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Fact Book

2010

NATIONAL STOCK EXCHANGE OF INDIA LIMITED


June 2010
C O N T E N T S

SECTION 1- NATIONAL STOCK EXCHANGE OF INDIA

Introduction ........................................................................................... 3

Incorporation and Management ....................................................................3

Market Segments And Products .....................................................................3

Achievements/Milestones ........................................................................... 5

Developments during the year......................................................................6

Facts And Figures ..................................................................................... 8

Technology ............................................................................................. 8

NSE Family ........................................................................................... 11

NSCCL ................................................................................................ 11

NSDL ................................................................................................ 12

NSE Infotech services Ltd ......................................................................... 12

NSE.IT ................................................................................................ 12

IISL ................................................................................................ 12

Dotex International Ltd. ........................................................................... 12

NCDEX ................................................................................................ 13

NCCL ................................................................................................ 13

PXIL ................................................................................................ 13

SECTION 2- MEMBERSHIP ADMINISTRATION

Eligibility Criteria................................................................................... 19

Trading Membership ................................................................................ 19

Clearing Membership ............................................................................... 20

Currency Derivative Membership ................................................................. 20

Growth and Distribution Of Members............................................................ 20

SECTION 3- LISTING OF SECURITIES

Listing Criteria ...................................................................................... 27

Listing Agreement .................................................................................. 27

Compliance By Listed Companies ................................................................ 27

Disclosures By Listed Companies ................................................................. 28

De-Listing ............................................................................................ 28

CM Segment ......................................................................................... 29

Listing Fees .......................................................................................... 30


Shareholding Pattern ............................................................................... 30

WDM Segment ....................................................................................... 30

Contd...

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Contd...

Funds Mobilisation On the Exchange ............................................................ 31

Initial Public Offerings (IPO’s) ............................................................ 32

Rights Issues ................................................................................. 32

Preferential Allotment/ Private Placement............................................ 32

QIPs ........................................................................................... 32

SECTION 4- CAPITAL MARKET SEGMENT

NEAT - CM System................................................................................... 49

Market Performance................................................................................ 49
Trading Volume ............................................................................. 49

Liquidity ..................................................................................... 50

Distribution of turnover ................................................................... 51

Market Capitalisation ...................................................................... 52

Sectoral Distribution of Top 50 Companies ............................................ 52

Trading Records during 2008-09 .......................................................... 53

Internet Trading ............................................................................ 53

On-line IPOs ................................................................................. 54

Indices ................................................................................................ 54

Mutual Funds And Exchange Traded Funds ...................................................... 56

Charges ............................................................................................... 57

Clearing & Settlement ............................................................................. 58

Settlement Agencies ....................................................................... 59

Settlement Cycles .......................................................................... 60

Settlement Statistics ...................................................................... 60

Risk Management System .......................................................................... 60


Capital Adequacy ........................................................................... 60

On-Line Monitoring ......................................................................... 60

Margin Requirements ............................................................................... 61

Categorisation of newly listed securities ....................................................... 61

Value at Risk Margin ................................................................................ 61

Extreme Loss Margin ............................................................................... 62

Mark to Market Margin ............................................................................. 62

Close out Facility ................................................................................... 62

Index –based Market wide Circuit Breakers..................................................... 63

Settlement Guarantee Fund ...................................................................... 63

Contd...

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Contd...

SECTION 5- WHOLESALE DEBT MARKET SEGMENT

Trading Mechanism ................................................................................. 87

Market Performance................................................................................ 88

Turnover...................................................................................... 88

Market Capitalistion ...................................................................... 90

Transaction Charges ................................................................................ 90

Settlement ........................................................................................... 90

FIMMDA-NSE MIBID/MIBOR ......................................................................... 90

Zero Coupon Yield Curve .......................................................................... 91

NSE-VAR System ..................................................................................... 92

GOI- bond Index..................................................................................... 93

SECTION 6- FUTURES &OPTIONS SEGMENT

Trading Mechanism ................................................................................ 107

Contract Specification ............................................................................ 107

Selection Criteria For Stocks And Index Eligibility For Trading ............................. 108

Trading Value & Contracts Traded............................................................... 109

Product wise turnover on F&O segment ............................................... 110

Futures and Options on Benchmark Indices ........................................... 111

Sectorwise Stock Futures & Options Turnover ....................................... 111

Participant wise turnover on F&O Segment ........................................... 112

Member wise turnover on the Exchange ............................................... 113

High Volume Members .................................................................... 113

Internet Trading ........................................................................... 113

Traded Value Records ..................................................................... 113


Top 20 Futures And Options Contracts ......................................................... 114

Number of Trades .................................................................................. 114

Charges .............................................................................................. 114

Clearing And Settlement.......................................................................... 115

Clearing Mechanism ....................................................................... 115

Settlement Mechanism ................................................................... 116

Settlement Statistics ..................................................................... 117

Risk Management System ......................................................................... 117

NSE-SPAN® ......................................................................................... 118

Margins ...................................................................................... 119

Position Limits ............................................................................ 119


Contd...
SPAN® is a registered trademark of the Chicago Mercantile Exchange (CME) used here under license.

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Contd...

SECTION 7- CURRENCY DERIVATIVES SEGMENT

Trading Mechanism ................................................................................ 143

Contract Specifications for Currency Futures ................................................. 143

Turnover............................................................................................. 145

Traded Value Records ............................................................................. 146

Clearing and Settlement.......................................................................... 146

Clearing Entities .......................................................................... 146

Clearing Mechanism ...................................................................... 146

Settlement Mechanism ................................................................... 146

Settlement Statistics ..................................................................... 147

Margining System ......................................................................... 147

Position Limits for Currency Futures .................................................. 151

Risk Management .................................................................................. 151

SECTION 8- INVESTOR SERVICES, ARBITRATION

Investor Services ................................................................................... 157

Arbitration .......................................................................................... 157

SECTION 9- KNOWLEGDE INITIATIVE

About NSE’s Certification in Financial Markets (NCFM) ..................................... 163

New Modules introduced under NCFM in 2009-10 ............................................ 163

NSE’s Certified Capital Market Professionals (NCCMP) ...................................... 164

CBSE- NSE joint Certification in Financial Markets ........................................... 164

NSE’s Certified Capital Market Professionals (NCCMP) ...................................... 164

NSE – Manipal Education Training Programs ................................................... 165

NSE Research Initiative ........................................................................... 166

Investor Awareness and Education Programmes ............................................. 166

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National Stock Exchange
of India 1
2
National Stock Exchange of India 1
Since its inception in 1992, National Stock Exchange of India has been at the vanguard of change
in the Indian securities market. This period has seen remarkable changes in markets, from how
capital is raised and traded, to how transactions are cleared and settled.

The market has grown in scope and scale in a way that could not have been imagined at the time.
Average daily trading volumes have jumped from ` 17 crore in 1994-95 when NSE started its Cash
Market segment to ` 16,959 crore in 2009-10. Similarly, market capitalization of listed companies
went up from ` 363,350 crore at the end of March 1995 to ` 6,009,173 crore at end March 2010.
Indian equity markets are today among the most deep and vibrant markets in the world.

NSE offers a wide range of products for multiple markets, including equity shares, Exchange
Traded Funds (ETF) , Mutual Funds, Debt instruments, Index futures and options, Stock futures and
options, Currency futures and Interest rate futures. Our Exchange has more than 1,400 companies
listed in the Capital Market and more than 92% of these companies are actively traded. The debt
market has 4,140 securities available for trading. Index futures and options trade on four different
indices and on 190 stocks in stock futures and options as on 31st March , 2010. Currency futures
contracts are traded in four currency pairs. Interest Rate Futures (IRF) contracts based on 10 year
7% Notional GOI Bond are also available for trading.

Incorporation and Management


NSE was incorporated in November 1992, and received recognition as a stock exchange under
the Securities Contracts (Regulation) Act, 1956 in April 1993. It is managed by professionals who
do not directly or indirectly trade on the Exchange. The trading rights are with trading members
who offer their services to the investors. The Board of NSE comprises of senior executives from
promoter institutions and eminent professionals, without having any representation from trading
members. While the Board deals with the broad policy issues, the Executive Committees (ECs),
which include trading members, formed under the Articles of Association and the Rules of NSE for
different market segments, set out rules and parameters to manage the day-to-day affairs of the
Exchange. The day-to-day management of the Exchange is delegated to the Managing Director who
is supported by a team of professional staff. Therefore, though the role of trading members at NSE
is to the extent of providing only trading services to the investors, the Exchange involves trading
members in the process of consultation and participation in vital inputs towards decision making.

Tables 1-1 and 1-2 gives the composition of its Board of Directors and the Executive Committees.

Market Segments and Products


NSE provides a trading platform for of all types of securities for investors under one roof – Equity,
Corporate Debt, Central and State Government Securities, T-Bills, Commercial Paper (CPs),
Certificate of Deposits (CDs), Warrants, Mutual Funds (MFs) units, Exchange Traded Funds (ETFs),
Derivatives like Index Futures, Index Options, Stock Futures, Stock Options Currency Futures and
Interest Rate Futures. The Exchange provides trading in 4 different segments viz., Wholesale Debt
Market (WDM) segment, Capital Market (CM) segment, Futures & Options (F&O) segment and the
Currency Derivatives Segment (CDS).

The Wholesale Debt Market segment provides the trading platform for trading of a wide range of
debt securities which includes State and Central Government securities, T-Bills, state development
loans (SDLs), bonds issued by public sector undertakings (PSUs), floating rate bonds (FRBs),
zero coupon bonds (ZCBs), index bonds, commercial papers (CPs), certificate of deposits (CDs),

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corporate debentures, SLR and non-SLR bonds issued by financial institutions (FIs), bonds issued
by foreign institutions and units of mutual funds (MFs).

However, along with these financial instruments, NSE also launched various products e.g. FIMMDA-
NSE MIBID/MIBOR owing to the market need. NSE also started the dissemination of its yet another
product, the ‘Zero Coupon Yield Curve’. This helps in valuation of sovereign securities across all
maturities irrespective of its liquidity in the market. The increased activity in the government
securities market in India and simultaneous emergence of MFs (Gilt MFs) had given rise to the
need for a well defined bond index to measure the returns in the bond market. NSE constructed
such an index, ‘NSE Government Securities Index’. This index provides a benchmark for portfolio
management by various investment managers and gilt funds. The average daily turnover in the
WDM Segment was ` 2,359 crore (US $523 million) during 2009-10.

The Capital Market (CM) segment offers a fully automated screen based trading system, known
as the National Exchange for Automated Trading (NEAT) system. This operates on a price/time
priority basis and enables members from across the country to trade with enormous ease and
efficiency. Various types of securities e.g. equity shares, warrants, debentures etc. are traded on
this system. The average daily turnover in the CM Segment of the Exchange during 2009-10 was
` 16,959 crore. (US $3,757 million).

Futures & Options (F&O) segment of NSE provides trading in derivatives instruments like Index
Futures, Index Options, Stock Options, Stock Futures. The futures and options segment of NSE
has made a mark for itself globally. In the Futures and Options segment, trading in S&P CNX Nifty
Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index and single stocks are available.
Trading in Mini Nifty Futures & Options and Long term Options on S&P CNX Nifty are also available.
The average daily turnover in the F&O Segment of the Exchange during 2009-10 was ` 72,392 crore
(US $ 16,097 million).

Currency Derivatives Segment (CDS) at NSE commenced operations on August 29, 2008 with the
launch of Currency futures trading in US Dollar-Indian Rupee (USD-INR). On the very first day of
operations a total number of 65,798 contracts valued at ` 291 crore were traded on the Exchange.
Since then trading activity in this segment has been witnessing a rapid growth.

Trading in Currency Futures contracts in other pairs- Euro-INR, Pound Sterling-INR and Japanese
Yen-INR commenced on February 01, 2010. The average daily turnover in the Currency Futures
during 2009-10 was ` 7,428 crore (US $ 1,646 million).

Trading in Interest Rate Futures (IRF) commenced on August 31, 2009. Interest Rate Futures
contracts are based on 10 year 7% Notional GOI Bond. On its first day of trading, 14,559 contracts
were traded with a total value of ` 267.31 crores.

Trading Value
( ` crore)
Segment/Year 2006-07 2007-08 2008-09 2009-10

CM 1,945,287 3,551,038 2,752,023 4,138,023

F&O 7,356,271 13,090,478 11,010,482 17,663,665

WDM 219,106 282,317 335,952 563,816

Currency Futures * -- -- 162,272 1,782,608

Interest Rate Futures ** -- -- -- 2,975

Total 9,520,664 16,923,833 14,260,729 24,151,088


* Trading in Currency Futures commenced on August 28, 2008
** Trading in Interest Rate Futures commenced on August 31,2009

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Market Capitalisation (As at end March)
( ` crore)
Segment/Year Mar-07 Mar-08 Mar-09 Mar-10
CM 3,367,350 4,858,122 2,896,194 6,009,173
WDM 1,784,801 2,123,346 2,848,315 3,165,929
Total 5,152,151 6,981,468 5,744,510 9,175,102

NSEs Worldwide Ranking in 2009 (Jan-Dec)


• 4th in Number of Trades in Equity Shares.
• 2nd in terms of Number of Contracts traded in Single Stock Futures.
• 3rd in terms of Number of Contracts traded in Stock Index Futures.
• 2nd in terms of Number of Contracts traded in Stock Index Options.
• 7th Largest Derivatives Exchange in the World.
Source:WFE & FIA

Achievements/Milestones

Month/Year Event
November 1992 Incorporation
April 1993 Recognition as a stock exchange.
June 1994 WDM segment goes live.
November 1994 CM segment goes live through VSAT.
October 1995 Became largest stock exchange in the country.
April 1996 Commencement of clearing and settlement by NSCCL.
April 1996 Launch of S&P CNX Nifty.
November 1996 Setting up of National Securities Depository Ltd., first depository in India, co-promoted
by NSE.
December 1996 Commencement of trading/settlement in dematerialised securities.
December 1996 Launch of CNX Nifty Junior.
May 1998 Promotion of joint venture, India Index Services & Products Limited (IISL) (along with
CRISIL) for index services.
May 1998 Launch of NSE’s Web-site : www.nseindia.com.
July 1998 Launch of ‘NSE’s Certification Programme in Financial Markets’ (NCFM)
October 1999 Setting up of NSE.IT Ltd.
June 2000 Commencement of Derivatives Trading (in Index Futures).
September 2000 Launch of Zero Coupon Yield Curve.
June 2001 Commencement of Trading in Index Options
July 2001 Commencement of Trading in Options on Individual Securities
November 2001 Commencement of Trading in Futures on Individual Securities
January 2002 Launch of Exchange Traded Funds (ETFs).
August 2003 Launch of Futures and Options on CNX IT Index
June 2005 Launch of Futures & Options on BANK Nifty Index
August 2006 Setting up of NSE Infotech Services Ltd.
December 2006 ‘Derivative Exchange of the Year’, by Asia Risk magazine
March 2007 Launch of Gold BeES- Exchange Traded Fund (ETF).(First Gold ETF)
January 2008 Launch of Mini Nifty derivative contracts
March 2008 Launch of long term option contracts on S&P CNX Nifty Index.

Contd...

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Contd...
Month/Year Event
April 2008 Launch of Securities Lending & Borrowing Scheme
April 2008 Launch of - India VIX* - The Volatility Index
April 2008 Direct Market Access (DMA)
June 2008 Setting up of Power Exchange India Ltd.
July 2008 Launch of NOW ‘Neat on Web’
August 2008 Launch of Currency Derivatives Segment with commencement of trading on Currency
Futures on August 29, 2008.
September 2008 Launch of ASBA (Applications supported by Blocked Amount)
February 2009 Cross Margining Benefit in CM and F&O Segment
March 2009 Launch of NSE E-Bids for Debt Segment
August 2009 Launch of Interest Rate Futures
November 2009 Launch of Mutual Fund Service System
December 2009 Commencement of settlement of corporate bonds
February 2010 Trading in Currency Futures on additional currency pairs
February 2010 Listing of Hang Seng BeES ETF on NSE
March 2010 NSE and CME Group announced cross-listing relationship
March 2010 NSE and Singapore Exchange sign Memorandum of Understanding (MOU)
April 2010 NSE and NSCCL receive Asian Banker awards

Developments during the year.

– The innovation of new market products and services continued during 2009-2010. National
Stock Exchange became the first exchange to receive approval from SEBI to introduce Exchange
traded Interest Rate Futures (IRF) contracts for trading on the Currency Derivatives Segment
of the exchange. Trading in IRF commenced on August 31, 2009. On its first day of trading,
14,559 contracts were traded with a total value of ` 267.31 crores.

– In November 2009, SEBI allowed transaction in Mutual Fund schemes through the stock exchange
infrastructure. Consequently, NSE launched India's first Mutual Fund Service System (MFSS)
on November 30, 2009 through which an investor can subscribe or redeem units of a mutual
fund scheme.

– The clearing and settlement of corporate bonds was operationalised at NSCCL on December
01, 2009. As per SEBI circular dated October 16, 2009, all trades in corporate bonds between
specified entities, namely, mutual funds, foreign institutional investors/ sub-accounts, venture
capital funds, foreign venture capital investors, portfolio mangers, and RBI regulated entities
as specified by RBI are required to be cleared and settled through the National Securities
Clearing Corporation Limited (NSCCL) or the Indian Clearing Corporation Limited (ICCL). This
is applicable to all corporate bonds Over The Counter (OTC) or on the debt segment of Stock
Exchanges. All transactions are to be cleared and settled in terms of the norms specified by
NSCCL and ICCL.

– Trading in Currency Futures contracts on additional currency pairs - Euro-INR, Pound


Sterling-INR and Japanese Yen-INR in the Currency Derivative Segment (CDS) of the Exchange
commenced from February 01, 2010.

– Hang Seng BeES ETF - India’s first Exchange Traded Fund (ETF) tracking an overseas stock
market index was launched on NSE on February 15, 2010. The open ended ETF aimed to
**
“VIX” is a trademark of Chicago Board Options Exchange, Incorporated ("CBOE") and Standard & Poor’s has granted a license to NSE, with
permission from CBOE, to use such mark in the name of the India VIX and for purposes relating to the India VIX.

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provide domestic investors exposure to companies listed on the Hong Kong Stock Exchange
that constitute the Hang Seng index. There are 42 constituent companies in the Hang Seng
index such as HSBC Holdings, Hutchison, Cathay Pacific Airways, China Mobile, and PetroChina
etc. This product would give Indian markets an exposure to the Chinese market- which is the
fastest growing economy in the world.

– The National Stock Exchange of India (NSE) and CME Group, announced cross-listing
arrangements, including license agreements covering benchmark indexes for U.S. and Indian
equities on March 10, 2010.

They also entered into a Memorandum of Understanding with respect to other areas of
potential cooperation, including related to development and distribution of financial products
and services. Under the cross-listing arrangements, the S&P CNX Nifty Index (the Nifty 50), the
leading Indian benchmark index for large companies accounting for 22 sectors of the Indian
economy, will be made available to Chicago Mercantile Exchange (CME), for the creation and
listing of U.S. dollar denominated futures contracts for trading on CME, and the rights to the
S&P 500® and Dow Jones Industrial Average™ (DJIA® ) will also be made available to NSE
for the creation and (subject to regulatory approval) listing of Rupee-denominated futures
contracts for trading on NSE. The license to the Nifty 50 from NSE’s affiliate India Index
Services & Products Ltd. (IISL), which is exclusive to CME Group within the Americas and
Europe, is in addition to the existing licensing arrangement between Singapore Exchange Ltd.
(SGX) and IISL. The sublicenses to the S&P 500 and DJIA indexes, which are exclusive to NSE
for Rupee -denominated futures contracts traded within India, are being made available via
sublicenses from CME Group and each of Standard & Poor’s and Dow Jones, respectively.

– The National Stock Exchange of India Limited (NSE) and Singapore Exchange (SGX) signed a
Memorandum of Understanding (MOU) on March 10, 2010 to cooperate in the development
of a market for India-linked products. Under the MOU, both exchanges aim to explore future
collaboration in the expansion, development and promotion of India-linked products and
services to be listed on SGX. Subject to regulatory approval, these products may include
equity products and other asset classes. The two exchanges also will look into a bilateral
securities trading link to enable investors in one country to seamlessly trade on the other
country’s exchange.

– NSE has been awarded ‘The Asian Banker Financial Derivative Exchange of the Year Award”
and NSCCL has been awarded ‘The Asian Banker Clearing House of the Year Award” in April
2010. This is the highest award for exchanges that outperform their regional peers in terms
of growing financial derivatives related products and trading business and for clearing houses
in Asia Pacific region respectively.

The objectives of this award programme was to recognize exchanges, depositories, alternative
markets service providers, etc. who are leading the industry in creating sustainable and highly
liquid markets of the future, to recognize the use of technology and business models to
revolutionize the industry and create global access in an efficient and seamless manner, to
validate the leadership of the regional players that maintain the integrity of financial markets,
protect investor interests and still lead in innovation, to identify emerging best practices as
well as product and process innovations that set the benchmarks for all players to improve
their competitive profile. The Asian Banker, is one of Asia’s foremost intelligence provider
to the financial services industry. The Asian Banker Markets & Exchanges Achievement Award
Programme was instituted in 2010 to recognise the competition amongst exchanges, broker-
dealers, financial institutions, fund managers and others in this fascinating and fast changing
industry. The programme is also designed to be a repository of evolving best practices from
which players can benchmark their own products and processes over the long term.

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FACTS AND FIGURES
The growth in the stock market activity across the different market segments and hightest attained
records is visible from the below facts and figures.

