to a unsecured

loan to a broker by three crucial steps:

i) The intermediation of a broker in the settlement process;

ii) The crediting of the broker‟s account;

iii) The persuasion of the lending bank to dispense with security for the loan

by the broker.

The money would have gone to share purchases by Mehta and the “equally

powerful bear cartel, represented by Hiten Dalal,A.D. Narottam and others”, to bribes

and to foreign currency purchases. The immediate impact of the scam was a sharp fall of

the share prices (Sensex decrease of 35% in 3 months between the peak on 1st of April

and 1st July); a market capitalization loss of 1000 billion INR. Technically speaking,

scam resulted in withdrawal of 35 billion INR, which is a relatively small amount with a

little impact on prices. But the phenomenon‟s of tainted shares and perceived slow down

in reforms were the two main raisons for the fall.

Policy response to the scam

Government reacted by discovering and punishing the guilty, recovering the

money and investigating more radical financial reforms. The task of discovering and

punishing the guilty had been allocated to the Central Bureau of Investigation and the

27 Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia) 28 Samir BARUA and Jayant VARMA,”Securities Scam: Genesis, Mechanics and Impact,” Journal of the Indian Institute of Management,18, no.1

32

Joint Parliamentary Committtee which affected people -holding key positions in the

India's financial sector29

.

In parliament, Minister of Finance Singh stressed “prima facie evidence of a

nexus between brokers and bank officials” and the need to create competition between

exchanges as it is the case in China where “ the new stock exchange in Chenzen allowed

computerized transactions and the state exercising a highly regimented control on the

listing of companies.30

”

Government tapped the Industrial Development Bank to take the lead of the

project of creating competition for BSE. The Industrial Development bank of India

(IDBI) was a government-owned institution dedicated to providing long-term finance in

India. Nandkari, the chairman of IDBI, asked Ravain Narain- now managing director and

CEO of the NSE- and 4 other employees of IDBI to build this online exchange rapidly.

Among those who drew up the blueprint for the National Stock Exchange (NSE),

was-besides Narain- R H Patil, a development banker who later became the NSE's

founder chairman. “"Our mandate was to set up a nationwide securities exchange that

would offer modern trading facilities across the breadth of the country," he says. A Hong

Kong-based consultant was appointed and in eight months the plan was ready”31

.

Intelligentsia and BSE brokers –who called the new exchange the “sarkari share bazaar

(government stock exchange)”were confident that NSE would put no challenge because

“exchanges are not about technology, they are about people32

”.

d. Relevant aspects of competition

Trading technology NSE has been systematically 1st mover in the technological field by

introducing respectively:

Satellite and terminal- based real-time trading outside Bombay

from day 1;

A website in May 1998;

Online trading in February 2000.

NSE received several awards rewarding its IT performances:

29 Including K. M. Margabandhu, then CMD of the UCO Bank who was arrested and V. Mahadevan, one of the Managing Directors

of India‟s largest bank, the State bank of India who was had to quit his job. 30 http://parliamentofindia.nic.in/lsdeb/ls10/ses4/2004089210.htm -last access on 23rt October 2008 31 Kaolo RAO, The Banker, Asia: India - Decade Of Reform - India's Securities Went From Third To First World In Record Time. But

Is T+1 A Step Too Far,.(T+1, securities settlement system), 2004- http://goliath.ecnext.com/coms2/summary_0199-95177_ITM -last

access on 23rd October 2008 32 Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia)

33

Award for 'Best IT Usage' by Computer Society of India in 1996 &

1997

Dataquest Award for „Top IT User‟ in 1996;

„Cyber Corporate of the Year Award‟ in 2008

„CHIP Web Award‟ by CHIP Magazine in 2009.

Trading system The key characteristics of the trading system at the NSE were the

following:

Trading was order-driven and orders were placed in an electronic central limit

order book

Satellite technology was used to reach locations all over India from a central

trading computer located in Bombay

The tick size was uniformly set at INR 0.05 for all stocks.

The decision to be order-driven was controversial because of 2 reasons. The 1st reason

concerns both national (BSE, OTCEI) and international (NYSE, LSE, …) prevalence of

quote-driven exchanges. Secondly, quote-driven markets reduce the risk of buyers and

sellers not finding counterparts in a timely fashion in illiquid securities. But the symmetry

among all agents and the elimination of market dealers and their complex monitoring

were determining factors for NSE to go for a order-driven market in the aftermath of the

scam.

NSE chose very small aperture terminals (VSAT‟s) for satellite-based

communications as distribution channel. Reliability and flexibility in deployment were

main drivers for this technological choice. NSE‟s current Managing Director explains the

necessity to set up an own telecom company: “There was no viable telecom infrastructure

on the basis of which a state-of-the-art exchange could be launched. We obviously could

not rely on terrestrial lines.33

” Equipment and software from vendors in the U.S., Canada,

France and Israel were put together in a consortium led by Tata Consulting Services.

