NYSE moves into Asia with NSE deal

The NSE was formed in 1992 by a group of domestic banks and financial institutions. The exchange started operations in 1994, first with wholesale debt and then equities. Conceived as a fully electronic trading platform, it offered much needed transparency and efficiency to investors. Within a year, the NSE overtook the BSE as the largest stock exchange in the country in terms of traded volume.

NSE's benchmark index, the S&P CNX Nifty, was launched in 1996. The exchange launched internet trading in 2000, which has attracted a large number of retail investors into the market and has considerably improved price efficiency. The year 2000 also saw the launch of index futures, which was followed by trading in index and stock options in 2001.

For the financial year ended 31 March 2006, NSE had reported a net profit of Rs191.42 crore, or Rs42.54 per share, an increase of 23.49 per cent over Rs155.01 crore, or Rs34.45 per share, reported for the previous year. Total revenues for 2005-06 increased 44.23 per cent to Rs472.51 crore from Rs327.6 crore.

NSE is now one of the top-10 stock exchanges in the world in terms of number of daily transactions or trading volume, even though the Indian market is only the fifth largest in Asian in terms of total market capitalisation.

Trading volumes have been going up steadily over the last many years as the Indian stock market has attracted considerable investment flows from overseas investors. India has become one of the most widely tracked emerging market with nearly 1,000 foreign institutional investors (FII) registered with market regulator SEBI.

The BSE, which lags behind the NSE in trading volume though the number of listed companies on the BSE is much higher than NSE, is also planning to offload shares to investors in the near future. The BSE was turned into a company last year after existing as an association of persons for more than a century.

Besides LSE, Deutsche Boerse, NASDAQ and Singapore Stock Exchange are rumoured to be interested in acquiring a strategic stake in BSE. The BSE may also come out with an IPO later, but the NSE has no plans for an IPO as the exchange is confident that it can meet its capital requirements from other sources.