Figures as on March 31, 2010

Listed Companies 1,470


Trading Members 1,297
VSATS 2,527
Number of cities having VSATS 186
Securities available for trading in the CM segment 1,806
Contracts available for trading equity derivatives segment @ 23,533

Records reached (data from inception to March 31, 2010)

Parameter Date Magnitude

Capital Market Segment

Number of trades May 19, 2009 11,260,392

Traded Quantity May 19, 2009 19,225.95 lakh

Turnover May 19, 2009 ` 40,151.91 cr. (US $ 8,894.97 mn.)


Market capitalisation January 07, 2008 ` 6,745,724.00 cr. (US $ 1,687,696.77 mn.)
S&P CNX Nifty Index value January 08, 2008 6357.10

CNX Nifty Junior Index value January 04, 2008 13209.35

Futures & Options Segment

Number of trades January 28, 2010 1,971,214

Number of Contracts Traded January 28, 2010 6,300,279

Turnover January 28, 2010 ` 166,193.03 cr. (US $ 36,817.24 mn.)


Currency Derivatives Segment (Currency Futures)

Number of trades January 11, 2010 78,935

Number of Contracts Traded March 30, 2010 4,353,053

Turnover March 30,2010 ` 19,927 cr. (US $ 4,414 mn.)


Wholesale Debt Market Segment

Turnover August 25, 2003 ` 13,911.57 cr. (US $ 3,179.79 mn.)

@ No. of contracts available for trading in F&O segment as on 31st March 2010 includes 3 Nifty
index Futures, 3 CNX IT Futures , 3 Bank Nifty Futures, 3 CNX 100 Futures , 3 Nifty Junior Futures,
3 Nifty Midcap50 futures, 3 Mini Nifty Futures, 570 stock futures, 628 Nifty index options,
114 CNX IT options, 140 Bank Nifty options, 86 Nifty Midcap50 options, 98 Mini Nifty Options,
21,882 stock option

Technology and Application Systems in NSE


Technology has been the backbone of the Exchange. Providing the services to the investing
community and the market participants using technology at the cheapest possible cost has been
its main thrust. NSE chose to harness technology in creating a new market design. It believes that
technology provides the necessary impetus for the organization to retain its competitive edge and
ensure timeliness and satisfaction in customer service. In recognition of the fact that technology
will continue to redefine the shape of the securities industry, NSE stresses on innovation and

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sustained investment in technology to remain ahead of competition. NSE is the first exchange in
the world to use satellite communication technology for trading. It uses satellite communication
technology to energize participation from about 2,493 VSATs from nearly 185 cities spread all over
the country.

Its trading system, called National Exchange for Automated Trading (NEAT), is a state of-the-art
client server based application. At the server end all trading information is stored in an in-memory
database to achieve minimum response time and maximum system availability for users. It has
uptime record of 99.999%. For orders entered by the user, the response time within trading system
is around 5ms. NSE has been continuously undertaking capacity enhancement measures so as to
effectively meet the requirements of increased users and associated trading loads. NSE has also
put in place NIBIS (NSEs Internet Based Information System) for on-line real-time dissemination of
trading information over the Internet.

As part of its business continuity plan, NSE has established a disaster back-up site at Chennai along
with its entire infrastructure, including the satellite earth station and the high-speed optical fiber
link with its main site at Mumbai. This site at Chennai is a replica of the production environment
at Mumbai. The transaction data is backed up on near real time basis from the main site to the
disaster back-up site through the 3 STM-4 (1.86 GB) high-speed links to keep both the sites all the
time synchronized with each other. The various application systems that NSE uses for its trading
as well clearing and settlement and other operations form the backbone of the Exchange. The
application systems used for the day-to-day functioning of the Exchange can be divided into (a)
Front end applications and (b) Back office applications.

The various application systems that NSE uses for its trading as well clearing and settlement and
other operations form the backbone of the Exchange. The application systems used for the day-to-
day functioning of the Exchange can be divided into (a) Front end applications and (b) Back office
applications. In the front office, there are 7 applications:

NEAT-CM system takes care of trading of securities in the Capital Market segment that includes
equities, debentures/notes as well as retail Gilts. The NEAT – CM application has a split architecture
wherein the split is on the securities and users. The application runs on three Stratus systems with
communication over TCP IP protocol. The application has been benchmarked to support 60,000
users and handle more than 30 million trades daily. This application also provides data feed for
processing to some other systems like Index, OPMS through TCP/IP. This is a direct interface with
the trading members of the CM segment of the Exchange for entering the orders into the main
system. There is a two way communication between the NSE main system and the front end
terminal of the trading member.

NEAT-WDM system takes care of trading of securities in the Wholesale Debt Market (WDM) segment
that includes Gilts, Corporate Bonds, CPs, T-Bills, etc. This is a direct interface with the trading
members of the WDM segment of the Exchange for entering the orders/trades into the main
system. There is a two way communication between the NSE main system and the front end
terminal of the trading member.

NEAT-F&O system takes care of trading of securities in the Futures and Options (F&O) segment that
includes Futures on Index as well as individual stocks and Options on Index as well as individual
stocks. This is a direct interface with the trading members of the F&O segment of the Exchange
for entering the orders into the main system. There is a two way communication between the NSE
main system and the front end terminal of the trading member.

Neat-IPO system is an interface to help the initial public offering of companies which are issuing
the stocks to raise capital from the market. This is a direct interface with the trading members of
the CM segment who are registered for undertaking order entry on behalf of their clients for IPOs.

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NSE uses the NEAT IPO system that allows bidding in several issues concurrently. There is a two way
communication between the NSE main system and the front end terminal of the trading member.

NEAT – MF system is an interface with the trading members of the CM segment for order
collection of designated Mutual Funds units

NEAT- CD system provides interface for trading in currency derivatives and Interest Rate Futures

NEATPLUS NSE is offering a multi-market front end application NEATPlus to its members. This
application provides a common trading platform to NSE members to trade in Capital Market as
well as Futures and Options Market segments at NSE. Members can take login in CM and F&O
segments in a single terminal with ability to monitor and trade in Equity securities as well as Equity
derivatives from single screen. Members can use the existing VSAT/Leased Line connectivity for
accessing the NEATPlus application. Multiple market watch screens with Excel like features, ability
to select various fonts, customizable color schemes and themes are some of the other salient
features of the NEATPlus application.

The exchange also provides a facility to its members to use their own front end software through
the CTCL (computer to computer link) facility. The member can either develop his own software
or use products developed by CTCL vendors.

In the back office, the following important application systems are operative:

Nationwide Clearing and Settlement System NCSS is the clearing and settlement system of the
NSCCL for the trades executed in the CM segment of the Exchange. The system has 3 important
interfaces – OLTL (Online Trade loading) that takes each and every trade executed on real time
basis and allocates the same to the clearing members, Depository Interface that connects the
depositories for settlement of securities and Clearing Bank Interface that connects the 13 clearing
banks for settlement of funds. It also interfaces with the clearing members for all required reports.
Through collateral management system it keeps an account of all available collaterals on behalf of
all trading/ clearing members and integrates the same with the position monitoring of the trading/
clearing members. The system also generates base capital adequacy reports.

Future and Options Clearing and Settlement System (FOCASS) is the clearing and settlement
system of the NSCCL for the trades executed in the F&O segment of the Exchange. It interfaces
with the clearing members for all required reports. Through collateral management system it keeps
an account of all available collaterals on behalf of all trading/clearing members and integrates the
same with the position monitoring of the trading/clearing members. The system also generates
base capital adequacy reports.

Currency Derivatives Clearing and Settlement System (CDCSS) is the clearing and settlement
system for trades executed in the currency derivative segment. Through collateral management
system it keeps an account of all available collateral on behalf of all trading /clearing members
and integrates the same with the position monitoring of the trading/clearing members. The System
also generates base capital adequacy report.

Surveillance system offers the users a facility to comprehensively monitor the trading activity and
analyze the trade data online and offline

Online Position Monitoring System (OPMS) OPMS is the online position monitoring system that
keeps track of all trades executed for a trading member vis-à-vis its capital adequacy.

Parallel RISk Monitoring System (PRISM) is the parallel risk management system for F&O trades
using Standard Portfolio Analysis (SPAN). It is a system for comprehensive monitoring and load
balancing of an array of parallel processors that provides complete fault tolerance. It provides

10
real time information on initial margin value, mark to market profit or loss, collateral amounts,
contract-wise latest prices, contract-wise open interest and limits. The system also tracks online
real time client level portfolio base upfront margining and monitoring.

Parallel RISk Monitoring System – Currency Derivatives (PRISM-CD) is the risk management system
of the currency derivatives segment. It is similar in features to the PRISM of F&O Segment.

Data warehousing that is the central repository of all data in CM as well as F&O segment of the
Exchange.

Listing system captures the data from the companies which are listed in the Exchange for
corporate governance and integrates the same to the trading system for necessary broadcasts for
data dissemination process.

Membership system that keeps track of all required details of the Trading Members of the
Exchange.

The exchange operates and manages a nationwide network. This network includes 9 POPs (Points of
Presence) setup across the country and catering to 3070+ leased lines. All the POP’s are connected
to DC and DR over high Speed links (Mainly STM’s). All the members are given a 2mb point to point
connection to the nearest POP. All the members have a choice of selecting the POP’s based on their
office location. Also there are plans to setup additional POPs based on member requirements. The
old X.25 VSAT and Leased Line network has been decommissioned completely.

NSE’s existing POPs are build on highly redundant infrastructure connecting to Core and DR setup
via high speed redundant backbone links from multiple service providers. Mini POP with low
connectivity requirement is fully owned and operated by NSE is proposed to be built in with
redundant Infrastructure at Rajkot. Member links would terminate at Mini POP and the traffic
would be routed via a dual backbone pipe to nearby Mini POP. In keeping up with the global
trends the Exchange is providing to its members a co-location facility for their DMA and ALGO IT
infrastructure at NSEIL premises in BKC shortly.

NOW

NSE is also offering internet based trading services to NSE members. This facility is branded as NOW
‘Neat on Web’ NOW provides an internet portal for NSE members and their authorized clients to
transact orders and trades to the various market of NSE viz. CM, F&O and Currency. The members
can also access NOW through their existing VSAT/ Leased line, in addition to internet links. The
various features provided by NOW are (a) comprehensive Administration features, flexible risk
management system, high speed dealer terminals and online trading facility for investors.

NSE Family
NSCCL

The National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned subsidiary of NSE, was
incorporated in August 1995 and commenced clearing corporation in April 1996. It was the first
clearing corporation in the country to provide novation/settlement guarantee that revolutionized
the entire concept of settlement system in India. It was set up to bring and sustain confidence in
clearing and settlement of securities; to promote and maintain short and consistent settlement
cycles; to provide counter-party risk guarantee, and to operate a tight risk containment system.
It carries out the clearing and settlement of the trades executed in the equities and derivatives
segments of the NSE. It operates a well-defined settlement cycle and there are no deviations
from the same. It is the first clearing corporation in the country to establish the Settlement
Guarantee Fund (SGF) in June 1996. It has been managing, clearing and settlement functions since

11
its inception without a single failure or clubbing of settlements. NSCCL has also introduced the
facility of direct payout to clients account on both the depositories viz., NSDL and CDSL.

Today NSCCL settles trades under the T+2 rolling settlement. It has the credit of continuously
upgrading the clearing and settlement procedures and has also bought Indian financial markets in
line with international markets

NSDL

To promote dematerialization of securities NSE joined hands with UTI and IDBI to set up the first
depository in India called the “National Securities Depository Limited” (NSDL). The depository
system gained quick acceptance and in a very short span of time it was able to achieve the
objective of eradicating the paper from the trading and settlement of securities, and was also
able to get rid of the risks associated with fake/forged/stolen/bad paper. Dematerialized delivery
today constitutes almost 100% of total of the total delivery based settlement.

NSE Infotech Services Ltd

NSE Infotech Services Ltd Information Technology has been the back bone of conceptualization,
formation, running and the success of National Stock Exchange of India Limited (NSE). NSE
has been at the forefront in spearheading technology changes in the securities market. It was
important to give a special thrust and focus on Information Technology to retain the primacy in the
market. Towards this a wholly owned subsidiary M/s. NSE Infotech Services Limited (NSETECH) was
incorporated to cater to the needs of NSE and all it’s group companies exclusively.

NSE.IT

NSE.IT Limited, a 100% subsidiary of NSE was setup in 1999 to provide thrust to NSE’s technology
edge, concomitant with its overall goal of harnessing latest technology for optimum business
use. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information Technology (IT)
products, solutions and services. NSE.IT has expertise in a wide range of business applications
including high-end mission critical applications requiring real-time processing speeds. Additionally,
NSE.IT specializes in providing complete IT solutions to Stock Exchanges, Clearing Corporations,
Brokerage Firms, Insurance Firms and other organizations in the financial sector. NSE.IT is focused
on developing mission-critical technology solutions for the Financial Services market and the
facilitation of change within these markets.

IISL

India Index Services and Products Limited (IISL), a joint venture of CRISIL and NSE, was set up
in May 1998 to provide indices and index services. It has a licensing and marketing agreement
with Standard and Poor’s (S&P), the world’s leading provider of investible equity indices, for
co-branding equity indices. IISL is India’s first specialized company focusing upon the index as a
core product. It provides a broad range of services, products and professional index services. It
maintains over 96 equity indices comprising broad-based benchmark indices, sectoral indices and
customised indices. Many investment and risk management products based on IISL indices have
developed in the recent past, within India and abroad. These include index based derivatives on
NSE and on Singapore Exchange, India’s first exchange traded fund, a number of index funds, and
Licensing of the Index for various structured products.

DOTEX INTERNATIONAL LTD.

The data and info-vending products of NSE are provided through a separate company DotEx
International Ltd., a 100% subsidiary of NSE, which is a professional set-up dedicated solely for

12
this purpose. DotEx data provides products like : On-line streaming data feed, Intra-day Snapshot
data feed, end of day data and Historical Data.

NCDEX

NSE joined hand with other financial institutions in India to promote the NCDEX which provides for
a world class commodity exchange platform for Market Participants to trade in wide spectrum of
commodity derivatives. It was incorporated in the year 2003. Currently NCDEX facilitates trading
of agro based commodities, precious metal, base metal, energy products and polymers.

NCCL

National Commodity Clearing Limited (NCCL) is a company promoted by National Stock Exchange
of India Limited (NSEIL). It was incorporated in the year 2006. One of the objectives of NCCL is
to provide and manage clearing and settlement, risk management and collateral management
services to commodity exchanges. NCCL is having the requisite experience and exposure in
providing clearing and settlement facility, risk and collateral management services in the
commodities market including funds settlement with multiple clearing banks. Currently NCCL is
providing clearing and settlement services to NCDEX.

PXIL

A National Level Power Exchange by the name of Power Exchange India Limited (PXIL) has been set
up through a Joint Venture by India's two leading Exchanges, National Stock Exchange of India Ltd
(NSE) and National Commodity & Derivatives Exchange Ltd (NCDEX). PXIL has got the in-principle
approval from CERC to set up and operate the power exchange and will operate as a National Level
electricity exchange covering the entire Indian electricity market.

13
Table 1-1 : Board of Directors *

1 Dr. Vijay L Kelkar Chairman


Former Chairman, Finance Commission, India Former Union
Finance Secretar y and Advisor to the Finance Minister

2 Mr. Ravi Narain Managing Director


National Stock Exchange of India Ltd.

3 Ms. Chitra Ramkrishna Joint Managing Director


National Stock Exchange of India Ltd.

4 Mr. C. Achuthan Director


Former Presiding Officer, Securities Appellate Tribunal

5 Mr. Anjan Barua Director


Deputy Managing Director & Group Executive
(Global Markets)
State Bank of India

6 Mr. A. P. Kurian Director


Chairman
Association of Mutual Funds in India

7 Dr. Rajiv B. Lall Director


Managing Director & CEO
IDFC Limited

8 Mr. Anand G. Mahindra Director


Vice Chairman & Managing Director
Mahindra & Mahindra Ltd.

9 Mr. S. B. Mainak Director


Executive Director
(Investment-Risk Management and Research)

10 Mr. Y. H. Malegam Director


Chairman Emeritus
M/s. S.B. Billimoria & Co.
Chartered Accountants

11 Mr. S. B. Mathur Director


Secretary General, Life Insurance Council &
Former Chairman, Life Insurance Corporation of India

12 Dr. KRS Murthy Director


Professor & Former Director
Indian Institute of Management, Bangalore

13 Dr. R. H. Patil Director


Chairman
The Clearing Corporation of India Ltd.

14 Ms. Bhagyam Ramani Director


General Manager & Director, GIC

15 Dr. V. A. Sastry Director


Director, MUSA Software Engineering Pvt. Ltd.
Former Director, Infosys Technologies Ltd.

16 Mr. Deepak M Satwalekar Director


Former Managing Director & CEO
HDFC Standard Life Insurance Company Ltd.

17 Mr. Justice B.N.Srikrishna (Retd.) Director


Former Judge, Supreme Court of India
* As on July 8, 2010

14
Table 1-2 : Executive Committees *

I CM & WDM SEGMENTS


1 Mr. Ravi Narain Managing Director, National Stock Exchange Chairman
of India Ltd.
2 Mr. D. C. Anjaria Director, International Financial Solutions Public Representative
Pvt. Ltd.
3 Mr. D. Balasundaram Chairman, M/s. Coimbatore Capital Limited Trading Member
4 Mr. Vimal Bhandari Country Manager – India AEGON International Public Representative
NV.
5 Mr. Atul Goel Partner, M/s. Pace Financial Services Trading Member
6 Mr. Y. H. Malegam Chairman Emeritus, M/s. S.B.Billimoria & Public Representative
Co., Chartered Accountants
7 Mr. Gagan Rai Managing Director & CEO, National Other Nominees
Securities Depository Limited
8 Ms. Chitra Ramkrishna Joint Managing Director, National Stock Other Nominees
Exchange of India Ltd
9 Mr. Mayank Shah Director, M/s. Anagram Capital Limited Trading Member
10 Mr. Akhilesh Kumar Singh Managing Director & CEO, M/s. Shriram Trading Member
Insight Share Brokers Limited
11 Mr. P. M. Venkatasubramanian Former Managing Director, GIC Other Nominees
II F&O MARKET SEGMENT
1 Mr. Ravi Narain Managing Director, National Stock Exchange Chairman
of India Ltd.
2 Mr. D.C.Anjaria Director, International Finance Solutions Public Representative
Pvt. Ltd.
3 Prof. V. Ravi Anshuman Professor, Indian Institute of Management, Public Representative
Bangalore
4 Ms. Madhabi Puri Buch Managing Director & CEO, M/s. ICICI Trading Member
Securities Limited
5 Mr. Shailesh Haribhakti Executive Chairman & Managing Partner, Public Representative
BDO Haribhakti
6 Mr. M. Raghavendra Former General Manager, General Insurance Other Nominees
Corporation of India
7 Mr. A.V. Rajwade Forex Consultant Public Representative
8 Ms. Chitra Ramkrishna Joint Managing Director, National Stock Other Nominees
Exchange of India Ltd
9 Mr. Rajendra Dolatrai Shah Director, M/s. Nirpan Securities Private Trading Member
Limited
III CD SEGMENT
1 Mr. Ravi Narain Managing Director, National Stock Exchange Chairman
of India Ltd.
2 Mr. M. G.Bhide Former Chairman, Bank of India Public Representative
3 Mr. Conrad D’souza Senior General Manager, Treasury, Housing Public Representative
Development Finance Corporation Ltd
4 Dr. R. H. Patil Chairman, The Clearing Corporation of India Public Representative
Limited
5 Mr. S. Rajendren General Manager- International Banking & Trading Member
Treasury Union Bank Of India
6 Ms. Chitra Ramkrishna Joint Managing Director, National Stock Other Nominees
Exchange of India Limited
7 Mr. Suresh Senapaty Chief Financial Officer & Director,Wipro Public Representative
Limited
8 Mr. V. Srikanth Managing Director, Head of Markets, Citi Trading Member
South Asia, Citibank N.A.
* As on July 8, 2010

15
16
Membership 2
18
Membership 2
The trading in NSE has a three tier structure-the trading platform provided by the Exchange, the
broking and intermediary services and the investing community. The trading members have been
provided exclusive rights to trade subject to their continuously fulfilling the obligation under the
Rules, Regulations, Byelaws, Circulars, etc. of the Exchange. The trading members are subject to its
regulatory discipline. Any person can become a trading member by complying with the prescribed
eligibility criteria and exit by surrendering trading membership without any hidden/overt cost.
There are no entry/exit barriers to trading membership.

Eligibility Criteria
The Exchange stresses on factors such as corporate structure, capital adequacy, track record,
education, experience, etc. while granting trading rights to its members. This reflects a conscious
effort by the Exchange to ensure quality broking services which enables to build and sustain
confidence in the Exchange’s operations. The standards stipulated by the Exchange for trading
membership are substantially in excess of the minimum statutory requirements as also in comparison
to those stipulated by other exchanges in India. The exposure and volume of transactions that can
be undertaken by a trading member are linked to liquid assets in the form of cash, bank guarantees,
etc. deposited by the member with the Exchange as part of the membership requirements.

The trading members are admitted to the different segments of the Exchange subject to the
provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board
of India Act, 1992, the rules, circulars, notifications, guidelines, etc., issued there under and the
byelaws, Rules and Regulations of the Exchange. All trading members are registered with SEBI.

Trading Membership
A prospective trading member is admitted to any of the following combinations of market
segments:
• Wholesale Debt Market (WDM) segment,
• Capital Market (CM) and the Futures and Options (F&O) segments,
• CM Segment and the WDM segment, or
• CM Segment, the WDM and the F&O segment.
• Currency Derivatives (CD) segment.
• CD along with either or all segments listed above.