Investors had real-time access to a single screen through the VSAT network which as

linked to the computers in brokers‟ offices. Knowing the exact time and price of each

transaction reduced uncertainty and transactions costs. This electronic trading resulted in

33 Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia)

34

a conversion rate of 90% in sharp contract with the 30% conversion rate for BSE‟s open-

outcry 30% conversion rate.

Since BSE had to react, “BSE installed all the equipment needed by brokers‟ offices,

including the VSAT‟s, antennas, Uninterrupted Power Systems and other internal

connections.”34

. It started to operate the Bombay Online Trading System (BOLT) which

was still restricted to Bombay, a far cry from NSE‟s national reach.

The tick size on the BSE ranged from Rs.0.25 to Rs.1.00. BSE members lobbied for

large ticks in order to maximize spreads. In order to favor the interests of NSE chose a

uniform tick size of Bs.0.05 for all stocks.

Clearing system Clearing consist of checking that both sides agrees with the exchange

records and can consist of netting of trades. Futures-style settlement involves significant

counterparty risk.

On the BSE, counterparty risk was handled by appealing to the ethnicity that

linked the BSE members. Delays were accepted and collective accommodating loans

were granted to the member in distress. This practice was harmful to investors and new

brokers. In NSE‟s first months, no alternative to this ethnical-club-like-solidarity-system

was provided. But the National Securities Clearing Corporation (NSCC), a wholly owned

subsidiary of the NSE, was created in April 1996.

NSCC requires collateral in the form of initial margins and mark-to-market

margins. As counterparty to the net settlement obligations of all brokers, it fulfills those

obligations in the case of a brokers default.

Today, “trades are guaranteed both by NSCCL and the Bank of India

Shareholding (BOISL)” and each exchange “assumes the counter-party risk of each

member”.35

Settlement system Settlement is the actual delivery of cash and securities.

Before NSE‟s entry, BSE followed an “account period” system in which

transactions made in a single account during each two week trading period were netted.

34 Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours, HBS press (Penguin Asia) 35 India‟s Securities Markets- A brief history, ABN AMBRO Publications, 2007

35

In practice, trades were netted over a month because of the system of badla and

administrative delays In addition, 6900 of the 7000 shares traded were not settled

centrally through the Clearinghouse but bilaterally between BSE members, which

increased the administrative complexity and settlement risk. It took from one to three

months before share selling price amounts were obtained.

In 1994 NSE opted for a netting period of one week, using physical share

certificates, with a highly efficient implementation. The money- equivalent to the net

open position at the end of the week- was obtained with a lag of 5 working days after

netting and thus a total lag of 5 to 10 working days. Since April 1996, The National

Securities Clearing Corporation (NSCCL) determines the funds/securities obligations of

members and ensures that trading members meet their obligations.

In 2002, SEBI obliged all listed securities- both at NSE and BSE- to be settled

on a rolling T+5 basis and the Account Period settlement was discontinued . Initially BSE

was opposed to the introduction of this rolling system and preferred “a modified system

of badla to suit the rolling settlement system”. Managing Director Rathi favoured the

introduction of the rolling settlement “only with adequate supportive tools that would

ensure liquidity in the market-place.”36

Since 2003, all securities are settled in a T+2 rolling settlement. On the trade day,

NSCCL (in the case of NSE)/the Clearing House (in the case of BSE) notifies the trade

details to clearing members and custodians. The custodians affirm the trades to

NSCCL/The Clearing house by day T+1 –which nets the position of counterparties do

determine their obligations. The transfer of securities/funds is done on day T+2.

Dematerialization The introduction of dematerialized trading “was the precursor to the

next big changes- rolling settlements and paperless trading.37

”

36 SRINIVISAN, From brokers club to world-class exchange... -- BSE's tale of transition ,Business line investment World, 14 May 2000

37 VAIDYANATHAN, The Coming of Dematerialization- Business Line Financial Daily- 6 February 2000

36

The holding and trading securities in paperless mode was an alien concept in

India before 1995. As the FIIs complained about the paperwork as a major constraining

factor, the government and SEBI passed the Depositories Act in 1996 was passed and

the NSE launched the National Securities Depository Ltd (NSDL). NSE started

dematerialized trading and settlement in December 1996.But the depository concept did

not gain popularity because of the lack of liquidity. Therefore SEBI made demat trading

in stock mandatory in phases.