In order to be admitted as a trading member, the individual trading member/at least two partners
of the applicant firm/at least two directors of the applicant corporate must be HSC and must
possess at least two years’ experience in securities markets. The applicant for trading membership/
any of its partners/shareholders/directors must not have been declared defaulters on any stock
exchange, must not be debarred by SEBI for being associated with capital market as intermediaries
and must not be engaged in any fund-based activity. In case of corporate applicant, the minimum
paid up capital should be ` 30 lakh and the dominant promoter/shareholder group should hold at
least 51% of paid-up equity capital of unlisted corporate entity. In case of listed corporate entity,
persons named as promoters in any document for offer of securities to the public or existing
shareholders or in the shareholding pattern disclosed by the corporate trading member under the
provisions of the Listing Agreement, whichever is later, is deemed to be in control.

19
Clearing Membership
The trades executed on the Exchange may be cleared and settled by a clearing member. The
trading members in the CM segment are also clearing members. In the F&O segment, some
members, who are registered with SEBI as self-clearing members, clear and settle their own
trades. Certain others, registered as trading member-cum-clearing member, clear and settle their
own trades as well as trades of other trading members. Besides this, there is a special category
of members, called professional clearing members (PCMs), who do not trade but only clear trades
executed by others. This means that some members clear and settle their trades through a trading
member-cum-clearing member or a PCM, not themselves. The members clearing their own trades
or trades of others and the PCMs are required to bring in additional security deposits in respect
of every trading member whose trades they undertake to clear and settle. The requirements of
trading membership and clearing membership in the different market segments are presented in
Table 2-1. With effect from July 1, 2008 a processing fee of ` 10,000/- and an admission fee of
` 5,00,000/- is charged for taking up new membership.

Currency Derivatives Membership


Trading in Currency Derivatives commenced on August 29, 2008 at NSE. The membership of the
currency futures market is separate from the membership of the equity derivative segment or the
cash segment. Membership for both trading and clearing, in the currency futures market is subject
to the guidelines issued by the SEBI. Table 2-1 contains the Eligibility Criteria for Membership in
Currency Derivatives for Corporates, Individuals and Firms. Banks authorized by the Reserve
Bank of India under section 10 of the Foreign Exchange Management Act, 1999 as ‘AD Category - I
bank’ are permitted to become trading and clearing members of the currency futures market of
the recognized stock exchanges, on their own account and on behalf of their clients, subject to
fulfilling the following minimum prudential requirements as mentioned below :
a) Minimum net worth of ` 500 crores.
b) Minimum CRAR of 10 per cent.
c) Net NPA should not exceed 3 per cent.
d) Made net profit for last 3 years.

Growth and Distribution of Members


As at end March 2010, the Exchange had 1,136 members. The growth of membership on NSE
is presented in Table 2-2. A total of 41,153 (1,867 corporates, 2,705 partnership firms and
36,581 individuals) sub-brokers were affiliated to 609 trading members of the Exchange on
March 31, 2010.

20
Table 2-1 : Eligibility Criteria for Trading Membership

CORPORATES
(Amount in ` lakh)
Particulars/ Segments CM CM and F&O WDM CM and WDM CM,WDM and F&O
Minimum Paid-up capital 30 30 30 30 30
Net Worth 100 100 (Membership in CM 200 200 200(Membership in WDM segment,
segment and CM segment and
Trading/Trading and self Trading/Trading and Self Clearing
clearing membership in membership in F&O segment)
F&O segment)
300(Membership in WDM segment,
300 (Membership in CM CM segment and
segment and Trading Trading and Clearing membership
and Clearing member- in F&O segment)
ship in F&O segment)
Interest Free Security Deposit (IFSD) 85 110 150 235 260
with NSEIL
Interest Free Security Deposit (IFSD) 15 15 * NIL 15 15 *
with NSCCL
Collateral Security Deposit (CSD) with 25 25** NIL 25 25**
NSCCL
Annual Subscription 1 1 1 2 2
Advance Minimum Transaction Chare- NIL 1 NIL NIL 1
ges for Futures Segment
Education Two directors should be Two directors should be Two directors should Two directors should be HSC. Two directors should be HSC.
HSC. HSC. be HSC. Dealers should also have Dealers should also have passed
Dealers should also have Dealers should also have Dealers should also passed FIMMDA-NSE Debt Market (Basic
passed SEBI approved cer- passed SEBI approved have passed FIMMDA- FIMMDA-NSE Debt Market Module) of NCFM
tification test for Capital certification test for NSE Debt Market (Ba- (Basic Module) of NCFM.& Capital Market Module of NCFM.&
Market Module of NCFM. Derivatives and Capital sic Module) of NCFM. Capital Market Module of SEBI approved certification test
Market Module of NCFM. NCFM. for Derivatives
Experience ---------------Two year’s experience in securities market-----------------------
Track Record The Directors should not be defaulters on any stock exchange. They must not be debarred by SEBI for being associated with capital market as
intermediaries They must be engaged solely in the business of securities and must not be engaged in any fund-based activity.
Net worth requirement for Professional Clearing members in F&O segment is ` 300 lakhs. Further a Professional Clearing member needs to bring IFSD of 25 lakhs with NSCCL and Collateral
Security Deposit (CSD) of 25 lakhs with NSCCL as deposits.
*Additional IFSD of 25 lakhs with NSCCL is required for Trading and Clearing (TM-CM) and for Trading and Self clearing member (TM/SCM).
** Additional Collateral Security Deposit (CSD) of 25 laksh with NSCCL is required for Trading and Clearing (TM-CM) and for Trading and Self clearing member (TM/SCM).
In addition, a member clearing for others is required to bring in IFSD of ` 2 lakh and CSD of ` 8 lakh per trading member he undertakes to clear in the F&O segment.
Contd...

21
22
Contd...

Requirements for Professional Clearing Memberhip


(All values in ` lakh)
Particulars CM Segment F&O Segment CM and F&O Segment
Eligibility Trading Member of NSE/SEBI Registered Custodians/Recognised Banks
Net Worth 300 300 300
Interest Free Security Deposit (IFSD) * 25 25 34
Collateral Security Deposit (CSD) 25 25 50
Annual Subscription 2.5 Nil 2.5
* The Professional Clearing Member (PCM) is required to bring in IFSD of ` 2 lakh and CSD of ` 8 lakh per trading member
whose trades he undertakes to clear in the F&O segment and IFSD of ` 6 lakh and CSD of ` 17.5 lakh (` 9 lakh and ` 25
lakh respectively for corporate Members) per trading member in the CM segment.

INDIVIDUALS/PARTNERSHIP FIRMS
(Amount in ` lakh)
Particulars CM CM and F&O WDM CM and CM,WDM and F&O
WDM
Net Worth 75 75 (Membership in CM segment and Trading membership in 200 200 200 (Membership in WDM segment, CM
F&O segment) segment and Trading/Trading and Self Clearing
membership in F&O segment)
100 (Membership in CM segment and Trading and Self
clearing membership in the F&O segment) 300 (Membership in WDM segment,CM segment
and Trading and clearing membership on F&O
300 (Membership in CM segment and Trading and Clearing segment)
membership in F&O segment)
Interest Free Security Deposit (IFSD) with NSEIL 26.5 51.5 150 176.5 201.5
Interest Free Security Deposit (IFSD) with NSCCL 6 6* NIL 6 6*
Collateral Security Deposit (CSD) with NSCCL 17.5 17.5 ** NIL 17.5 17.5 **
Annual Subscription 0.5 0.5 1 1.5 1.5
Advance Minimum Transaction Chareges for NIL 1 NIL NIL 1
Futures Segment
* Additional IFSD of 25 lakhs with NSCCL is required for Trading and Clearing (TM-CM) and for Trading and Self clearing member (TM/SCM).
** Additional Collateral Security Deposit (CSD) of 25 lakh with NSCCL is required for Trading and Clearing (TM-CM) and for Trading and Self clearing member (TM/SCM).
Contd...
Contd...

CURRENCY DERIVATIVES- Corporates, Individuals and Firms


(Amount in ` lakh)
Particulars NSE Members NCDEX Members New Applicants
Trading Membership Trading cum Trading Membership Trading cum Trading Membership Trading cum Professional Clearing
Clearing Membership Clearing Membership Clearing Membership Membership
Networth 100 1000 100 1000 100 1000 1000
Cash to NSEIL 2 2 2 2 2 2 -
Non-cash to NSEIL 8 8 10.5 13 13 18 -
Cash to NSCCL - 25 - 25 - 25 25
Non cash to NSCCL - 25 - 25 - 25 25
Education Two directors should Two directors should Two directors should Two directors should Two directors should Two directors should Two directors should
be HSC. be HSC. be HSC. be HSC. be HSC. be HSC. be HSC.
Dealers should Dealers should Dealers should Dealers should Dealers should Dealers should Dealers should
also have passed also have passed also have passed also have passed also have passed also have passed also have passed
SEBI approved SEBI approved SEBI approved SEBI approved SEBI approved SEBI approved SEBI approved
National Institute of National Institute of National Institute of National Institute of National Institute of National Institute of National Institute of
Securities Markets Securities Markets Securities Markets Securities Markets Securities Markets Securities Markets Securities Markets
(NISM) Series I (NISM) Series I (NISM) Series I (NISM) Series I (NISM) Series I (NISM) Series I (NISM) Series I
– Currency Derivatives – Currency Derivatives – Currency Derivatives – Currency Derivatives – Currency Derivatives – Currency Derivatives – Currency Derivatives
Certification Certification Certification Certification Certification Certification Certification
Examination Examination Examination Examination Examination Examination Examination
Experience ---------------Two year’s experience in securities market-----------------------
Track Record The Directors should not be defaulters on any stock exchange. They must not be debarred by SEBI for being associated with capital market as intermediaries. They
must be engaged solely in the business of securities and must not be engaged in any fund-based activity.
In case the member is opting for membership of any other segment(s) in combination with the membership of Currency Derivatives segment, the applicable net worth will be the minimum
net worth required for the other segment(s) or the minimum net worth required for Currency Derivatives Segment, whichever is higher.
The eligibility condition for applicants planning to apply for new membership of the Exchange is that either the proprietor/one designated director/partner or the Compliance Officer of
the applicant entity should be successfully certified either in Securities Market (Basic) Module or Compliance Officers (Brokers) Module or the relevant module pertaining to the segments
wherein membership of the Exchange had been sought.
In addition to the individuals, corporates and partnership firms, Banks authorized by the Reserve Bank of India under section 10 of the Foreign Exchange Management Act, 1999 as ‘AD
Category- I bank’ to become trading and clearing members of the currency futures market of the recognized stock exchanges, on their own account and on behalf of their clients, subject
to minimum prudential requirements of minimum net worth of ` 500 crores, minimum CRAR of 10 per cent, net NPA not exceeding 3 per cent and net profit should have been made for the
last 3 years.
The AD Category-I banks which fulfill the prudential requirements are required to lay down detailed guidelines with the approval of their Boards for trading and clearing of currency futures
contracts and management of risks. AD Categoty-I banks which do not meet the above minimum prudential requirements and AD Categotry- I banks which are Urban Co-operative banks or
State Co-operative banks can participate in the currency futures market only as clients, subject to approval therefore from the respective regulatory Departments of the Reserve Bank.

23
Table 2-2 : Distribution of Members

Month/Year CM WDM CDS CM/WDM/F&O/CDS


(end of period)

Apr-09 116 5 39 1,074


May-09 116 5 42 1,076
Jun-09 115 5 44 1,078
Jul-09 113 5 21 1,088
Aug-09 110 5 33 1,093
Sep-09 105 5 34 1,103
Oct-09 103 5 38 1,111
Nov-09 104 5 41 1,115
Dec-09 105 5 43 1,118
Jan-10 107 5 46 1,122
Feb-10 108 5 47 1,123
Mar-10 108 5 48 1,136

24
Listing of Securities 3
26
Listing of Securities 3
NSE plays an important role in helping Indian companies access equity capital, by providing
a liquid and well-regulated market. As of March 2010, there were 1,470 companies listed on
NSE. The companies listed on the Exchange are from various sectors of the economy such as -
- heavy industry, software, refinery, public sector units, infrastructure, and financial services.
Wide range of securities such as stocks, bonds and other securities can be listed in the Capital
Market (Equities) segment and its Wholesale Debt Market segment. Listing means formal admission
of a security to the trading platform of the Exchange. It provides liquidity to investors without
compromising the need of the issuer for capital and ensures effective monitoring of conduct of the
issuer and trading of the securities in the interest of investors. The issuer wishing to have trading
privileges for its securities satisfies listing requirements prescribed in the relevant statutes and
in the listing regulations of the Exchange. It also agrees to pay the listing fees and comply with
listing requirements on a continuous basis. All the issuers who list their securities have to satisfy
the corporate governance requirement framed by regulators.

Listing Criteria

The Exchange has laid down criteria for listing of new issues by companies through IPOs, companies
listed on other exchanges etc. in conformity with the Securities Contracts (Regulation) Rules,
1957, SEBI Guidelines and other relevant guidelines/acts. The criteria include minimum paid-up
capital and market capitalisation, company/promoter’s track record, etc. The listing criteria for
companies in the CM Segment are presented in Table 3-1. The issuers of securities are required
to adhere to provisions of the Securities Contracts (Regulation) Act, 1956, the Companies Act,
1956, the Securities and Exchange Board of India Act, 1992 and the rules, circulars, notifications,
guidelines, etc. prescribed there under.

Listing Agreement

All companies seeking listing of their securities on the Exchange are required to enter into a formal
listing agreement with the Exchange. The agreement specifies all the quantitative and qualitative
requirements to be continuously complied with by the issuer for continued listing. The Exchange
monitors such compliance and companies who do not comply with the provisions of the listing
agreement may be suspended from trading on the Exchange. The agreement is being increasingly
used as a means to improve corporate governance.

Compliance by Listed Companies


NSE has institutionalised a process of verifying compliance of various conditions of the listing
agreement. It conducts a periodic review for compliance on account of announcement of book
closure/record date, announcement of quarterly results, submission of shareholding pattern,
annual reports, appointment of compliance officer, corporate governance report, investor
grievances and various disclosures etc.

27
Disclosures by Listed Companies

It is essential that all critical price sensitive/material information relating to securities is made
available to the market participants and the investors immediately to enable them to take informed
decisions in respect of their investments in securities. The Exchange therefore ensures certain
important timely disclosures by listed companies and disseminates them to market through the
NEAT terminals and through its website. These disclosures include corporate actions, quarterly/
half yearly results, decisions at board meeting, non-promoters’ holding, announcements / press
releases etc.

De-listing

There are two kinds of delisting which can be done from the Exchanges as per the SEBI (Delisting
of Securities) Guidelines, 2003 in the following manner:

Voluntary De-listing of Companies

Any promoter or acquirer desirous of delisting securities of the company under the provisions
of these guidelines shall obtain the prior approval of shareholders of the company by a special
resolution passed through postal ballot, make a public announcement in the manner provided in
these guidelines, make an application to the delisting exchange for seeking in-principle approval
in the form specified by the exchange, and comply with such other additional conditions as may
be specified by the concerned stock exchanges from where securities are to be de-listed. Any
promoter of a company which desires to de-list from the stock exchange shall also determine an
exit price for delisting of securities in accordance with the book building process as stated in the
guidelines. The stock exchanges shall provide the infrastructure facility for display of the price at
the terminal of the trading members to enable the investors to access the price on the screen to
bring transparency to the delisting process.

Compulsory De-listing of Companies

The stock exchanges may de-list companies which have been suspended for a minimum period
of six months for non-compliance with the listing agreement. The stock exchanges have to give
adequate and wide public notice through newspapers and also give a show cause notice to a
company. The exchange shall provide a time period of 15 days within which representation may be
made to the exchange by any person who may be aggrieved by the proposed delisting.

The Stock Exchanges may, after consideration of the representation received from the aggrieved
persons, delist the securities of such companies. The stock exchange shall ensure that adequate
and wide public notice is given through newspaper and on the notice boards/trading systems of the
stock exchanges and shall ensure disclosure in all such notices of the fair value of such securities.
The stock exchange shall display the name of such company on its website. Where the securities
of the company are de-listed by an exchange, the promoter of the company shall be liable to
compensate the security holders of the company by paying them the fair value of the securities
held by them and acquiring their securities, subject to their option to remain security-holders with
the company.

28
The companies delisted during 2009-10 are mentioned in the table below.

Name of the Company Date of Delisting

The Madras Aluminium Company Limited* 19-Jun-09

Lotte India Corporation Limited* 31-Jul-09

Matrix Laboratories Limited* 21-Aug-09

Pearl Global Limited* 21-Aug-09

SI Group - India Limited* 23-Sep-09

PHIL Corporation Limited^ 9-Feb-10

* Delisting of equity shares of the company on account of Voluntary delisting pursuant to SEBI
Delisting Guidelines-2003.
^ Delisting of equity shares of the company on account of Voluntary delisting pursuant to
Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009.

CM Segment

Two categories, namely ‘listed’ and ‘permitted to trade’ categories of securities (equity shares,
preference shares and debentures) are available for trading in the CM segment. At the end
of March 2010, 1,470 companies were listed, 37 companies were permitted for trading and
1,359 were available for trading. These securities had a market capitalisation of ` 6,009,173
crore (US $ 1,331,230 million). The growth of companies listed on the CM segment is presented
in Table 3-1.

Chart 3-1 : Companies Listed at end of March

29
Listing Fees
The listing fees charged by the Exchange are presented in the following table:

Listing Fees in the CM Segment

Sr. No. Listing Fees Amount


(`)
1 Initial Listing Fees 25,000
2 Annual Listing Fees (based on paid up share, bond and/ or debenture and/or debt
capital, etc.)
a) Upto ` 1 Crore 10,000
b) Above ` 1 Crore and upto ` 5 Crores 15,000
c) Above ` 5 Crore and upto ` 10 Crores 25,000
d) Above ` 10 Crore and upto ` 20 Crores 45,000
e) Above ` 20 Crore and upto ` 30 Crores 70,000
f) Above ` 30 Crore and upto ` 40 Crores 75,000
g) Above ` 40 Crore and upto ` 50 Crores 80,000
h) Above ` 50 Crores and upto ` 100 Crores 1,30,000
i) Above ` 100 Crore and upto ` 150 Crores 1,50,000
j) Above ` 150 Crore and upto ` 200 Crores 1,80,000
k) Above ` 200 Crore and upto ` 250 Crores 2,05,000
l) Above ` 250 Crore and upto ` 300 Crores 2,30,000
m) Above ` 300 Crore and upto ` 350 Crores 2,55,000
n) Above ` 350 Crore and upto ` 400 Crores 2,80,000
o) Above ` 400 Crore and upto ` 450 Crores 3,25,000
p) Above ` 450 Crore and upto ` 500 Crores 3,75,000

Companies which have a paid up share, bond and/ or debenture and/or debt capital, etc. of more
than ` 500 crores will have to pay minimum fees of ` 3,75,000 and an additional listing fees of
` 2,500 for every increase of ` 5 crores or part thereof in the paid up share, bond and/ or debenture
and/or debt capital, etc.

Companies which have a paid up share, bond and/ or debenture and/or debt capital, etc. of more
than ` 1,000 crores will have to pay minimum fees of ` 6,30,000 and an additional listing fees of
` 2,750 for every increase of ` 5 crores or part thereof in the paid up share, bond and/ or debenture
and/or debt capital, etc.

Shareholding Pattern
In the interest of transparency, the issuers are required to disclose shareholding pattern on a
quarterly basis. Table 3-3 a presents the sector-wise shareholding pattern at end-March 2010 of
companies listed on NSE. On an average, the promoters hold more than 57.83% of total shares.
Though the public shareholding is nearly 39.86%, Indian public held only 12.03% and the institutional
holdings by (Financial Institutions, Banks, Central and State governments, Insurance companies,
FIIs , MFs, VCF’s and FVCF’s) accounted for 18.37 %. Table 3-3 b shows that around 9.13% of the
total shares held by promoters are pledged.

WDM Segment
In the WDM segment, all government securities, state development loans and treasury bills are
‘deemed’ listed as and when they are issued. Other than those mentioned above, all eligible debt
securities whether publicly issued or privately placed can be made available for trading in the

30
WDM segment. Amongst other requirements, privately placed debt paper of banks, institutions
and corporates require an investment grade credit rating to be eligible for listing. The listing
requirements for securities on the WDM segment are presented in Table 3-4.

The growth of securities available for trading on the WDM segment is presented in Table 3-5. As at
end March 2010, 4,140 securities with issued capital of ` 3,150,880 crore (US $ 698,024 million)
and a market capitalisation of ` 3,165,929 crore (US $ 701,358 million) were available for trading
on the WDM segment.

Funds Mobilisation on the Exchange


During the year 2009-10, the resources raised through Public Issues, Rights Issues, QIP and
Preferential Allotments is summarized in the table below and Chart 3-2.

Particulars No. of Amount


Issues
( ` cr) (US $ mn)

Equity Public Issues 36 45,624 10,107

IPOs 33 23,684 5,247

FPOs 3 21,941 4,861

Rights Issues 16 4,893 1,084

QIP 64 42,484 9,412

Preferential Allotment 134 15,530 3,440

Non-Convertible Debentures 3 2,500 554

Initial Public Offer 1 1,000 443

Further Issue 2 1,500 111

Total 253 111,032 24,597

Chart 3-2 : No. of issues through various instruments during 2009-10

31
Public Issues

Initial Public Offerings (IPO’s)

Equity Shares

During the year 2009-10, 33 companies were listed through IPO mobilizing an amount of ` 23,684
crore (US $ 5,247 million). NHPC Limited was the largest IPO raising ` 6,038.55 crore (US $ 1,337.74
million) followed by Adani Power Limited raising ` 3,016.52 crore (US $ 668.26 million). The details
of IPOs listed on NSE during 2009-10 is presented in Table 3-6.