Governance

Governance NSE The NSE started as the first public sector exchange in the world. The

governance structure adopted at the NSE differs from the BSE model along 3 dimensions

1.Ownership: The exchange is a limited liability tax-paying company owned by public

sector financial institutions, particularly the Industrial Development Bank of India

(IDBI).38

The government-owned IDBI played a leading role in the establishment of the

NSE. The chairman of IDBI - Nandkarni - served as the chairman of the NSE, and the

task of building the NSE itself was handed to a team of five that left IDBI for this

purpose. Nandnkarni gave full power to Narain‟s team and he urged them “to go do this,

do it quickly and don‟t tell me what you‟re doing.”Ravi Narain became Managing

Director of NSE. As an MBA from Wharton, he was “an unusual choice.39

”

2. Management: The shareholders appoint a board of directors and a management team.

Brokerage firms do not own the exchange and are represented neither on the board of

directors nor the management team. This means that “while BSE elected one of the

brokers to administer the exchange, the NSE was run professionally by a Managing

Director.”40

At NSE the principles of separation between management and ownership and

value-maximization are reflected by this governance form.

3. Role brokers: Brokerage firms are franchisees of the exchange and express their views

39

Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours,

HBS press (Penguin Asia) 40

Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours,

HBS press (Penguin Asia)

37

through membership on a variety of Exchange-appointed committees working on such

things as market design and dispute resolution. By opening barriers, brokers were no long

“assured of fat-cat profits, but where disciplinized by fair competition.

Governance BSE Before NSE‟s entry, “BSE had always functioned as a “club like” run

by powerful groups of Gujarati and Marwari businessmen41

” with entry barriers to

membership and governance. In 2005 BSE has been corporatized (from an Association

of Persons) and demutualised under the provisions of the Companies Act, 1956, pursuant

to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the

Securities and Exchange Board of India (SEBI).

Core points of this demutualization scheme are:

Voting rights of trading shareholders are restricted to 5%;

Trading members‟ representation in Board may not exceed 25%42

;

The CEO has to be” ex-officio director”43

;

Rights trading shareholders should “rank pari passu with trading rights other

members”44

In April 2006, the remaining 41% was sold to international and national institutional

and individual investors with “overwhelming interest.45

”

41

Tarun KHANNA, Billions of Entrepreneurs: How China & India are reshaping their Futures-and Yours,

HBS press (Penguin Asia) 42

Nevertheless, from table 4 we imply that 3 out of 9 directors are trading member directors. 43

http://www.sebi.gov.in/stkexchange/BseCorpDMut.html - last access on 26th

October 2008

44 http://www.sebi.gov.in/stkexchange/BseCorpDMut.html - last access on 26

th October 2008

45 http://news.oneindia.in/2007/04/12/bse-receives-overwhelming-interest-for-41-per-cent-stake-

1176386869.html - last access on 26th

October 2008

38

Table 4: BSE Board of Directors

Non-Excecutive Chairman

Mr. Jagdish Capoor Chairman, HDFC Bank Limited

Public Interest Directors

Mr. Jitesh Khosla Joint Secretary, Ministry of Corporate Affairs, Govt. of India

Mr. S. N. Menon - IAS (Retd.) Chairman, Nicco Parks & Resorts Limited

Shareholder Directors

Mr. Ishaat Hussain Finance Director, Tata Sons Limited

Mr. Vivek Kulkarni - IAS (Retd.) Chairman and CEO, Brickwork India Pvt. Ltd.

Mr. Sudipto Sarkar Senior Advocate, Kolkata High Court

Trading Member Directors

Mr. Prakash R. Kacholia Designated Director

Emkay Global Financial Services Limited

Mr. Balkishan Mohta

Mr. Siddharth J. Shah Designated Director

J.G.A. Shah Share Brokers Private Limited

Product scope Today, both stock exchanges trade equity, bonds, options & derivatives.

NSE first entered the bonds market in June 1994. Then NSE wanted to compete with

BSE in equities trading-which it launched in November 1994. Rather than obtaining

listings-which involved delays and the risk of non-persuasion- of the firms- the NSE

chose to permit trading in the 1200 most liquid stocks. Gradually, NSE obtained

significant income-generating listings.

For the options & derivatives, NSE & BSE introduced simultaneously index

futures, index options and options and futures on individual securities between June 2000

and November 2002. The O&D segment was heavily contested with capricious market

share jumps from June 2000 until July 2001. Since July 2001, NSE has always dominated

the O&D market with market shares above 90%.

39

Service scope

BSE has been the first exchange in selling information products and providing financial

trading. More recently, NSE innovated by launching a NSE research unit and 18 media

channels in joint venture with CNBC.

Table 5: service scope timeline

Event Exchange Date

Launch selling information products BSE Since 80’s

Launch selling information products NSE 1994

Launch Training Institute BSE 1989

Launch Training in Financial Markets NSE July 1998

Launch of NSE Research NSE February 2000

Launch of NSE-CNBC TV 18 Media Centre NSE January 2007