Non Convertible Debentures (NCDs)

During 2009-10, there were three NCD issues. L&T Finance came out with its initial public offer in
form of non-convertible debentures in September 2010. In March 2010, Shriram Transport Finance
Co. ltd. and L&T Finance came out with further issue in the form of non-convertible debentures.
Details about the resource mobilisation through NCDs is given in the table below:

S.No. Name of Company Date Amount Mobilised


( ` crs)

1 Shriram Transport Finance Co. Ltd.** 4-Sep-09 1000

2 L&T Finance Limited* 24-Sep-09 1000

3 L&T Finance Limited** 16-Mar-10 500

* The NCD issue is Initial Public Offer.


** The NCD issue is a further public offer.

Rights Issue

There were 16 Rights issues during 2009-10, out of which Religare Enterprises Ltd. was the largest
in terms of issue size of ` 1,814.31 crore (US $ 401.93 million). The details of Rights Issues listed
on NSE during 2009-10 is presented in Table 3-7.

Preferential Allotment / Private Placement


During 2009-10, there were 134 preferential allotments that raised ` 15,530.30 crore
(US $ 3,440.47 million). The details of Preferential Allotment listed on NSE during 2009-10 are
presented in Table 3-8.

QIPs

The amount raised through 64 QIPs during 2009-10, was ` 42,484.45 crore (US $ 9411.71 million).
The details of QIPs are presented in Table 3-9.

32
Table 3-1 : Listing Criteria for Companies on the CM Segment of NSE

Criteria Initial Public Offerings (IPOs) Companies listed on other exchanges

Paid-up PUEC ≥ ` 10 cr. and MC ≥ ` 25 cr. PUEC ≥ ` 10 cr. and MC ≥ ` 25 cr. OR


Equity Capital PUEC ≥ ` 25 cr. OR
(PUEC)/Market MC ≥ ` 50 cr. OR
Capitalisation (MC) The company shall have a net worth of not
/Net Worth less than ` 50 crores in each of the preceding
financial years.

Company/ Atleast 3 years track record of either Atleast three years track record of either
Promoter’s Track a) the applicant seeking listing OR
Record b) the promoters/promoting a) the applicant seeking listing; OR
company incorporated in or b) the promoters/promoting company,
outside India OR incorporated in or outside India.
c) Partnership firm and subsequently
converted into Company not
in existence as a Company for
three years) and approaches
the Exchange for listing. The
Company subsequently formed
would be considered for listing
only on fulfillment of conditions
stipulated by SEBI in this regard.

Dividend Record -- Dividend paid in at least 2 out of the last 3


/ Net worth / financial years immediately preceding the
Distributable year in which the application has been made
Profits OR The networth of the applicants atleast
` 50 crores OR The applicant has
distributable profits in at least two out of
the last three financial years.

Listing Listed on any other stock exchange for


at least last three years OR listed on
the exchange having nationwide trading
terminals for at least one year.

Other (a) No disciplinary action by other (a) No disciplinary action by other stock
Requirements stock exchanges/regulatory exchanges/regulatory authority in past 3
authority in past 3 yrs. yrs.
(b) Satisfactory redressal mechanism (b) Satisfactory redressal mechanism for
for investor grievances, investor grievances,
(c) distribution of shareholding (c) distribution of shareholding and
(d) details of llitigation record in past (d) details of llitigation record in past
3 years. 3 years.
(e) Track record of Directors of the (e) Track record of Directors of the Company
Company (f) Change in control of a Company/
Utilisation of funds raised from public

33
Note:
1. (a) In case of IPOs, Paid up Equity Capital means post issue paid up equity capital.
(b) In case of Existing companies listed on other exchanges, the existing paid up equity capital as well
as the paid up equity capital after the proposed issue for which listing is sought shall be taken into
account.
2. (a) In case of IPOs, market capitalisation is the product of the issue price and the post-issue number of
equity shares.
(b) In case of existing companies listed on other stock exchanges the market capitalisation shall be
calculated by using a 12 month moving average of the market capitalisation over a period of six months
immediately preceding the date of application. For the purpose of calculating the market capitalisation
over a 12 month period, the average of the weekly high and low of the closing prices of the shares as
quoted on the National Stock Exchange during the last twelve months and if the shares are not traded
on the National Stock Exchange such average price on any of the recognised Stock Exchanges where
those shares are frequently traded shall be taken into account while determining market capitalisation
after making necessary adjustments for Corporate Action such as Rights / Bonus Issue/Split.
3. In case of Existing companies listed on other stock exchanges, the requirement of ` 25 crores market
capital shall not be applicable to listing of securities issued by Government Companies, Public Sector
Undertakings, Financial Institutions, Nationalised Banks, Statutory Corporations and Banking Companies
who are otherwise bound to adhere to all the relevant statutes, guidelines, circulars, clarifications etc.
that may be issued by various regulatory authorities from time to time
4. Net worth means paid-up equity capital + reserves excluding revaluation reserve - miscellaneous expenses
not written off - negative balance in profit and loss account to the extent not set off.
5. Promoters mean one or more persons with minimum 3 years of experience of each of them in the same
line of business and shall be holding at least 20 % of the post issue equity share capital individually or
severally.
6. In case a company approaches the Exchange for listing within six months of an IPO, the securities may
be considered as eligible for listing if they were otherwise eligible for listing at the time of the IPO. If
the company approaches the Exchange for listing after six months of an IPO, the norms for existing listed
companies may be applied and market capitalisation be computed based on the period from the IPO to the
time of listing.

34
Table 3-2 : Companies Listed, Permitted to Trade, Available for Trading
on the CM Segment

Month/Year No. of No. of No. of Market Capitalisation *


(end of period) Companies Companies Companies
Listed* Permitted to Available for
Trade* Trading *@ ( ` crore) (US $ mn)

Nov-94 0 300 300 292,637 93,108


Mar-95 135 543 678 363,350 115,606
Mar-96 422 847 1,269 401,459 116,873
Mar-97 550 934 1,484 419,367 116,880
Mar-98 612 745 1,357 481,503 121,807
Mar-99 648 609 1,254 491,175 115,761
Mar-00 720 479 1,152 1,020,426 240,496
Mar-01 785 320 1,029 657,847 141,048
Mar-02 793 197 890 636,861 130,504
Mar-03 818 107 788 537,133 113,081
Mar-04 909 18 787 1,120,976 258,349
Mar-05 970 1 839 1,585,585 362,419
Mar-06 1,069 --- 929 2,813,201 630,621
Mar-07 1,228 --- 1,084 3,367,350 772,505
Mar-08 1,381 --- 1,236 4,858,122 1,215,442
Apr-08 1,390 --- 1,244 5,442,780 1,068,259
May-08 1,398 --- 1,252 5,098,873 1,000,760
Jun-08 1,407 --- 1,262 4,103,651 805,427
Jul-08 1,417 --- 1,272 4,432,427 869,956
Aug-08 1,422 --- 1,278 4,472,461 877,814
Sep-08 1,424 --- 1,278 3,900,185 765,493
Oct-08 1,431 --- 1,282 2,820,388 553,560
Nov-08 1,430 --- 1,286 2,653,281 520,762
Dec-08 1,428 --- 1,283 2,916,768 572,477
Jan-09 1,427 --- 1,286 2,798,707 549,305
Feb-09 1,425 --- 1,284 2,675,622 525,147
Mar-09 1,432 --- 1,291 2,896,194 568,439
Apr-09 1,420 -- 1,279 3,375,025 747,679
May-09 1,425 -- 1,280 4,564,572 1,011,203
Jun-09 1,426 -- 1,282 4,432,596 981,966
Jul-09 1,430 -- 1,287 4,816,459 1,067,005
Aug-09 1,431 -- 1,288 4,975,800 1,102,304
Sep-09 1,434 -- 1,287 5,353,880 1,186,061
Oct-09 1,439 -- 1,291 5,024,830 1,113,166
Nov-09 1,443 10 1,292 5,430,088 1,202,944
Dec-09 1,453 10 1,303 5,699,637 1,262,658
Jan-10 1,457 31 1,338 5,782,965 1,281,118
Feb-10 1,461 31 1,342 5,755,305 1,274,990
Mar-10 1470 37 1359 6,009,173 1,331,230
2009-10 1,470 37 1,359 6,009,173 1,331,230
* At the end of the period
@ Excludes suspended companies.

35
36
Table 3-3 a : Shareholding Pattern at the end of March 2010 of companies Listed on NSE
(in percent)
Sectors Promoters Public Shares held by
Custodians
Indian Foreign Institutional Non- Institutional
and against
Promoters Promoters
Financial Institu- Foreign Institu- Mutual Funds Venture Any other Bodies Individuals Any Other which Deposi-
tions/ tional Investors Capital Funds Corporate tory
Banks/Central including Receipts have
Government/ Foreign Ven- been issued
State ture Capital
Government(s)/ Funds
Insurance
Companies
Banks 45.94 1.08 9.85 16.02 3.50 0.00 0.40 5.75 12.68 0.86 3.92

Engineering 27.36 1.76 10.84 8.28 10.82 0.00 0.61 10.98 20.84 7.49 1.00

Finance 42.90 1.82 8.15 16.53 3.35 0.00 0.67 6.76 15.55 4.02 0.24

FMCG 20.24 14.94 11.90 14.09 7.18 0.00 0.00 5.63 12.71 13.02 0.28

Information Technology 41.77 6.38 2.47 11.68 2.32 0.15 0.17 6.87 16.71 4.74 6.75

Infrastructure 71.18 2.55 3.89 8.90 2.03 0.45 0.00 3.19 5.87 1.87 0.06

Manufacturing 44.98 8.82 6.43 8.79 3.44 0.02 0.30 6.68 15.03 2.33 3.21

Media & Entertainment 49.28 3.54 1.57 7.06 4.72 0.16 0.00 9.66 12.63 2.10 9.28

Petrochemicals 54.73 6.78 4.92 6.08 2.47 0.00 0.31 6.15 10.64 3.26 4.64

Pharmaceuticals 39.29 10.75 4.25 8.78 3.85 0.12 0.40 7.43 20.32 3.17 1.63

Services 45.27 11.58 5.49 8.05 3.90 0.60 0.00 7.97 12.35 4.09 0.71

Telecommunication 52.55 7.80 5.29 8.64 1.57 0.00 0.00 3.98 9.48 10.05 0.64

Miscellaneous 50.21 2.26 1.98 8.10 2.92 0.00 0.04 9.46 18.92 5.62 0.48

Number of Shares 123,995,584,268 14,869,503,195 13,365,229,286 22,993,197,680 7,379,382,003 363,160,395 456,187,691 13,789,878,538 28,876,284,061 8,495,555,436 5,536,759,300

% to Total Number of Shares 51.64 6.19 5.57 9.58 3.07 0.15 0.19 5.74 12.03 3.54 2.31
Table 3-3 b : Sectorwise Pledged Shares of Promoters of Companies Listed
at NSE ar the end of March 2010.

Sectors Indian Foreign Shares pledged %age of pledged


Promoters Promoters (No.) shares
(No.) (No.)

Banks 6,108,864,413 143,446,889 5,924,955 0.09

Engineering 443,448,622 28,590,809 17,793,262 3.77

Finance 4,337,315,551 184,031,799 75,975,376 1.68

FMCG 2,079,925,510 1,535,216,594 242,927,311 6.72

Information Technology 5,412,785,833 826,972,951 394,413,453 6.32

Infrastructure 43,003,555,153 1,540,126,582 5,531,874,706 12.42

Manufacturing 30,510,730,999 5,979,738,065 3,289,368,642 9.01

Media & Entertainment 2,730,830,464 196,254,541 575,236,403 19.65

Petrochemicals 12,408,195,923 1,537,897,877 637,863,199 4.57

Pharmaceuticals 2,782,337,615 761,540,572 156,201,607 4.41

Services 3,432,491,991 877,784,737 631,782,904 14.66

Telecommunication 7,490,950,815 1,111,238,881 580,510,998 6.75

Miscellaneous 3,254,151,379 146,662,898 545,277,625 16.03

Total 123,995,584,268 14,869,503,195 12,685,150,441 9.13

37
Table 3-4 : Eligibility Criteria for Securities on WDM Segment

Issuer Eligibility Criteria for listing

Public Issue /Private Placement

Corporates (Public limited companies ● Paid-up capital of ` 10 crores; or


and Private limited companies) ● Market capitalisation of ` 25 crores
(In case of unlisted companies Networth more than ` 25 crores)
● Credit rating

Public Sector Undertaking, Statutory ● Credit rating


Corporation established/ constituted
under Special Act of Parliament
/State Legislature, Local bodies/
authorities

Mutual Funds: ● Qualifies for listing under SEBI’s Regulations


Units of any SEBI registered Mutual
Fund/scheme :
● Investment objective to invest
predominantly in debt or
● Scheme is traded in secondary
market as debt instrument

Infrastructure companies ● Qualifies for listing under the respective Acts, Rules or Regulations
● Tax exemption and recognition under which the securities are issued.
as infrastructure company under ● Credit rating
related statutes/regulations

Financial Institutions u/s. 4A of Public Issue Private Placement


Companies Act, 1956 including
Industrial Development Corporations Qualifies for listing under the Credit rating
respective Acts, Rules or Regulations
under which the securities are
issued.

Banks ● Scheduled banks ● Scheduled Banks


● Networth of ` 50 crores or ● Networth of ` 50 crores or
above above
● Qualifies for listing under ● Credit rating
the respective Acts, Rules or
Regulations under which the
securities are issued.

Table 3-5 : Securities Available for Trading on WDM Segment (as on March 31)

Securities 2009 2010


Number Amount Amount Number Amount Amount
( ` cr) (US $ mn) ( ` cr) (US $ mn)

Government Securities 1,391 2,272,333 445,993 1,461 2,472,978 547,846


T-Bills 52 147,617 28,973 54 137,500 30,461
PSU Bonds 783 129,499 25,417 795 161,904 35,867
Institutional. Bonds 263 57,628 11,311 299 77,568 17,184
Bank Bonds 459 132,662 26,038 518 164,385 36,417
Corporate Bonds 1,000 107,782 21,154 992 133,428 29,559
Others 6 795 156 21 3,117 690
Total 3,954 2,848,315 559,041 4,140 3,150,880 698,024

38
Table 3-6 : Initial Public Offerings (IPOs) during 2009-10

Sr. Company Name Sector Issue Date of No. of Securi- Issue Close Close Price Apprecia- Price Appre-
No. size Listing ties issued Price Price on Price at tion/ Deprecia- ciation/ Depre-
first day end of tion on the first ciation at end
of trading March day of trading March 2009
/ Listing 2010 with the issue with the issue
Price price price
( ` cr) (`) (`) (`) (in %) (in %)
Equity Issues
1 Mahindra Holidays & Resorts India Limited Services 277.96 16-Jul-09 9,265,275 300.00 317.45 544.70 5.82 81.57
2 Excel Infoways Limited Services 48.17 3-Aug-09 5,667,079 85.00 95.85 39.55 12.76 -53.47
3 Raj Oil Mills Limited Manufacturing 114.00 12-Aug-09 9,500,008 120.00 119.25 59.75 -0.63 -50.21
4 Adani Power Limited Infrastructure 3016.52 20-Aug-09 301,652,031 100.00 100.10 116.00 0.10 16.00
5 NHPC Limited Infrastructure 6038.55 1-Sep-09 1,677,374,015 36.00 36.75 30.45 2.08 -15.42
6 Jindal Cotex Limited Manufacturing 93.43 22-Sep-09 12,457,034 75.00 87.30 81.00 16.40 8.00
7 Globus Spirits Limited FMCG 75.00 23-Sep-09 7,500,000 100.00 91.00 135.35 -9.00 35.35
8 Oil India Limited Petrochemicals 2777.25 30-Sep-09 26,449,982 1050.00 1,141.20 1,154.75 8.69 9.98
9 Pipavav Shipyard Limited Services 498.66 9-Oct-09 85,450,225 58.00 56.70 70.20 -2.24 21.03
10 Euro Multivision Limited Information Technology 66.00 15-Oct-09 8,800,049 75.00 53.55 24.10 -28.60 -67.87
11 Thinksoft Global Services Limited Information Technology 45.58 26-Oct-09 3,646,000 125.00 164.40 189.55 31.52 51.64
12 Indiabulls Power Limited Infrastructure 1529.10 30-Oct-09 339,800,000 45.00 39.50 30.75 -12.22 -31.67
13 Den Networks Limited Media & Entertainment 364.45 24-Nov-09 18,567,240 195.00 163.40 195.75 -16.21 0.38
14 Astec LifeSciences Limited Petrochemicals 61.50 25-Nov-09 7,500,150 82.00 84.00 49.15 2.44 -40.06
15 Cox And Kings (India) Limited Services 610.39 11-Dec-09 18,496,640 330.00 425.40 481.35 28.91 45.86
16 JSW Energy Limited Infrastructure 2657.73 4-Jan-10 267,326,604 100.00 100.85 111.85 0.85 11.85
17 Godrej Properties Limited Infrastructure 468.85 5-Jan-10 9,429,750 490.00 537.25 511.55 9.64 4.40
18 D. B. Corp Limited Services 384.22 6-Jan-10 18,175,000 212.00 265.90 239.90 25.42 13.16
19 MBL Infrastructures Limited Infrastructure 102.60 11-Jan-10 5,700,000 180.00 206.55 226.20 14.75 25.67

Contd...

39
40
Contd...

Sr. Company Name Sector Issue Date of No. of Securi- Issue Close Close Price Apprecia- Price Appre-
No. size Listing ties issued Price Price on Price at tion/ Deprecia- ciation/ Depre-
first day end of tion on the first ciation at end
of trading March day of trading March 2009
/ Listing 2010 with the issue with the issue
Price price price
( ` cr) (`) (`) (`) (in %) (in %)
20 Infinite Computer Sol Ltd Information Technology 189.8383 3-Feb-10 11,505,352 165.00 191.80 190.70 16.24 15.58
21 Jubilant Foodworks Limited Manufacturing 328.72 8-Feb-10 22,670,452 145.00 229.10 313.60 58.00 116.28
22 Syncom Healthcare Limited Pharmaceuticals 56.25 15-Feb-10 7,500,000 75.00 87.75 120.60 17.00 60.80
23 Vascon Engineers Ltd Manufacturing 178.20 15-Feb-10 10,800,000 165.00 148.05 154.90 -10.27 -6.12
24 Thangamayil Jewellery Ltd Miscellaneous 28.75 19-Feb-10 3,833,667 75.00 71.05 81.55 -5.27 8.73
25 Aqua Logistics Ltd Services 152.16 23-Feb-10 6,916,225 220.00 244.60 271.05 11.18 23.20
26 D B Realty Limited Infrastructure 1500.00 24-Feb-10 32,051,282 468.00 456.20 453.85 -2.52 -3.02
27 Emmbi Polyarns Ltd Miscellaneous 38.96 24-Feb-10 8,657,700 45.00 28.75 20.65 -36.11 -54.11
28 Hathway Cable & Datacom Media & Entertainment 666.00 25-Feb-10 27,750,000 240.00 207.65 207.50 -13.48 -13.54
29 ARSS Infrastructure Projects Limited Infrastructure 103.02 3-Mar-10 2,289,230 450.00 737.45 928.10 63.88 106.24
30 Texmo Pipes and Products Limited Manufacturing 45.00 10-Mar-10 5,000,000 90.00 137.15 91.95 52.39 2.17
31 Man Infraconstruction Limited Infrastructure 141.76 11-Mar-10 5,625,204 252.00 349.85 358.75 38.83 42.36
32 United Bank of India Bank 324.98 18-Mar-10 50,000,000 66.00 68.65 68.80 4.02 4.24
33 IL&FS Transportation Networks Limited Services 700.00 30-Mar-10 27,131,782 258.00 274.65 278.35 6.45 7.89
Total 23,684
Non Convertible Debenture - Initial Public Offer during 2009-10
1 L&T Finance Limited
L&TFINANCE-Series N1 106.64 24-Sep-09 1066381 1000.00 1,029.90 1036 2.99 3.6
L&TFINANCE-Series N2 Finance 296.35 24-Sep-09 2963483 1000.00 1,030.00 1034 3 3.4
L&TFINANCE-Series N3 126.32 24-Sep-09 1263197 1000.00 1,044.00 1111 4.4 11.1
L&TFINANCE-Series N4 470.69 24-Sep-09 4706939 1000.00 1,038.00 1054.01 3.8 5.401
Table 3-7 : Rights Issues during 2009-10

S. Company Name Amount Amount Date of Listing


No. Mobilised Mobilised
( ` Crore) (US $ mn)
1 Chemplast Sanmar Limited 159.94 35.43 7-May-2009
2 Alok Industries Limited 449.59 99.60 11-May-2009
3 Sundaram Brake Linings Limited 14.85 3.29 3-Jul-2009
4 Piramal Glass Limited 187.36 41.51 25-Sep-2009
5 JMC Projects (India) Limited 39.91 8.84 8-Oct-2009
6 The Tinplate Company of India Limited 374.13 82.88 21-Oct-2009
7 Greenply Industries Limited 45.89 10.17 26-Oct-2009
8 Morarjee Textiles Limited 27.24 6.04 29-Oct-2009
9 Television Eighteen India Limited 126.01 27.92 30-Oct-2009
10 Fortis Healthcare Limited 997.12 220.89 3-Nov-2009
11 Wire and Wireless (India) Limited 212.60 47.10 9-Nov-2009
12 Impex Ferro Tech Limited 39.95 8.85 17-Nov-2009
13 Lakshmi Vilas Bank Limited 263.14 58.29 30-Dec-2009
14 City Union Bank Limited 40.86 9.05 5-Jan-2010
15 Infomedia 18 Limited 99.90 22.13 29-Jan-2010
16 Religare Enterprises Limited 1814.31 401.93 2-Mar-2010
Total 4892.81 1,083.92

Table 3-8 : Preferential Allotments by NSE Listed Companies during 2009-10

S.No. Company Name Amount Raised


` Crore US $ mn
1 GTL Infrastructure Limited 6.00 1.33
2 Geojit BNP Paribas Financial Services Limited 36.17 8.01
3 JIK Industries Limited 0.51 0.11
4 NCL Industries Limited 3.60 0.80
5 Jain Irrigation Systems Limited 72.00 15.95
6 West Coast Paper Mills Limited 13.50 2.99
7 Talbros Automotive Components Limited 2.67 0.59
8 Cranes Software International Limited 38.74 8.58
9 Satyam Computer Services Limited 1756.03 389.02
10 Suryajyoti Spinning Mills Limited 1.12 0.25
11 JIK Industries Limited 2.47 0.55
12 Opto Circuits (India) Limited 0.00 -
13 Opto Circuits (India) Limited 0.00 -
14 Opto Circuits (India) Limited 19.44 4.31
15 Rane Brake Lining Limited 3.50 0.78
16 Apollo Hospitals Enterprise Limited 77.10 17.08
17 Bombay Rayon Fashions Limited 333.00 73.77
18 Banswara Syntex Limited 0.00 -

Contd...

41
Contd...
S.No. Company Name Amount Raised
` Crore US $ mn
19 Softpro Systems Limited 6.53 1.45
20 GTL Infrastructure Limited 481.98 106.77
21 Rana Sugars Limited 4.37 0.97
22 GMR Infrastructure Limited 149.72 33.17
23 Shree Renuka Sugars Limited 25.03 5.54
24 R. S. Software (India) Limited 0.43 0.10
25 Dewan Housing Finance Corporation Limited 25.01 5.54
26 Max India Limited 150.00 33.23
27 Raj Rayon Limited 0.08 0.02
28 IFB Industries Limited 6.80 1.51
29 IFB Industries Limited 2.94 0.65
30 Network18 Media & Investments Limited 90.00 19.94
31 Satyam Computer Services Limited 1152.22 255.25
32 Shri Lakshmi Cotsyn Limited 7.79 1.72
33 Gallantt Metal Limited 15.50 3.43
34 Radha Madhav Corporation Limited 21.82 4.83
35 Dewan Housing Finance Corporation Limited 75.44 16.71
36 West Coast Paper Mills Limited 11.50 2.55
37 Adhunik Metaliks Limited 100.00 22.15
38 Adhunik Metaliks Limited 72.22 16.00
39 Himadri Chemicals and Industries Limited 17.55 3.89
40 Arvind Limited 11.25 2.49
41 Delta Corporation Limited 24.86 5.51
42 Delta Corporation Limited 35.08 7.77
43 Delta Corporation Limited 0.81 0.18
44 Simbhaoli Sugars Limited 6.83 1.51
45 Jai Balaji Industries Limited 273.26 60.54
46 OnMobile Global Limited 3.30 0.73
47 TIL Limited 9.78 2.17
48 Karuturi Global Limited 5.06 1.12
49 Sesa Goa Limited 537.24 119.02
50 Kohinoor Foods Limited 5.64 1.25
51 MVL Limited 5.00 1.11
52 Shriram Transport Finance Company Limited 240.00 53.17
53 Motilal Oswal Financial Services Limited 13.72 3.04
54 J.Kumar Infraprojects Limited 24.00 5.32
55 Axis Bank Limited 360.56 79.88
56 JIK Industries Limited 0.38 0.08
57 JIK Industries Limited 0.62 0.14
58 ING Vysya Bank Limited 185.91 41.19
59 Ind-Swift Laboratories Limited 3.50 0.78

Contd...

42
Contd...
S.No. Company Name Amount Raised
` Crore US $ mn
60 Ind-Swift Laboratories Limited 4.90 1.09
61 MVL Limited 1.00 0.22
62 Celebrity Fashions Limited 0.50 0.11
63 Gujarat NRE Coke Limited 20.00 4.43
64 NCL Industries Limited 5.03 1.11
65 Simplex Projects Limited 8.10 1.79
66 Mawana Sugars Limited 16.00 3.54
67 Allcargo Global Logistics Limited 100.97 22.37
68 HCL Infosystems Limited 251.35 55.68
69 Era Infra Engineering Limited 178.50 39.54
70 Era Infra Engineering Limited 119.00 26.36
71 Abhishek Industries Limited 59.64 13.21
72 Radha Madhav Corporation Limited 12.86 2.85
73 ibn18 Broadcast Limited 25.50 5.65
74 Pantaloon Retail (India) Limited 276.33 61.22
75 Network18 Media & Investments Limited 119.63 26.50
76 Network18 Media & Investments Limited 99.00 21.93
77 Aditya Birla Nuvo Limited 432.95 95.91
78 Allcargo Global Logistics Limited 141.36 31.32
79 Jindal Saw Limited 213.01 47.19
80 FCS Software Solutions Limited 18.20 4.03
81 Electrosteel Castings Limited 73.13 16.20
82 HBL Power Systems Limited 34.70 7.69
83 Sujana Tower Limited 4.00 0.89
84 Ruchi Soya Industries Limited 105.00 23.26
85 Ucal Fuel Systems Limited 29.87 6.62
86 Lloyds Steel Industries Limited 20.00 4.43
87 The Dhampur Sugar Mills Limited 22.84 5.06
88 Rallis India Limited 89.03 19.72
89 Su-Raj Diamonds and Jewellery Limited 77.62 17.19
90 Videocon Industries Limited 45.00 9.97
91 Berger Paints (I) Limited 36.36 8.05
92 Electrosteel Castings Limited 23.58 5.22
93 HDFC Bank Limited 4008.97 888.12
94 Maral Overseas Limited 19.75 4.38
95 Websol Energy Systems Limited 3.72 0.82
96 Berger Paints (I) Limited 99.00 21.93
97 LT Foods Limited 25.40 5.63
98 Raj Rayon Limited 0.90 0.20
99 S. Kumars Nationwide Limited 15.00 3.32
100 Shreyans Industries Limited 8.94 1.98

Contd...

43
Contd...

S.No. Company Name Amount Raised


` Crore US $ mn
101 K S Oils Limited 135.22 29.96
102 Bajaj Hindusthan Limited 75.60 16.75
103 S. Kumars Nationwide Limited 5.00 1.11
104 K Sera Sera Productions Limited 8.65 1.92
105 Amtek Auto Limited 101.08 22.39
106 Amtek India Limited 24.19 5.36
107 Sujana Tower Limited 17.60 3.90
108 Karuturi Global Limited 27.36 6.06
109 Asian Electronics Limited 14.40 3.19
110 Ind-Swift Laboratories Limited 4.20 0.93
111 Ind-Swift Laboratories Limited 4.46 0.99
112 Escorts Limited 44.80 9.93
113 Mahindra & Mahindra Limited 700.00 155.07
114 Sree Rayalaseema Hi-Strength Hypo Limited 0.82 0.18
115 Ahmednagar Forgings Limited 8.60 1.91
116 Ansal Properties & Infrastructure Limited 67.39 14.93
117 Himadri Chemicals and Industries Limited 252.40 55.91
118 Punjab Chemicals & Crop Protection Limited 8.16 1.81
119 S. Kumars Nationwide Limited 108.26 23.98
120 SEL Manufacturing Company Limited 34.98 7.75
121 Asian Electronics Limited 3.33 0.74
122 Softpro Systems Limited 1.80 0.40
123 LG Balakrishnan & Bros Limited 0.00 0.00
124 B.A.G Films and Media Limited 12.35 2.74
125 JHS Svendgaard Laboratories Limited 7.13 1.58
126 Nagarjuna Fertilizer & Chemicals Limited 1.26 0.28
127 India Foils Limited 13.60 3.01
128 Gujarat NRE Coke Limited 98.67 21.86
129 Supreme Tex Mart Limited 20.19 4.47
130 Aarti Industries Limited 10.78 2.39
131 SEL Manufacturing Company Limited 39.90 8.84
132 Nectar Lifesciences Limited 91.00 20.16
133 Shree Renuka Sugars Limited 205.87 45.61
134 Nitin Spinners Limited 5.00 1.11
Total 15530.30 3,440.47

44
Table 3-9 : Amount raised through QIP during 2009-10

Sr.No Name of the company Amount Raised

( ` cr) (US $ mn)

1 3i Infotech Limited 317.81 70.41

2 Aban Offshore Limited 697.50 154.52

3 Ackruti City Limited 302.40 66.99

4 Adhunik Metaliks Limited 137.13 30.38

5 Allied Digital Services Limited 231.42 51.27

6 Axis Bank Limited 2,996.14 663.74

7 Bajaj Electricals Limited 160.79 35.62

8 Bajaj Hindusthan Limited 723.18 160.21

9 Cipla Limited 675.99 149.75

10 Development Credit Bank Limited 81.00 17.94

11 Delta Corp Limited 83.26 18.45

12 Dewan Housing Finance Corporation Limited 225.77 50.02

13 Educomp Solutions Limited 606.69 134.40

14 Electrosteel Castings Limited 10.07 2.23

15 Electrosteel Castings Limited 200.00 44.31

16 Emami Limited 310.00 68.68

17 Exide Industries Limited 539.50 119.52

18 Gammon India Limited 304.16 67.38

19 Glenmark Pharmaceuticals Limited 413.56 91.62

20 GVK Power & Infrastructure Limited 716.85 158.81

21 Hindustan Construction Company Limited 480.11 106.36

22 HCL Infosystems Limited 472.67 104.71

23 Housing Development Finance Corporation Limited 301.23 66.73

24 Housing Development Finance Corporation Limited 4,000.00 886.13

25 Housing Development and Infrastructure Limited 1,688.40 374.04

26 Hindalco Industries Limited 2,790.10 618.10

27 Indiabulls Real Estate Limited 2,656.50 588.50

28 Indiabulls Financial Services Limited 960.00 212.67

29 The India Cements Limited 295.62 65.49

30 Indusind Bank Limited 480.35 106.41

31 ING Vysya Bank Limited 230.00 50.95

32 Jai Balaji Industries Limited 198.51 43.98

33 J.Kumar Infraprojects Limited 55.46 12.29

34 KSK Energy Ventures Limited 515.93 114.29

35 The Karnataka Bank Limited 160.83 35.63

36 LIC Housing Finance Limited 658.00 145.77

37 Lanco Infratech Limited 727.35 161.13

Contd...

45
Contd...

Sr.No Name of the company Amount Raised

( ` cr) (US $ mn)

38 Larsen & Toubro Limited 1,872.80 414.89

39 Mahindra Forgings Limited 175.00 38.77

40 United Spirits Limited 1,615.60 357.91

41 Nagarjuna Construction Company Limited 367.35 81.38

42 Network18 Media & Investments Limited 204.92 45.40

43 Opto Circuits (India) Limited 400.00 88.61

44 Orbit Corporation Limited 145.05 32.13

45 Pantaloon Retail (India) Limited 499.98 110.76

46 Parsvnath Developers Limited 168.01 37.22

47 Patel Engineering Limited 344.32 76.28

48 PSL Limited 149.32 33.08

49 PTC India Limited 499.99 110.76

50 Punj Lloyd Limited 670.18 148.47

51 Radico Khaitan Limited 341.79 75.72

52 Rei Agro Limited 182.67 40.47

53 Shree Renuka Sugars Limited 506.03 112.10

54 Sobha Developers Limited 526.90 116.72

55 Shriram Transport Finance Company Limited 583.86 129.34

56 Sunteck Realty Limited 158.44 35.10

57 Texmaco Limited 170.56 37.78

58 Unitech Limited 1,621.10 359.13

59 Unitech Limited 2,789.33 617.93

60 Unity Infraprojects Limited 73.34 16.25

61 Usha Martin Limited 468.16 103.71

62 Websol Energy Systems Limited 45.40 10.06

63 Welspun Corp Limited 466.20 103.28

64 Yes Bank Limited 1,033.88 229.04

Total 42,484.45 9,411.71

46
Capital Market Segment 4
48
Capital Market Segment 4
The Capital Market (CM) segment (or the equity market segment) of NSE commenced its operations
on November 4, 1995. The turnover in the Capital market segment witnessed a compound annual
growth rate of 67.50% from ` 1,805 crore (US $ 574.29 million) in the year 1994-95 to ` 4,138,023
crore (US $ 916,709 million) in 2009-10. The CM segment of NSE provides an efficient and
transparent platform for trading for various types of securities such as equity shares, preference
shares, debentures, warrants, exchange traded funds as well as retail government securities.

NEAT – CM System
The trading system of NSE Capital Market segment is known as the National Exchange for Automated
Trading – Capital Market (NEAT - CM). NEAT - CM is an on-line screen based trading system which
is fully automated, nationwide, anonymous and order driven. Under the screen based trading
system, a trading member can punch into the computer, the number of securities and the prices
at which he would like to transact. The transaction is executed as soon as it finds a matching sell
or buy order from a counter party. The various advantages of the screen based trading system are
as follows:

• It electronically matches orders on a price/time priority and hence cuts down on time, cost
and risk of error, as well as on fraud resulting in improved operational efficiency.

• It allows faster incorporation of price sensitive information into prevailing prices, thus
increasing the informational efficiency of markets.

• It enables market participants to see the full market on real-time, making the market
transparent. It allows a large number of participants, irrespective of their geographical
locations, to trade with one another simultaneously, improving the depth and liquidity of the
market.

• It provides tremendous flexibility to the users in terms of kinds of orders that can be placed on
the system. It ensures full anonymity by accepting orders, big or small, from members without
revealing their identity, thus providing equal access to everybody.

• It provides a perfect audit trail which helps to resolve disputes by logging in the trade execution
process in entirety.

• The trading platform of the CM segment is accessed not only from the computer terminals from
the premises of brokers spread across various cities, but also from the personal computers in
the homes of investors through the Internet.

Market Performance

Trading Volume

In the year 2009-10, the trading volumes increased by 50.36 % to ` 4,138,023 crore (US $ 916,709
million) from ` 2,752,023 crore (US $ 540,142 million) during 2008-09. The average daily trading
volume increased from ` 11,325 crore (US $ 2,223 million) during 2008-09 to ` 16,959 crore
(US $ 3,757 million) during 2009-10. The remarkable aspect was that the trading volumes in the
year 2009-10 showed a growth of 16.53 % over the trading volumes witnessed in 2007-08. The
business growth of the CM segment from 1994-95 till 2009-10 is shown in Table 4-1 and Chart 4-1.

49
Chart 4-1 : Business Growth of Capital Market Segment

Traded Quantity

The traded quantity registered in the year 2009-10 was 2,215,530 lakh which was 55.33% higher
than the number of traded quantity in 2008-09 (1,426,355 lakh). As compared with 2007-08, traded
quantity in 2009-10 was higher by 47.85%.

Liquidity

The liquidity in the CM segment, as measured by the turnover ratio, has witnessed a decrease and
reached nearly 68.86 % during the year 2009-2010 as compared to 95.02 % during the year 2008-09.
The companies available for trading for more than 100 days accounted for 92.86% as indicated in
the table below:

Frequency Distribution of Companies traded During 2009-10

No. of Days Traded No. of companies Traded

Above 100 1301


91-100 15
81-90 3
71-80 9
61-70 2
51-60 23
41-50 6
31-40 6
21-30 9
11-20 14
1-10 13
Total 1401

50
The percentage of companies traded compared to the number of companies available for trading is
quite high at more than 98% for all the months during the fiscal 2009-10. The month wise statistics
are indicated in the table below:

Trading Frequency of Companies during the period 2009-10

Month/Year NSE
Companies Available for Companies % of Traded to Available
Trading* Traded for Trading
Apr-09 1,279 1,266 98.98
May-09 1,280 1,268 99.06
Jun-09 1,282 1,268 98.91
Jul-09 1,287 1,269 98.60
Aug-09 1,288 1,272 98.76
Sep-09 1,287 1,275 99.07
Oct-09 1,291 1,274 98.68
Nov-09 1,292 1,286 99.54
Dec-09 1,303 1,297 99.54
Jan-10 1,338 1,320 98.65
Feb-10 1,342 1,328 98.96
Mar-10 1,359 1,343 98.82

*At the end of the period includes listed/permitted to trade companies but excludes suspended companies

Advance- Decline Ratio


The market climate during 2009-10 can be gauged by the advance/decline ratio which was 1.07.
On an average, 644 advances and 624 securities declined during the month. The largest advances
took place on May 20, 2009 where 1,166 stocks advanced. The advance-decline ratio details during
2009-10 are presented below:

Month Advances Declines Advance/Decline Ratio

Apr-09 732 495 1.48


May-09 775 431 1.80
Jun-09 576 675 0.85
Jul-09 650 588 1.11
Aug-09 667 582 1.15
Sep-09 632 630 1.00
Oct-09 518 751 0.69
Nov-09 671 607 1.10
Dec-09 673 614 1.10
Jan-10 598 725 0.83
Feb-10 591 715 0.83
Mar-10 646 680 0.95
Average for 2009-10 644 624 1.07

Distribution of Turnover

The concentration of trading among top ‘N’ securities/member is presented in Table 4-2. It is
observed that the top ‘5’ and ‘100’ securities account for about 15.43 % and 78.20 % of total
turnover in the CM segment in 2009-10. The top ‘50’ securities accounted for 64.24 % of the total
turnover, details of which are presented in Table 4-3.

51
Member-wise distribution of turnover as presented in Table 4-2 indicates increasing diffusion of
trades among a large number of trading members over the years. During 2009-10, top ‘5’ members
accounted for only 14.63% of turnover, while top ‘100’ members accounted for 72.71% of total
turnover.

City-wise Turnover in the CM Segment

The City wise turnover in the CM Segment of NSE is shown below:


( ` crore)
City 2005-06 2006-07 2007-08 2008-09 2009-10

Ahmedabad 3.00 2.90 3.38 5.27 6.96


Bangalore 1.65 1.33 0.80 0.62 0.64
Baroda 0.77 0.89 0.80 0.70 0.58
Bhubaneshwar 0.02 0.02 0.01 0.00 0.00
Chennai 2.77 2.18 1.90 1.97 1.67
Cochin 0.61 0.54 0.51 0.76 1.44
Coimbatore 0.44 0.25 0.20 0.33 0.32
Delhi 13.37 13.54 14.67 14.97 14.88
Guwahati 0.02 0.03 0.02 0.01 0.01
Hyderabad 1.91 1.21 1.26 1.73 1.84
Indore 0.83 0.78 0.65 0.49 0.58
Jaipur 1.15 0.88 0.74 0.56 0.53
Kanpur 0.21 0.17 0.10 0.07 0.07
Kolkata/Howrah 11.39 10.59 10.96 9.24 8.26
Ludhiana 0.32 0.22 0.20 0.17 0.15
Mangalore 0.06 0.06 0.04 0.03 0.02
Mumbai / Thane 52.43 57.06 57.66 55.85 54.52
Patna 0.08 0.06 0.29 0.03 0.3
Pune 0.56 0.41 0.04 0.22 0.21
Rajkot 0.31 0.36 0.75 1.28 1.37
Others 8.10 6.54 5.01 5.70 5.91
Total 100 100 100 100 100.00

Market Capitalisation

The total market capitalisation of securities available for trading on the CM segment increased
from ` 363,350 crore (US $ 115,606 million) as at end March 1995 to ` 6,009,173 crore
(US $ 1,331,230 million) as at end March 2010. The Market capitalization witnessed an increase
of 107.49 % during 2009-10 as compared to the market capitalization of ` 2,896,194 crore
(US $ 568,439 million) in 2008-09. As compared with 2007-08, the market capitalization in 2009-10
increased by 23.69 %. The market capitalisation ratio of NSE was 97.49% as of March 31, 2010.

The details of ‘50’ top companies by market capitalisation, which accounted for 62.24 % of total
market capitalisation as at end March 2010, are presented in Table 4-4. The companies with the
highest market capitalisation as of March 2010 was Reliance Industries Limited followed by Oil and
Natural Gas Corporation of India Limited and NTPC Ltd.

Sectoral Distribution of Top 50 Companies


Table 4-5 presents the sectoral distribution of ‘Top 50’ companies based on their trading value
and on their market capitalization. In 2009-10, among the top 50 companies, in term of the total

52
traded value, the manufacturing companies constituted a share of 27.23% (15.66% in 2008-09)
followed by the infrastructure companies with a share of 18.74% (18.78% in 2008-09) and banks
with the share of 13.12 % (14.98% in 2008-09).

During 2009-10, among the top 50 companies, in terms of market capitalisation, 31.29% (19.07%
in 2008-09) of the total market capitalisation was from the manufacturing sector followed by
petrochemicals sector with a share of 19.19% (26.67% in 2008-09) and banks with a share of 11.54%
(9.09% in 2008-09).

Trading Records during 2009-10


Ten of NSE’s most active trading days in terms of trading values are presented in
Table 4-6. During 2009-10, the highest trading value of ` 40,151.91 crore (US $ 8,894.97 million)
was witnessed on May 19, 2009.

The individual securities single day trading records are presented in Table 4-7. Among the top 10
individual securities which registered single day trading records during 2009-10, Reliance Industries
Limited was the equity share which recorded the first and the second highest single day trading
values during 2009-10 while Reliance Natural Resources Ltd. registered the third highest trading
value among the scrips.

Internet Trading
At the end of March 2010, a total number of 363 members were permitted to allow investor’s
web based access to NSE’s trading system. The members of the exchange in turn had registered
5,143,705 clients for web based access as on March 31, 2010. During the year 2009-10, 11.13 %
of the trading value in the Capital Market segment ( ` 692,789 - US $ 135,974 million) was routed
and executed through the internet. The table below shows the growth of internet trading from the
fiscal years 2006-07 till 2008-09. Chart 4-2 shows the internet trading volumes in the CM segment
of NSE in comparison with the total traded volumes at NSE.

Chart 4-2 : Internet Trading Value in the CM Segment in comparison


with total trading volumes at NSE

53
Year Enabled Registered Internet Trading Internet Trading % of total
Members* Clients* Volume Volume trading volume
( ` crore) (US $ million)
2006-07 242 2,279,098 337,524 77,432 17.35
2007-08 305 4,405,134 668,399 167,225 18.82
2008-09 349 5,627,789 692,789 135,974 25.17
2009-10 363 5,143,705 921,380 204,116 11.13
* At the end of the financial year
Trading volumes are calculated as buy side + sell side turnover

On-line IPOs
The on-line trading system of NSE is used by companies to make IPOs through book building. It is a fully
automated screen based bidding system that allows trading members to enter bids on behalf of their
clients. All bids received by the system are numbered, time stamped, and stored in the book till the
last day of the book building process and the offer price is determined after the bid closing date. While
ensuring efficient price discovery, this system reduces time taken for completion of the issue process.
342 companies have used the on-line IPO system of NSE by the end of March 2010. The details of
resources raised through IPOs during 2009-10 are discussed in details in Chapter 3 on Listing.

Indices
India Index Services and Products Ltd. (IISL), in technical partnership with S&P, have developed and
have been maintaining scientifically an array of indices of stock prices on NSE. The popular indices
are the S&P CNX Nifty, CNX Nifty Junior, S&P CNX Defty, S&P CNX 500, CNX Midcap, CNX 100, Nifty
Midcap 50, S&P CNX Industry indices and CNX segment indices. S&P CNX Nifty, introduced in April
1996, is based on 50 largest and highly liquid stocks. CNX Nifty Junior, introduced in December
1996, is built out of the next 50 large and liquid stocks. These indices are monitored and updated
dynamically and are reviewed regularly. The comparative movement of major sectoral indices
along with that of S&P CNX Nifty is presented in Chart 4-3.

Chart 4-3 : Movement of Sectoral Indices: 2009-10

(Index values rebased to 100 for March 31, 2009)

The composition of Nifty 50 and CNX Nifty Junior as at end March 2010 is presented in Table 4-8
and Table 4-9. The industry wise weightages of securities included in S&P CNX Nifty are presented
in Table 4-10.

54
The movements in S&P CNX Nifty and CNX Nifty Junior are presented in Table 4-11 and Table 4-12
respectively. The Performance of few of the indices is presented in Table 4-13. During 2009-10,
the S&P CNX Nifty Index touched its peak of 5302.85 on March 29, 2010. It yielded a point to point
positive return of 73.76 % over 2008-09 while CNX Nifty Junior gave returns of 148.45%.

Among the sectoral indices, the CNX IT index was the best performer which yielded returns of
152.55% followed by the S&P CNX Petrochemicals index which earned returns of 114.69% and the
CNX Finance Index. which yielded returns of 102.06%.

India VIX*

India VIX is a measure of the implied volatility of Nifty 50 Index Option prices. From the best bid-
ask prices of Nifty 50 Options contracts, a volatility figure (%) is calculated which indicates the
expected market volatility over the next 30 calendar days. It is an estimate of investor sentiment
and is a helpful indicator of the amount the market is expected to "fluctuate" in the near term.
Higher the implied volatility, higher the India VIX value and vice-versa.

Volatility indices, such as the India VIX of the NSE, normally have an inverse relationship with
the market. When the markets rise, investors get more complacent, which is reflected in lower
prices paid to buy protection using options. Put differently, the markets lower their expectations
of volatility in an uptrend. When the market corrects, on the other hand, volatility expectations
rise, or higher prices are paid to buy protection using options.

Chart 4-4 with the India VIX on the one hand and NSE’s main S&P CNX Nifty index on the other
shows that this relationship has largely been maintained during 2009-10. The index was in the
range of 17% to 84% during 2009-10. However, on May 22, 2009 it rose sharply 83.71% and the
lowest of 17.03 % was recorded on March 25, 2010 This high value of the index indicates that the
investors perceive a significant risk of large price changes, causing option premiums to become
pricier.

Chart 4-4 : Movement of India VIX and S&P CNX Nifty

* “VIX” is a trademark of Chicago Board Options Exchange, Incorporated ("CBOE") and Standard & Poor’s has granted a
license to NSE, with permission from CBOE, to use such mark in the name of the India VIX and for purposes relating to the
India VIX.

55
There are some differences between a price index, such as the Nifty 50 and India VIX. Nifty 50 is
calculated based on the price movement of the underlying 50 stocks which comprises the index. India
VIX is calculated based on the bid-offer prices of the near and mid month Nifty 50 Index Options.
Nifty 50 Index is an absolute number, e.g. 4500, 5000 etc., whereas India VIX is a percentage value
(eg. 20%, 30% etc.). Whereas Nifty 50 signifies how the markets have moved directionally, India VIX
indicates the expected near term volatility and how the volatility is changing from time to time.

Mutual Funds and Exchange Traded Funds


At the end of March 2010, there were 18 asset management companies with total of 218 schemes
and 14 Exchange traded funds listed on the exchange. The 18 asset management companies listed
at NSE as of March 2010 are shown in the table below:

No. Names of Asset Management Companies

1 Benchmark Asset Management Company Private Limited

2 Franklin Templeton Asset Management (India) Pvt. Ltd

3 Kotak Mahindra Asset Management Company Limited

4 Quantum Asset Management Co. Private Ltd

5 Reliance Capital Asset Management Limited

6 UTI Asset Management Co. Ltd.

7 IDFC Asset Management Company Private Limited

8 Religare Asset Management Co. Pvt. Ltd

9 SBI Funds Management Private Limited

10 Birla Sun Life Asset Management Company Limited

11 HDFC Asset Management Company Limited

12 Deutsche Asset Management (India) Private Limited

13 Fortis Investment Management (India) Private Limited

14 Principal PNB Asset Management Co. Pvt. Ltd.

15 Taurus Asset Management Company Limited

16 Sundaram BNP Paribas Asset Management Company Limited

17 ICICI Prudential Asset Management Company Limited

18 JM Financial Asset Management Private Limited

Table 4-14 presents the number of trades and trading volumes of the mutual fund and exchange
traded funds at NSE.

Mutual Fund Service System


In November 2009, SEBI allowed transaction in Mutual Fund schemes through the Stock Exchange
infrastructure. Consequent to this market development, NSE launched India’s first Mutual fund
Service System (MFSS) on November 30, 2009 through which an investor can subscribe or redeem
units of a mutual fund scheme. Mutual Fund Service System (MFSS) is an online order collection
system provided by NSE to its eligible members for placing subscription or redemption orders on
the MFSS based on orders received from the investors. This has made buying and selling of mutual
funds easier for investors. The subscription/redemption request would thereafter get processed
and investor would know about status of the request only in the form of direct communication
from Mutual Fund/AMC/RTA. The NSE MFSS facilitates entry of both buy and sell orders. With the

56
MFSS, investors can place an order through a registered NSE member who is eligible to participate
in MFSS for subscription/redemption of units. In order to subscribe units, members are required to
place buy orders. A member who wishes to redeem units of mutual fund scheme will be required
to place sell orders in the system. Participants can choose between physical mode and depository
mode while putting their subscription / redemption requests on the MFSS. All orders are settled on
order to order basis, on T+1 (working days).

As many as 17 fund houses have joined the NSE MFSS Platform and as on March 31, 2010 and there
were 908 sub schemes available for trading. During November 2009 to March 2010, there were
2,392 orders placed for subscription worth ` 91,932,291 and 274 orders worth `26,217,352 were
redeemed.

Date Subscription Redemption Total orders


No of orders Total No of orders Total
subscription redemption
amount amount *

Nov 09 - Mar 10 2,392 91,932,291 274 26,217,352 2,666

* Approximate value based on latest NAV.

Charges
Brokerage Charges

The maximum brokerage chargeable by trading member in respect of trades effected in the
securities admitted to dealing on the CM segment of the Exchange is fixed at 2.5% of the contract
price, exclusive of statutory levies like, securities transaction tax, SEBI turnover fee, service
tax and stamp duty. However, the brokerage charges as low as 0.10% are also observed in the
market.

Transaction Charges

As per SEBI Regulations, every stockbroker, on the basis of his total turnover, is required to pay
annual turnover charges, which are to be collected by the stock exchanges. In order to share the
benefits of efficiency, NSE has been reducing the transaction charges over a period of time.

A member was required to pay the exchange, transaction charges at the rate of 0.0035% ( ` 3.5 per
` 1 lakh) of the turnover till September, 2009. NSE has, with effect from October, 2009, changed
the transaction charges structure to a slab based one, as below:

Total Traded Value in a month Revised Transaction Charges


( ` per lakh of Traded Value)
Up to First ` 1250 crores ` 3.25 each side

More than ` 1250 crores up to ` 2500 crores ` 3.20 each side


(on incremental volume)

More than ` 2500 crores up to ` 5000 crores ` 3.15 each side


(on incremental volume)

More than ` 5000 crores up to ` 10000 crores ` 3.10 each side


(on incremental volume)

More than ` 10000 crores up to ` 15000 crores ` 3.05 each side


(on incremental volume)

Exceeding `15000 crores ` 3.00 each side


(on incremental volume)

57
Securities Transaction Tax (STT)

STT is levied on all transactions of sale and / or purchase of equity shares and units of equity
oriented fund and sale of derivatives entered into in a recognised stock exchange.

The existing rates are as follows :-

Sr. Taxable securities transaction Rate (%) Payable by


No

1 Purchase of an equity share in a company or a unit of an equity 0.125 Purchaser.


oriented fund, where –

(a) the transaction of such purchase is entered into in a recognised


stock exchange; and

(b) the contract for the purchase of such share or unit is settled
by the actual delivery or transfer of such share or unit.

2 Sale of an equity share in a company or a unit of an equity oriented 0.125 Seller.


fund, where –

(a) the transaction of such sale is entered into in a recognised


stock exchange; and

(b) the contract for the sale of such share or unit is settled by the
actual delivery or transfer of such share or unit.

3 Sale of an equity share in a company or a unit of an equity oriented 0.025 Seller.


fund, where –

(a) the transaction of such sale is entered into in a recognised


stock exchange; and

(b) the contract for the sale of such share or unit is settled
otherwise than by the actual delivery or transfer of such share
or unit.

Clearing & Settlement


While NSE provides a platform for trading to its trading members, the National Securities Clearing
Corporation Ltd. (NSCCL) determines the funds/securities obligations of the trading members and
ensures that trading members meet their obligations. The core processes involved in clearing and
settlement are:

(a) Trade Recording: The key details about the trades are recorded to provide basis for settlement.
These details are automatically recorded in the electronic trading system of the exchanges.

(b) Trade Confirmation: The parties to a trade agree upon the terms of trade like security, quantity,
price, and settlement date, but not the counterparty which is the NSCCL. The electronic
system automatically generates confirmation by direct participants.

(c) Determination of Obligation: The next step is determination of what counter-parties owe, and
what counter-parties are due to receive on the settlement date. The NSCCL interposes itself
as a central counterparty between the counterparties to trades and nets the positions so that
a member has security wise net obligation to receive or deliver a security and has to either
pay or receive funds.

(d) Pay-in of Funds and Securities: The members bring in their funds/securities to the NSCCL.
They make available required securities in designated accounts with the depositories by
the prescribed pay-in time. The depositories move the securities available in the accounts
of members to the account of the NSCCL. Likewise members with funds obligations make

58
available required funds in the designated accounts with clearing banks by the prescribed
pay-in time. The NSCCL sends electronic instructions to the clearing banks to debit member’s
accounts to the extent of payment obligations. The banks process these instructions, debit
accounts of members and credit accounts of the NSCCL.

(e) Pay-out of Funds and Securities: After processing for shortages of funds/securities and
arranging for movement of funds from surplus banks to deficit banks through RBI clearing, the
NSCCL sends electronic instructions to the depositories/clearing banks to release pay-out of
securities/funds. The depositories and clearing banks debit accounts of the NSCCL and credit
accounts of members. Settlement is complete upon release of pay-out of funds and securities
to custodians/members.

Settlement Agencies
The NSCCL, with the help of clearing members, custodians, clearing banks and depositories settles
the trades executed on exchanges. The roles of each of these entities are explained below:

(a) NSCCL: The NSCCL is responsible for post-trade activities of a stock exchange. Clearing and
settlement of trades and risk management are its central functions. It clears all trades,
determines obligations of members, arranges for pay-in of funds/securities, receives funds/
securities, processes for shortages in funds/securities, arranges for pay-out of funds/securities
to members, guarantees settlement, and collects and maintains margins/collateral/base
capital/other funds. It is the counterparty to all settlement obligations of the members.

(b) Clearing Members: They are responsible for settling their obligations as determined by the
NSCCL. They have to make available funds and/or securities in the designated accounts with
clearing bank/depositories, as the case may be, to meet their obligations on the settlement
day.

(c) Custodians: Custodian is a clearing member but not a trading member. They settles trades
assigned to them by trading members. They are required to confirm whether they are going
to settle a particular trade or not. If it is confirmed, the NSCCL assigns that obligation to that
custodian and the custodian is required to settle it on the settlement day.

(d) Clearing Banks: Every clearing member is required to open a dedicated clearing account
with one of the clearing banks. Based on his obligation as determined through clearing, the
clearing member makes funds available in the clearing account for the pay-in and receives
funds in case of a pay-out.

(e) Depositories: Depositories help in the settlement of the dematerialised securities. Each
custodian/clearing member is required to maintain a clearing pool account with the
depositories. He is required to make available the required securities in the designated
account on settlement day. The depository runs an electronic file to transfer the securities
from accounts of the custodians/clearing member to that of NSCCL. As per the schedule of
allocation of securities determined by the NSCCL, the depositories transfer the securities on
the pay-out day from the account of the NSCCL to those of members/custodians.

(f) Professional Clearing Member: NSCCL admits special category of members namely, professional
clearing members. Professional Clearing Member (PCM) may clear and settle trades executed for
their clients (individuals, institutions etc.). In such an event, the functions and responsibilities
of the PCM would be similar to Custodians. PCMs may also undertake clearing and settlement
responsibility for trading members. In such a case, the PCM would settle the trades carried out
by the trading members connected to them. A PCM has no trading rights but has only clearing
rights, i.e. he clears the trades of his associate trading members and institutional clients.

59
Settlement Cycles

NSCCL clears and settles trades as per well-defined settlement cycles, as presented in Table 4-15.
Since the beginning of the financial year 2003, all securities are being traded and settled under
T+2 rolling settlement. The NSCCL notifies the consummated trade details to clearing members/
custodians on the trade day. The custodians affirm back the trades to NSCCL by T+1 day. Based
on the affirmation, NSCCL nets the positions of counterparties to determine their obligations. A
clearing member has to pay-in/pay-out funds and/or securities. A member has a security-wise
net obligation to receive/deliver a security. The obligations are netted for a member across all
securities to determine his fund obligations and he has to either pay or receive funds. Members’
pay-in/pay-out obligations are determined latest by T+1 day and are forwarded to them on the
same day so that they can settle their obligations on T+2 day. The securities/funds are paid-in/
paid-out on T+2 day and the settlement is complete in 2 days from the end of the trading day.

Settlement Statistics

The settlement statistics of the CM segment is presented in Table 4-16. During 2009-10, NSCCL
settled trades for ` 4,129,214 crore (US $ 539,637 million.) of which 22.44% were settled by
delivery. However, these deliveries include only the net deliveries made by the trading members
to the clearing corporation. Of total delivery, nearly 100% of securities were delivered in demat
form in 2009-10. Short deliveries averaged around 0.18 % of total delivery in 2009-10.

Risk Management System


A sound risk management system is integral to an efficient settlement system. The NSCCL ensures
that trading members’ obligations are commensurate with their net worth. It has put in place
a comprehensive risk management system, which is constantly monitored and upgraded to
pre-empt market failures. It monitors the track record and performance of members and their net
worth; undertakes on-line monitoring of members’ positions and exposure in the market, collects
margins from members and automatically disables members if the limits are breached. The risk
management methods adopted by NSE have brought the Indian financial market in line with the
international markets.

There have been a number of experiments with different risk containment measures in the recent
pasts. NSE being aware of the importance of the risk containment measures has a dedicated
Risk Group which looks into aspects relating to the risk management. These measures have been
repeatedly reviewed and revised. The risk containment measures in vogue are described below:

Capital Adequacy

The capital adequacy requirements stipulated by the NSE are substantially in excess of the minimum
statutory requirements as also in comparison to those stipulated by other stock exchanges. A
person seeking membership in the CM and F&O segment is required to have a net worth of ` 1
crore, and keep an interest free security deposit of ` 1.25 crore and collateral security deposit
of ` 0.25 crore with the Exchange/NSCCL. The deposits kept with the Exchange as part of the
membership requirement may be used towards the margin requirement of the member. Additional
capital may be provided by the member for taking additional exposure.

On-Line Monitoring

NSCCL has put in place an on-line monitoring and surveillance system whereby exposure of the
members is monitored on a real time basis. A system of alerts has been built in so that both the
member and NSCCL are alerted as per pre-set levels (reaching 70%, 85%, 90%, 95% and 100%) when

60
the members approach their allowable limits. The system enables NSSCL to further check the
micro-details of members’ positions, if required and take pro-active action.

The on-line surveillance mechanism also generates various alerts/reports on any price/volume
movement of securities not in line with past trends/patterns. For this purpose the exchange
maintains various databases to generate alerts. Alerts are scrutinised and if necessary taken up for
follow up action. Open positions of securities are also analysed. Besides this, rumors in the print
media are tracked and where they are price sensitive, companies are contacted for verification.
Replies received are informed to the members and the public.

Off-line Monitoring

Off-line surveillance activity consists of inspections and investigations. As per regulatory


requirement, trading members are to be inspected in order to verify the level of compliance with
various rules, byelaws and regulations of the Exchange. The inspection verifies if investor interests
are being compromised in the conduct of business by the members.

Margin Requirements

NSCCL imposes stringent margin requirements as a part of its risk containment measures. The
categorization of stocks for imposition of margins has the structure as given below;

 The Stocks which have traded atleast 80% of the days for the previous six months constitute
the Group I and Group II.

 Out of the scrips identified for Group I & II category, the scrips having mean impact cost of
less than or equal to 1% are categorized under Group I and the scrips where the impact cost
is more than 1, are categorized under Group II.

 The remaining stocks are classified into Group III.

 The impact cost is calculated on the 15th of each month on a rolling basis considering the
order book snapshots of the previous six months. On the basis of the impact cost so calculated,
the scrips move from one group to another group from the 1st of the next month.

 For securities that have been listed for less than six months, the trading frequency and the
impact cost is computed using the entire trading history of the security

Categorisation of newly listed securities

For the first month and till the time of monthly review a newly listed security is categorised in that
Group where the market capitalization of the newly listed security exceeds or equals the market
capitalization of 80% of the securities in that particular group. Subsequently, after one month,
whenever the next monthly review is carried out, the actual trading frequency and impact cost of
the security is computed, to determine the liquidity categorization of the security.

In case any corporate action results in a change in ISIN, then the securities bearing the new ISIN
shall be treated as newly listed security for group categorization.

Daily margin, comprises of VaR margin, Extreme Loss margin and Mark to Market margin.

1) Value at Risk Margin :

All securities are classified into three groups for the purpose of VaR margin

For the securities listed in Group I, scrip wise daily volatility calculated using the exponentially
weighted moving average methodology is applied to daily returns in the same manner as in the

61
derivatives market. The scrip wise daily VaR would be 3.5 times the volatility so calculated
subject to a minimum of 7.5%.

For the securities listed in Group II, the VaR margin is higher of scrip VaR (3.5 sigma) or three
times the index VaR, and it is scaled up by root 3.

For the securities listed in Group III, the VaR margin is equal to five times the index VaR and
scaled up by root 3.

The index VaR, for the purpose, would be the higher of the daily Index VaR based on NSE Nifty
50 or BSE Sensex. The index VaR would be subject to a minimum of 5%.

Security specific Margin: NSCCL may stipulate security specific margins for the securities from
time to time.

The VaR margin rate computed as mentioned above will be charged on the net outstanding
position (buy value-sell value) of the respective clients on the respective securities across all
open settlements. There would be no netting off of positions across different settlements.
The VaR margin shall be collected on an upfront basis by adjusting against the total liquid
assets of the member at the time of trade. The VaR margin so collected shall be released on
completion of pay-in of the settlement

The VaR numbers are recomputed six times during the day taking into account price and
volatilities at various time intervals and are provided on the website of the Exchange.

2) Extreme Loss Margin

The Extreme Loss Margin for any security is be higher of 5%, or 1.5 times the standard deviation
of daily logarithmic returns of the security price in the last six months. The Extreme Loss
Margin is be collected/ adjusted against the total liquid assets of the member on a real time
basis

3) Mark to Market Margin

Mark to market loss is calculated by marking each transaction in security to the closing price of
the security at the end of trading. In case the security has not been traded on a particular day,
the latest available closing price at the NSE is considered as the closing price. In case the net
outstanding position in any security is nil, the difference between the buy and sell values is
considered as notional loss for the purpose of calculating the mark to market margin payable.

The mark to market margin (MTM) is collected from the member before the start of the
trading of the next day. The MTM margin is also collected/adjusted from/against the
cash/cash equivalent component of the liquid net worth deposited with the Exchange.

The MTM margin so collected is be released on completion of pay-in of the settlement.

Close Out Facility

An online facility to close–out open positions of members in the capital market segment whose
trading facility is withdrawn for any reason, has been provided with effect from June 13, 2007.

On disablement, the trading members will be allowed to place close-out orders through this
facility. Only orders which result in reduction of existing open positions at the client level would
be accepted through the close-out facility in the normal market. Members would not be allowed
to create any fresh position when in the close-out mode, to place close out orders with custodial
participant code and to close out open positions of securities in trade for trade segment.

62
Index-based Market-wide Circuit Breakers

a. An index based market-wide circuit breaker system applies at three stages of the index
movement either way at 10%, 15% and 20%. These circuit breakers bring about a coordinated
trading halt in trading on all equity and equity derivatives markets across the country. The
breakers are triggered by movements in either Nifty 50 or Sensex, whichever is breached
earlier.

• In case of a 10% movement in either of these indices, there would be a one-hour market
halt if the movement takes place before 1:00 p.m. In case the movement takes place at
or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for ½ hour. In case
movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level
and market would continue trading.

• In case of a 15% movement of either index, there should be a two-hour halt if the
movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00 p.m.
but before 2:00 p.m., there should be a one-hour halt. If the 15% trigger is reached on or
after 2:00 p.m. the trading should halt for remainder of the day.

• In case of a 20% movement of the index, trading should be halted for the remainder of
the day.

NSE may suo moto cancel the orders in the absence of any immediate confirmation from the
members that these orders are genuine or for any other reason as it may deem fit. The Exchange
views entries of non-genuine orders with utmost seriousness as this has market –wide repercussion.
As an additional measure of safety, individual scrip-wise price bands have been fixed as below:

Daily price bands of 2% (either way) on a set of specified securities

Daily price bands of 5% (either way) on a set of specified securities

Daily price bands of 10% (either way) on a set of specified securities

Price bands of 20% (either way) on all the remaining securities (including debentures, preference
shares etc. which are traded on CM segment of NSE).

No price bands are applicable on scrip on which derivative products are available or scrips included
in indices on which derivative products are available. However in order to prevent members from
entering orders at non-genuine prices in such securities, the Exchange has fixed operating range
of 20% for such securities.

The price bands for the securities in the Limited Physical Market are the same as those applicable for
the securities in the Normal Market. For Auction market the price bands of 20% are applicable.

Settlement Guarantee Fund

The Settlement Guarantee Fund provides a cushion for any residual risk and operates like a self-
insurance mechanism wherein members themselves contribute to the fund. In the event of a
trading member failing to meet his settlement obligation, then the fund is utilized to the extent
required for successful completion of the settlement. This has eliminated counter-party risk of
trading on the Exchange. The market has full confidence that settlement shall take place in time
and shall be completed irrespective of default by isolated trading members.

63
64
Table 4-1 : Business Growth of CM Segment

Month & No. of No. of No. of Traded Trading Value Average Daily Turnover Demat Demat Trading Value Market Capitalisation
Year Trading companies Trades Quantity Trading Value Ratio Traded
Days Traded Quantity
(lakh) (lakh) ( ` cr.) (US $ ( ` cr.) (US $ (%) (lakh) ( ` cr.) (US $ mn.) ( ` cr.) (US $ mn.)
mn.) mn.)
1994-95 102 – 3 1,391 1,805 – 17 – 0.50 0 0 – 363,350 115,606
(Nov.-Mar.)
1995-96 246 – 66 39,912 67,287 – 276 – 16.76 0 0 – 401,459 116,873
1996-97 250 – 264 135,561 294,503 – 1,176 – 70.23 2 6 – 419,367 116,880
1997-98 244 – 381 135,685 370,193 – 1,520 – 76.88 315 351 – 481,503 121,807
1998-99 251 – 546 165,327 414,474 97,683 1,651 389 84.38 8,542 23,818 5,613 491,175 115,760
1999-2000 254 – 984 242,704 839,052 192,353 3,303 757 82.23 153,772 711,706 163,159 1,020,426 233,933
2000-01 251 1,201 1,676 329,536 1,339,510 287,202 5,337 1,144 203.62 307,222 1,264,337 271,084 657,847 141,048
2001-02 247 1,019 1,753 278,408 513,167 105,157 2,078 426 80.58 277,717 512,866 105,095 636,861 130,504
2002-03 251 899 2,397 364,066 617,989 130,103 2,462 518 115.05 364,049 617,984 130,102 537133 113,081
2003-04 254 804 3,780 713,300 1,099,534 253,407 4,329 998 98.09 713,300 1,099,534 253,407 1,120,976 258,349
2004-05 253 856 4,509 797,685 1,140,072 260,588 4,506 1,030 71.90 797,685 1,140,072 260,588 1,585,585 362,419
2005-06 251 928 6,089 844,486 1,569,558 351,840 6,253 1,402 55.79 844,486 1,569,558 351,840 2,813,201 630,621
2006-07 249 1,114 7,847 855,456 1,945,287 446,269 7,812 1,792 57.77 855,456 1,945,287 446,269 3,367,350 772,505
2007-08 251 1,244 11,727 1,498,469 3,551,038 888,426 14,148 3,540 73.09 1,498,469 3,551,038 888,426 4,858,122 1,215,442
Apr-08 20 1,240 1,079 114,280 271,227 53,234 13,561 2,662 – 114,280 271,227 53,234 5,442,780 1,068,259
May-08 20 1,246 1,071 115,014 277,923 54,548 13,896 2,727 – 115,014 277,923 54,548 5,098,873 1,000,760
Jun-08 21 1,256 1,115 108,548 264,428 51,900 12,592 2,471 – 108,548 264,428 51,900 4,103,651 805,427
Jul-08 23 1,267 1,337 134,285 295,816 58,060 12,862 2,524 – 134,285 295,816 58,060 4,432,427 869,956
Aug-08 20 1,274 1,067 104,352 234,251 45,977 11,713 2,299 – 104,352 234,251 45,977 4,472,461 877,814
Sep-08 21 1,275 1,132 102,202 262,261 51,474 12,489 2,451 – 102,202 262,261 51,474 3,900,185 765,493

Contd...
Contd...
Month & No. of No. of No. of Traded Trading Value Average Daily Turnover Demat Demat Trading Value Market Capitalisation
Year Trading companies Trades Quantity Trading Value Ratio Traded
Days Traded Quantity
(lakh) (lakh) ( ` cr.) (US $ ( ` cr.) (US $ (%) (lakh) ( ` cr.) (US $ mn.) ( ` cr.) (US $ mn.)
mn.) mn.)
Oct-08 20 1,277 1,178 109,299 216,198 42,433 10,810 2,122 – 109,299 216,198 42,433 2,820,388 553,560
Nov-08 18 1,282 1,099 106,848 173,123 33,979 9,618 1,888 – 106,848 173,123 33,979 2,653,281 520,762
Dec-08 21 1,282 1,302 144,793 212,956 41,797 10,141 1,990 – 144,793 212,956 41,797 2,916,768 572,477
Jan-09 20 1,281 1,222 145,254 191,184 37,524 9,559 1,876 – 145,254 191,184 37,524 2,798,707 549,305
Feb-09 19 1,280 969 111,865 149,857 29,413 7,887 1,548 – 111,865 149,857 29,413 2,675,622 525,147
Mar-09 20 1,283 1,081 129,614 202,799 39,803 10,140 1,990 – 129,614 202,799 39,803 2,896,194 568,439
2008-09 243 1,277 13,650 1,426,355 2,752,023 540,142 11,325 2,223 95.02 1,426,355 2,752,023 540,142 2,896,194 568,439
Apr-09 17 1,266 1,271 183,156 266,697 59,082 15,688 3,475 – 183,156 266,697 59,082 3,375,025 747,679
May-09 20 1,268 1,483 229,028 382,561 84,750 19,128 4,237 – 229,028 382,561 84,750 4,564,572 1,011,203
Jun-09 22 1,268 1,800 274,851 482,414 106,871 21,928 4,858 – 274,851 482,414 106,871 4,432,596 981,966
Jul-09 23 1,269 1,709 219,356 426,143 94,405 18,528 4,105 – 219,356 426,143 94,405 4,816,459 1,067,005
Aug-09 21 1,272 1,475 194,427 364,969 80,853 17,379 3,850 – 194,427 364,969 80,853 4,975,800 1,102,304
Sep-09 20 1,275 1,387 196,512 365,063 80,874 18,253 4,044 – 196,512 365,063 80,874 5,353,880 1,186,061
Oct-09 20 1,274 1,347 168,479 362,969 80,410 18,148 4,020 – 168,479 362,969 80,410 5,024,830 1,113,166
Nov-09 20 1,286 1,317 157,401 324,477 71,882 16,224 3,594 – 157,401 324,477 71,882 5,430,088 1,202,944
Dec-09 21 1,297 1,256 150,384 292,900 64,887 13,948 3,090 – 150,384 292,900 64,887 5,699,637 1,262,658
Jan-10 19 1,320 1,403 180,424 338,443 74,976 17,813 3,946 – 180,424 338,443 74,976 5,782,965 1,281,118
Feb-10 20 1,328 1,133 123,541 245,143 54,307 12,257 2,715 – 123,541 245,143 54,307 5,755,305 1,274,990
Mar-10 21 1,343 1,235 137,971 286,246 63,413 13,631 3,020 – 137,971 286,246 63,413 6,009,173 1,331,230
2009-2010 244 1,370 16,816 2,215,530 4,138,023 916,709 16,959 3,757 68.86 2,215,530 4,138,023 916,709 6,009,173 1,331,230

65
Table 4-2 : Percentage Share of Top ‘N’ Securities/Member in Turnover

Year No. of Securities/Brokers

5 10 25 50 100

Securities

1994-95 (Nov.-Mar.) 48.77 55.92 68.98 81.14 91.07

1995-96 82.98 86.60 90.89 93.54 95.87

1996-97 84.55 91.96 95.70 97.03 98.19

1997-98 72.98 85.17 92.41 95.76 97.90

1998-99 52.56 67.11 84.71 92.03 95.98


1999-00 39.56 59.22 82.31 88.69 93.66

2000-01 52.15 72.90 88.93 94.57 97.46

2001-02 44.43 62.92 82.24 91.56 95.91

2002-03 40.58 55.41 77.8 89.16 95.38

2003-04 31.04 44.87 64.32 79.44 91.03

2004-05 25.88 41.65 57.98 72.40 84.26

2005-06 22.15 31.35 46.39 59.22 73.12

2006-07 16.97 25.25 43.46 61.94 77.22

2007-08 16.29 26.78 45.46 61.47 77.29

2008-09 20.48 32.58 56.36 74.66 87.69

2009-2010 15.43 26.15 46.80 64.24 78.20

Members

1994-95 (Nov.-Mar.) 18.19 26.60 44.37 61.71 81.12

1995-96 10.65 16.56 28.61 41.93 58.59

1996-97 5.94 10.08 19.67 30.57 45.95

1997-98 6.29 10.59 18.81 29.21 44.24

1998-99 7.73 11.96 20.77 31.66 47.02

1999-00 7.86 12.99 22.78 34.41 49.96

2000-01 7.78 12.76 23.00 33.86 48.79


2001-02 7.14 12.29 23.63 36.32 53.40

2002-03 10.26 16.41 29.07 42.49 59.15

2003-04 11.58 17.36 30.34 44.05 61.37

2004-05 13.52 20.20 34.97 49.01 65.09

2005-06 14.62 22.57 38.17 52.57 38.45

2006-07 14.72 24.27 42.61 56.71 71.22

2007-08 14.57 25.71 44.70 60.11 73.90

2008-09 13.56 23.62 43.55 61.21 75.42

2009-2010 14.63 23.48 41.00 57.01 72.71

66
Table 4-3 : ‘50’ Most Active Securities during 2009-10
in Terms of Trading Value

Rank Name of Security Trading Value % Share Market Capitalisation % Share


in Total as on March 31,2010 in Total
Trading Market
( ` cr.) (US $ Value ( ` cr.) (US $ Capitali-
mn.) mn.) sation
1 Reliance Industries Ltd- 175,590 38,899 4.24 353,056.22 78,214 5.88
-Petrochemicals
2 ICICI Bank Ltd.--Banks 129,476 28,683 3.13 106,123.67 23,510 1.77
3 Unitech Ltd-- 114,712 25,412 2.77 17,581.58 3,895 0.29
Infrastructure
4 Tata Steel Limited-- 111,220 24,639 2.69 56,087.42 12,425 0.93
Manufacturing
5 DLF Limited-- 107,447 23,803 2.60 52,431.12 11,615 0.87
Infrastructure
6 State Bank Of India-- 105,241 23,314 2.54 131,940.81 29,229 2.20
Banks
7 Suzlon Energy Limited-- 87,651 19,418 2.12 11,185.12 2,478 0.19
Manufacturing
8 Reliance Capital 84,926 18,814 2.05 18,571.07 4,114 0.31
Limited--Finance
9 Housing Development 84,684 18,760 2.05 9,903.21 2,194 0.16
Finance Corporation
Ltd.--Finance
10 Bharti Airtel Limited-- 81,104 17,967 1.96 118,683.21 26,292 1.98
Telecommunication
11 Larsen & Toubro Ltd.-- 72,441 16,048 1.75 98,140.59 21,741 1.63
Engineering
12 Jaiprakash Associates 70,427 15,602 1.70 31,773.70 7,039 0.53
Limited--Infrastructure
13 Infosys Technologies 68,666 15,212 1.66 150,033.95 33,237 2.50
Ltd--Information
Technology
14 Aban Offshore Ltd.-- 66,857 14,811 1.62 5,057.11 1,120 0.08
Petrochemicals
15 Reliance Infrastructure 65,090 14,420 1.57 22,505.63 4,986 0.37
Ltd--Infrastructure
16 Tata Motors Ltd. -- 61,137 13,544 1.48 36,357.36 8,054 0.61
Manufacturing
17 Axis Bank Limited-- 56,374 12,489 1.36 47,257.91 10,469 0.79
Banks
18 Educomp Solutions 52,076 11,536 1.26 7,100.71 1,573 0.12
Limited--Information
Technology
19 HDFC Ltd. -- Finance 51,911 11,500 1.25 77,840.42 17,244 1.30
20 Jindal Steel & Power 51,864 11,489 1.25 65,475.07 14,505 1.09
Ltd.--Manufacturing
21 Sterlite Industries 48,581 10,762 1.17 71,429.11 15,824 1.19
( India ) Limited--
Manufacturing
22 JSW Steel Ltd. -- 47,868 10,604 1.16 23,096.77 5,117 0.38
Manufacturing
23 Satyam Computer 47,786 10,586 1.15 10,859.07 2,406 0.18
Services Ltd--
Information Technology
24 Sesa Goa Ltd.-- 47,456 10,513 1.15 38,696.80 8,573 0.64
Manufacturing
25 Bharat Heavy 45,966 10,183 1.11 117,027.10 25,925 1.95
Electricals Ltd--
Manufacturing

Contd...

67
Contd...
Rank Name of Security Trading Value % Share Market Capitalisation % Share
in Total as on March 31,2010 in Total
Trading Market
( ` cr.) (US $ Value ( ` cr.) (US $ Capitali-
mn.) mn.) sation
26 Reliance 44,386 9,833 1.07 35,078.14 7,771 0.58
Communications
Limited--
Telecommunication
27 Indiabulls Real Estate 43,977 9,742 1.06 6,124.50 1,357 0.10
Limited--Infrastructure
28 Reliance Natural 39,943 8,849 0.97 10,166.24 2,252 0.17
Resources Limited--
Manufacturing
29 HDFC Bank Ltd--Banks 38,979 8,635 0.94 88,279.50 19,557 1.47
30 Oil & Natural Gas Corpn 38,641 8,560 0.93 234,997.92 52,060 3.91
Ltd--Petrochemicals
31 Tata Consultancy 37,384 8,282 0.90 152,790.46 33,848 2.54
Services Limited--
Information Technology
32 IFCI Limited--Finance 37,159 8,232 0.90 3,678.12 815 0.06
33 Steel Authority Of India 36,448 8,075 0.88 104,313.27 23,109 1.74
Ltd.--Manufacturing
34 Hindalco Industries Ltd. 33,113 7,336 0.80 34,681.00 7,683 0.58
-- Manufacturing
35 Punj Lloyd Limited-- 29,419 6,517 0.71 5,887.83 1,304 0.10
Infrastructure
36 Infrastructure 29,343 6,500 0.71 20,868.40 4,623 0.35
Development
Finance Company
Limited--Finance
37 ITC Ltd.--FMCG 29,068 6,440 0.70 100,074.82 22,170 1.67
38 Maruti Suzuki India 26,599 5,893 0.64 40,966.00 9,075 0.68
Limited--Manufacturing
39 NTPC Limited-- 25,552 5,661 0.62 170,887.25 37,857 2.84
Infrastructure
40 Mahindra & Mahindra 24,710 5,474 0.60 31,313.55 6,937 0.52
Ltd. -- Manufacturing
41 Essar Oil Limited-- 24,220 5,366 0.59 16,605.14 3,679 0.28
Petrochemicals
42 Bajaj Hindustan Ltd -- 22,243 4,928 0.54 2,596.72 575 0.04
Manufacturing
43 Hindustan Unilever 21,851 4,841 0.53 52,256.44 11,577 0.87
Limited--FMCG
44 Cairn India Limited-- 21,630 4,792 0.52 57,974.86 12,843 0.96
Petrochemicals
45 IVRCL Infrastructures 21,349 4,729 0.52 4,432.36 982 0.07
& Projects Ltd.--
Infrastructure
46 Lanco Infratech Limited 20,162 4,467 0.49 12,556.70 2,782 0.21
- Infrastructure
47 Shree Renuka Sugars 19,933 4,416 0.48 4,518.99 1,001 0.08
Limited--Manufacturing
48 Hero Honda Motors 19,101 4,231 0.46 38,827.24 8,602 0.65
Ltd.-- Manufacturing
49 Kotak Mahindra Bank 18,744 4,152 0.45 26,024.50 5,765 0.43
Limited--Banks
50 LIC Housing Finance Ltd 17,816 3,947 0.43 8,273.85 1,833 0.14
-- Finance
Total 2,658,320 588,906 64.24 2,942,388 651,836 48.96

68
Table 4-4 : Top ‘50’ Companies by Market Capitalisation
as on March 31, 2010

Rank Name of Security and Market Capitalisation % Share Trading Volume % Share
Industry in Total During 2009-10 in Total
( ` cr.) (US $ mn.) Market ( ` cr.) (US $ mn.) Trading
Capitali- Volume
sation
1 Reliance Industries Ltd-- 353,056 78,214 5.88 175,590.43 38,899.08 4.24
Petrochemicals
2 Oil & Natural Gas Corpn 234,998 52,060 3.91 38,641.29 8,560.32 0.93
Ltd--Petrochemicals
3 NTPC Ltd--Infrastructure 170,887 37,857 2.84 25,552.00 5,660.61 0.62
4 MMTC Ltd -- 157,174 34,819 2.62 62.56 13.86 0.00
Manufacturing
5 Tata Consultancy 152,790 33,848 2.54 37,384.19 8,281.83 0.90
Services Limited--
Information Technology
6 Infosys Technologies Ltd- 150,034 33,237 2.50 68,666.34 15,211.86 1.66
-Information Technology
7 State Bank Of India-- 131,941 29,229 2.20 105,240.76 23,314.30 2.54
Banks
8 Bharti Airtel Limited-- 118,683 26,292 1.98 81,104.33 17,967.29 1.96
Telecommunication
9 Bharat Heavy Electricals 117,027 25,925 1.95 45,965.85 10,182.95 1.11
Ltd--Manufacturing
10 NMDC Ltd. -- 116,721 25,858 1.94 8,133.46 1,801.83 0.20
Manufacturing
11 ICICI Bank Ltd.--Banks 106,124 23,510 1.77 129,475.59 28,683.12 3.13
12 Steel Authority Of India 104,313 23,109 1.74 36,448.42 8,074.53 0.88
Ltd.--Manufacturing
13 Wipro Ltd.--Computers 103,777 22,990 1.73 17,706.01 3,922.47 0.43
- Software
14 ITC Ltd.--FMCG 100,075 22,170 1.67 29,068.38 6,439.61 0.70
15 Larsen & Toubro Ltd.-- 98,141 21,741 1.63 72,440.99 16,048.07 1.75
Engineering
16 HDFC Bank Ltd--Banks 88,279 19,557 1.47 38,978.62 8,635.05 0.94
17 HDFC Ltd.-- Finance 77,840 17,244 1.30 51,911.36 11,500.08 1.25
18 Indian Oil Corporation 71,807 15,908 1.19 6,912.75 1,531.40 0.17
Ltd -- Petrochemicals
19 Sterlite Industries (India) 71,429 15,824 1.19 48,581.20 10,762.34 1.17
Limited--Manufacturing
20 Jindal Steel & Power 65,475 14,505 1.09 51,863.57 11,489.49 1.25
Ltd.--Manufacturing
21 Cairn India Limited-- 57,975 12,843 0.96 21,629.80 4,791.71 0.52
Petrochemicals
22 Tata Steel Limited-- 56,087 12,425 0.93 111,219.68 24,638.83 2.69
Manufacturing
23 DLF Limited-- 52,431 11,615 0.87 107,446.56 23,802.96 2.60
Infrastructure
24 Hindustan Unilever 52,256 11,577 0.87 21,851.50 4,840.83 0.53
Limited--FMCG
25 GAIL (India) Limited -- 52,084 11,538 0.87 15,898.16 3,521.97 0.38
Manufacturing
26 Hindustan Zinc Ltd.-- 50,888 11,273 0.85 4,016.34 889.75 0.10
Manufacturing
27 Hindustan Copper Ltd. 49,314 10,925 0.82 3,883.42 860.31 0.09
-- Manufacturing
28 Axis Bank Ltd. -- Banks 47,258 10,469 0.79 56,374.18 12,488.74 1.36
Contd...

69
Contd...
Rank Name of Security and Market Capitalisation % Share Trading Volume % Share
Industry in Total During 2009-10 in Total
( ` cr.) (US $ mn.) Market ( ` cr.) (US $ mn.) Trading
Capitali- Volume
sation
29 Power Grid Corporation 45,098 9,991 0.75 8,787.62 1,946.75 0.21
of India Limited --
Infrastructure
30 Maruti Suzuki India Ltd. 40,966 9,075 0.68 26,598.99 5,892.55 0.64
-- Manufacturing
31 Hero Honda Motors Ltd.- 38,827 8,602 0.65 19,100.79 4,231.46 0.46
- Manufacturing
32 Sesa Goa Ltd.-- 38,697 8,573 0.64 47,455.67 10,513.00 1.15
Manufacturing
33 NHPC Ltd. -- 37,456 8,298 0.62 8,189.68 1,814.29 0.20
Infrastructure
34 Sun Pharmaceuticals 37,115 8,222 0.62 9,099.82 2,015.91 0.22
Industries Ltd --
Pharmaceuticals
35 Tata Motors Ltd. -- 36,357 8,054 0.61 61,137.31 13,543.93 1.48
Manufacturing
36 Reliance Power Limited 35,820 7,935 0.60 15,394.35 3,410.36 0.37
-- Infrastructure
37 Reliance 35,078 7,771 0.58 44,385.55 9,832.86 1.07
Communications Ltd. --
Telecommunication
38 Hindalco Industries Ltd.- 34,681 7,683 0.58 33,112.66 7,335.55 0.80
- Manufacturing
39 Tata Power Co. Ltd. -- 32,598 7,221 0.54 15,112.33 3,347.88 0.37
Infrastructure
40 Punjab National Bank 31,932 7,074 0.53 12,836.66 2,843.74 0.31
-- Banks
41 Jaiprakash Associates 31,774 7,039 0.53 70,427.00 15,601.90 1.70
Ltd. -- Infrastructure
42 Mundra Port and Special 31,638 7,009 0.53 6,173.15 1,367.56 0.15
Economic Zone Limited
-- Services
43 Mahindra & Mahindra 31,314 6,937 0.52 24,709.75 5,474.03 0.60
Ltd. -- Manufacturing
44 Power Finance 29,653 6,569 0.49 4,427.32 980.80 0.11
Corporation Limited -
Finance
45 Bajaj Auto Ltd. -- 29,151 6,458 0.49 7,864.06 1,742.15 0.19
Manufacturing
46 Oil India Ltd. -- 27,766 6,151 0.46 4,913.74 1,088.56 0.12
Manufacturing
47 Cipla Ltd. -- 27,167 6,018 0.45 11,200.63 2,481.31 0.27
Pharmaceuticals
48 National Aluminium 26,252 5,816 0.44 3,630.84 804.35 0.09
Company Ltd. --
Manufacturing
49 Kotak Mahindra Bank 26,024 5,765 0.43 18,743.54 4,152.31 0.45
Ltd. -- Banks
50 Grasim Industries Ltd.-- 25,807 5,717 0.43 11,309.72 2,505.48 0.27
Manufacturing
Total 3,740,037 828,542 62.24 1,876,658.94 415,741.90 31.23

70
Table 4-5 : Sectoral Distribution of Top ‘50’ Companies by Trading Volume and Market Capitalisation

Industry Trading Value (Amount) Trading Value (% Market Capitalisation (Amount) Market
to total Top 50 Capitalisation
companies) (% to total Top 50
companies)

2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10

( ` cr.) (US $ mn.) ( ` cr.) (US $ mn.) % % ( ` cr.) (US $ mn.) ( ` cr.) (US $ mn.) % %

Banks 307,778.82 60,408.01 348,812.69 77,273.52 14.98 13.12 185,581.02 36,424.14 431,558.65 95,604.49 9.09 11.54

Engineering 71,991.35 14,129.80 72,440.99 16,048.07 3.50 2.73 39,315.66 7,716.52 98,140.59 21,741.38 1.93 2.62

Financial Services 204,940.61 40,223.87 305,839.62 67,753.57 9.97 11.50 56,767.30 11,141.77 107,492.97 23,813.24 2.78 2.87

FMCG 57,693.31 11,323.52 50,919.88 11,280.43 2.81 1.92 121,540.02 23,854.76 152,331.26 33,746.40 5.95 4.07

Infrastructure 385,833.11 75,727.79 498,134.05 110,353.13 18.78 18.74 301,563.43 59,188.11 406,063.30 89,956.42 14.77 10.86

IT 177,612.59 34,860.18 205,912.42 45,616.40 8.64 7.75 164,538.95 32,294.20 406,601.80 90,075.72 8.06 10.87

Manufacturing 321,668.41 63,134.13 723,831.33 160,352.53 15.66 27.23 389,276.54 76,403.64 1,170,331.38 259,267.03 19.07 31.29

Petrochemicals 371,425.75 72,900.05 326,939.30 72,427.85 18.08 12.30 544,388.41 106,847.58 717,835.70 159,024.30 26.67 19.19

Pharmaceuticals 26,974.05 5,294.22 - - 1.31 - 40,124.25 7,875.22 64,282.10 14,240.61 1.97 1.72

Services - - - - – - 12,953.95 2,542.48 31,637.60 7,008.77 0.63 0.85

Telecommunications 128,631.05 25,246.53 125,489.88 27,800.15 6.26 4.72 185,176.32 36,344.71 153,761.35 34,063.21 9.07 4.11

Total 2,054,549.06 403,248.10 2,658,320.17 588,905.66 100.00 100.00 2,041,225.84 400,633.14 3,740,036.69 828,541.58 100.00 100.00

71
Table 4-6 : NSE’s Most Active Trading days during the year 2009-10

Sr No. Date Highest Single Day


Trading Value

( ` cr.) (US $ mn.)

1 19-May-2009 40,151.91 8,894.97


2 20-May-2009 28,398.75 6,291.26
3 29-May-2009 27,356.32 6,060.33
4 5-Jun-2009 26,776.46 5,931.87
5 4-Jun-2009 26,357.67 5,839.09
6 3-Jun-2009 26,272.58 5,820.24
7 2-Jun-2009 25,721.06 5,698.06
8 10-Jun-2009 25,673.64 5,687.56
9 28-May-2009 25,664.96 5,685.63
10 1-Jun-2009 24,877.16 5,511.11

Table 4-7 : Individual Securities Single day Trading Records- 2009-10

Rank Symbol Name of Company Date Traded Value


( ` cr.) (US $ mn.)

1 RELIANCE Reliance Industries Ltd. 11-Jan-2010 4,570 1,013


2 RELIANCE Reliance Industries Ltd. 17-Sep-2009 3,509 777
3 RNRL Reliance Natural Resources Ltd. 15-Jun-2009 2,603 577
4 BHARTIARTL Bharti Airtel Ltd. 6-Oct-2009 2,504 555
5 RELIANCE Reliance Industries Ltd. 19-May-2009 2,395 531
6 ICICIBANK ICICI Bank Ltd. 19-May-2009 2,278 505
7 OIL Oil India Ltd. 30-Sep-2009 2,239 496
8 DLF DLF Ltd 19-May-2009 2,109 467
9 UNITECH Unitech Ltd. 31-Aug-2009 1,977 438
10 NHPC NHPC LTD 1-Sep-2009 1,902 421

Table 4-8 : Composition of S&P CNX Nifty Index as on March 2010

Sl. Name of Security Issued Free Float Weight- Beta R2 Vola- Monthly Impact
No. Capital Market Cap- age tility Return Cost
( ` Cr.) italisation (%) (%) (%)
( ` crore)
1 ABB Ltd.--Electrical 42 8,424 0.55% 0.81 0.38 1.56 4.46 0.06
Equipment
2 ACC Ltd.--Cement And 188 9,605 0.63% 0.80 0.38 1.51 3.03 0.06
Cement Products
3 Ambuja Cements Ltd.- 305 9,783 0.64% 0.76 0.32 1.67 12.06 0.09
-Cement And Cement
Products
4 Axis Bank Ltd.--Banks 405 28,836 1.89% 1.18 0.56 1.55 3.89 0.06
5 Bharti Airtel Ltd.-- 3,797 38,170 2.50% 0.96 0.35 1.75 11.88 0.07
Telecommunication
- Services
6 Bharat Heavy Electricals 490 37,775 2.48% 0.93 0.58 1.14 1.76 0.05
Ltd.--Electrical
Equipment
Contd...

72
Contd...
Sl. Name of Security Issued Free Float Weight- Beta R2 Vola- Monthly Impact
No. Capital Market Cap- age tility Return Cost
( ` Cr.) italisation (%) (%) (%)
( ` crore)
7 Bharat Petroleum 362 6,694 0.44% 0.45 0.12 1.64 -8.14 0.07
Corporation Ltd.--
Refineries
8 Cairn India Ltd.--Oil 1,897 13,149 0.86% 0.94 0.46 1.74 14.88 0.07
Exploration/Production
9 Cipla Ltd.-- 161 17,169 1.13% 0.51 0.20 1.53 7.02 0.08
Pharmaceuticals
10 DLF Ltd.--Construction 339 11,195 0.73% 1.64 0.56 1.92 3.50 0.06

11 Gail (India) Ltd.--Gas 1,268 18,446 1.21% 0.66 0.31 1.36 2.96 0.06
12 Grasim Industries Ltd.- 92 19,226 1.26% 0.80 0.41 0.90 4.39 0.06
-Cement And Cement
Products
13 HCL Technologies Ltd.-- 135 7,604 0.50% 1.11 0.37 1.25 -2.37 0.07
Computers - Software
14 Housing Development 286 68,753 4.51% 1.16 0.59 1.46 8.67 0.06
Finance Corporation
Ltd.--Finance - Housing
15 HDFC Bank Ltd.--Banks 457 67,211 4.41% 0.78 0.55 1.29 13.42 0.06
16 Hero Honda Motors 40 17,488 1.15% 0.78 0.35 1.82 9.38 0.04
Ltd.--Automobiles - 2
And 3 Wheelers
17 Hindalco Industries 191 23,556 1.54% 1.29 0.46 2.16 11.44 0.07
Ltd.--Aluminium
18 Hindustan Unilever 218 25,071 1.64% 0.38 0.14 1.97 1.42 0.06
Ltd.--Diversified
19 ICICI Bank Ltd.--Banks 1,114 106,124 6.96% 1.41 0.66 1.34 9.21 0.06
20 Idea Cellular Ltd.-- 3,100 10,347 0.68% 1.08 0.45 2.16 7.20 0.08
Telecommunication
- Services
21 IDFC 1,297 15,080 0.99% 1.41 0.55 1.50 0.85 0.06
22 Infosys Technologies 287 125,945 8.26% 0.68 0.36 1.28 0.54 0.04
Ltd.--Computers -
Software
23 I T C Ltd.--Cigarettes 380 68,261 4.48% 0.61 0.28 1.30 13.26 0.06
24 Jindal Steel - 93 27,117 1.78% 1.12 0.49 1.58 11.18 0.06
Manufacturing
25 Jaiprakash Associates 425 17,137 1.12% 1.66 0.34 2.24 13.17 0.07
Limited-- Manufacturing
26 Larsen & Toubro Ltd.-- 120 98,141 6.43% 1.27 0.69 1.15 4.25 0.06
Engineering
27 Mahindra & Mahindra 578 22,735 1.49% 1.27 0.55 2.17 7.44 0.08
Ltd. -- Manufacturing
28 Maruti Suzuki India 144 18,758 1.23% 0.71 0.32 1.40 -2.88 0.06
Ltd.--Automobiles - 4
Wheelers
29 NTPC Ltd.--Power 8,245 17,944 1.18% 0.61 0.44 1.07 2.07 0.05
30 Oil & Natural Gas 2,139 37,059 2.43% 0.83 0.45 0.91 -1.69 0.05
Corporation Ltd.--Oil
Exploration/Production
31 Punjab National Bank- 315 13,476 0.88% 0.85 0.48 1.11 12.40 0.05
-Banks
32 Power Grid Corporation 4,209 6,150 0.40% 0.80 0.53 1.03 -0.37 0.07
Of India Ltd.--Power
33 Ranbaxy Laboratories 210 7,213 0.47% 0.82 0.26 1.32 1.06 0.05
Ltd.--Pharmaceuticals

Contd...

73
Contd...
Sl. Name of Security Issued Free Float Weight- Beta R2 Vola- Monthly Impact
No. Capital Market Cap- age tility Return Cost
( ` Cr.) italisation (%) (%) (%)
( ` crore)
34 Reliance 1,032 11,398 0.75% 1.39 0.56 1.27 7.87 0.07
Communications Ltd.-
-Telecommunication
- Services
35 Reliance Capital Ltd.-- 246 8,638 0.57% 1.60 0.62 0.95 -3.87 0.05
Finance
36 Reliance Industries Ltd.- 3,287 181,677 11.91% 1.11 0.69 1.55 9.73 0.05
-Refineries
37 Reliance Infrastructure 225 14,011 0.92% 1.42 0.61 1.26 -0.44 0.06
Ltd.--Power
38 Reliance Power Ltd.-- 2,397 5,452 0.36% 1.01 0.49 1.48 8.22 0.06
Power
39 Steel Authority Of India 4,130 14,792 0.97% 1.29 0.61 1.87 15.58 0.06
Ltd--Steel And Steel
Products
40 State Bank Of India-- 635 53,550 3.51% 1.16 0.62 0.84 5.26 0.04
Banks
41 Siemens Ltd.--Electrical 67 11,185 0.73% 1.15 0.58 1.46 8.17 0.06
Equipment
42 Sterlite Industries 168 34,272 2.25% 1.37 0.53 1.12 8.69 0.06
(India) Ltd.--Metals
43 Sun Pharmaceutical 104 13,468 0.88% 0.65 0.22 1.69 16.39 0.06
Industries Ltd.--
Pharmaceuticals
44 Suzlon Energy Ltd.-- 311 5,248 0.34% 1.53 0.42 2.04 0.00 0.06
Electrical Equipment
45 Tata Motors Ltd.- 480 20,574 1.35% 1.23 0.36 3.23 6.54 0.05
-Automobiles - 4
Wheelers
46 Tata Power Co. Ltd.-- 237 22,473 1.47% 0.76 0.44 1.79 13.23 0.06
Power
47 Tata Steel Ltd.--Steel 887 38,599 2.53% 1.40 0.50 1.69 10.05 0.05
And Steel Products
48 Tata Consultancy 196 39,229 2.57% 0.83 0.38 1.26 2.47 0.06
Services Ltd.--
Computers - Software
49 Unitech Ltd.-- 478 9,873 0.65% 1.70 0.49 1.67 2.29 0.07
Construction
50 Wipro Ltd.--Computers 294 21,084 1.38% 0.76 0.35 1.38 4.35 0.07
- Software
Total 48,504 1,525,165 100.00% 1.00 – 0.70 6.64 0.06
* Beta & R2 are calculated for the period 01-April-2009 to 31-March-2010
* Beta measures the degree to which any portfolio of stocks is affected as compared to the effect
on the market as a whole.
* The coefficient of determination (R2) measures the strength of relationship between two
variables the return on a security versus that of the market.
* Volatility is the Std. deviation of the daily returns for the period 01-March- 2010 to 31-March-
2010
* Last day of trading was 31-March-2010
* Impact Cost for S&P CNX Nifty is for a portfolio of ` 50 Lakhs
* Impact Cost for S&P CNX Nifty is the weightage average impact cost

74
Table 4-9 : Composition of CNX NIFTY Junior Index - as on March 31, 2010

Sl. Name of Security Issued Free Float Weight- Beta R2 Volatil- Returns Impact
No. Capital Market Capi- age ity Cost
talisation for
March 2010
( ` cr.) ( ` cr.) (%) (%) (%) (%)
1 Aditya Birla Nuvo Ltd. -- 103 5,036 1.72% 1.13 0.49 0.91 7.62 0.09
Textiles - Synthetic
2 Adani Enterprises Ltd. 53 6,329 2.16% 1.15 0.08 1.47 -3.47 0.13
--Trading
3 Andhra Bank --Banks 485 2,543 0.87% 0.94 0.49 1.54 9.24 0.08
4 Ashok Leyland Ltd. 133 3,639 1.24% 1.16 0.44 2.02 12.39 0.10
--Automobiles - 4
Wheelers
5 Asian Paints Ltd. --Paints 96 9,789 3.35% 0.36 0.14 1.88 12.65 0.14
6 Bajaj Auto Ltd. -- 145 14,687 5.02% 0.56 0.19 1.56 10.85 0.07
Automobiles - 2 And 3
Wheelers
7 Bank of Baroda --Banks 364 10,753 3.68% 0.82 0.40 1.47 9.51 0.07

8 Bank of India --Banks 525 6,349 2.17% 1.03 0.45 1.93 2.07 0.08
9 Bharat Electronics Ltd. - 80 4,253 1.45% 0.65 0.29 1.47 10.09 0.10
-Electronics - Industrial
10 Bharat Forge Ltd. -- 45 3,173 1.09% 1.08 0.32 2.19 3.54 0.10
Castings/Forgings
11 Biocon Ltd. -- 100 2,223 0.76% 0.85 0.31 1.54 8.28 0.08
Pharmaceuticals
12 Canara Bank --Banks 410 4,512 1.54% 0.93 0.45 1.68 4.38 0.08
13 Colgate Palmolive (India) 14 4,500 1.54% 0.33 0.14 1.05 -1.88 0.09
Ltd. --Personal Care
14 Container Corporation of 130 6,324 2.16% 0.34 0.14 1.10 9.30 0.17
India Ltd. --Travel And
Transport
15 Corporation Bank --Banks 143 2,952 1.01% 0.75 0.38 2.41 9.05 0.13
16 Crompton Greaves Ltd. 128 9,889 3.38% 1.03 0.42 2.19 9.67 0.12
--Electrical Equipment
17 Cummins India Ltd. -- 40 4,980 1.70% 0.73 0.31 1.10 12.50 0.15
Diesel Engines
18 Dr. Reddy’s Laboratories 84 15,973 5.46% 0.43 0.15 1.35 11.61 0.07
Ltd. --Pharmaceuticals
19 Federal Bank Ltd. -- 171 4,569 1.56% 0.85 0.41 1.79 3.29 0.11
Banks
20 Glaxosmithkline 85 7,429 2.54% 0.02 0.00 0.95 3.98 0.11
Pharmaceuticals Ltd. --
Pharmaceuticals
21 Glenmark 27 3,739 1.28% 0.97 0.31 2.20 6.38 0.09
Pharmaceuticals Ltd. --
Pharmaceuticals
22 GMR Infrastructure Ltd. 733 5,835 2.00% 1.23 0.56 1.79 14.42 0.08
--Construction
23 Housing Development 346 5,115 1.75% 1.97 0.64 1.85 -5.28 0.07
and Infrastructure Ltd.
--Construction
24 Hindustan Petroleum 339 5,274 1.80% 0.46 0.12 1.45 -8.16 0.08
Corporation Ltd. --
Refineries

Contd...

75
Contd...
Sl. Name of Security Issued Free Float Weight- Beta R2 Volatil- Returns Impact
No. Capital Market Capi- age ity Cost
talisation for
March 2010
( ` cr.) ( ` cr.) (%) (%) (%) (%)
25 Indiabulls Real Estate 80 5,100 1.74% 1.67 0.53 2.83 -4.78 0.08
Ltd. --Construction
26 IDBI Bank Ltd. --Banks 725 3,945 1.35% 1.44 0.62 1.42 -3.40 0.07
27 IFCI Ltd. --Financial 738 3,193 1.09% 1.68 0.61 1.66 -3.11 0.08
Institution
28 Indian Hotels Co. Ltd. 72 5,213 1.78% 1.03 0.38 2.21 14.12 0.10
--Hotels
29 Indian Overseas Bank 545 1,942 0.66% 1.19 0.53 1.49 4.25 0.09
--Banks
30 JSW Steel Ltd. --Steel 187 12,700 4.34% 1.54 0.52 1.73 15.36 0.06
And Steel Products
31 Kotak Mahindra Bank 348 12,082 4.13% 1.42 0.66 1.51 0.52 0.07
Ltd. --Banks
32 LIC Housing Finance Ltd. 95 5,251 1.80% 1.02 0.37 2.59 15.84 0.06
--Finance - Housing
33 Lupin Ltd. -- 89 7,644 2.62% 0.26 0.06 1.53 8.44 0.08
Pharmaceuticals
34 United Spirits Ltd. -- 126 11,299 3.87% 1.03 0.42 2.02 -2.42 0.08
Brew/Distilleries
35 Moser Baer India Ltd. -- 168 1,028 0.35% 1.20 0.46 1.94 -3.76 0.10
Computers - Hardware
36 Mphasis Ltd. -- 210 5,118 1.75% 0.62 0.17 1.46 -6.41 0.09
Computers - Software
37 Mangalore Refinery & 1,753 1,527 0.52% 1.08 0.35 1.09 2.83 0.09
Petrochemicals Ltd. --
Refineries
38 Mundra Port and Special 401 5,998 2.05% 0.84 0.36 1.79 17.18 0.07
Economic Zone Ltd. --
Travel And Transport
39 Oracle Financial 42 3,758 1.29% 0.78 0.31 0.64 2.80 0.07
Services Software Ltd. --
Computers - Software
40 Patni Computer Systems 26 3,694 1.26% 0.78 0.17 2.47 12.55 0.08
Ltd. --Computers -
Software
41 Power Finance 1,148 3,031 1.04% 0.87 0.41 1.72 3.22 0.10
Corporation Ltd. --
Financial Institution
42 Reliance Natural 817 4,591 1.57% 1.31 0.49 1.81 2.38 0.08
Resources Ltd. --Gas
43 Sesa Goa Ltd. --Mining 82 16,456 5.63% 1.18 0.42 2.23 17.51 0.06

44 Syndicate Bank --Banks 522 1,508 0.52% 1.02 0.56 1.50 2.80 0.09
45 Tech Mahindra Ltd. -- 122 1,759 0.60% 1.08 0.29 1.35 -4.24 0.06
Computers - Software
46 Tata Teleservices 1,897 1,000 0.34% 0.96 0.38 1.54 1.72 0.12
(Maharashtra) Ltd. -
-Telecommunication
- Services
47 UltraTech Cement Ltd. 124 6,501 2.22% 0.63 0.28 1.41 11.04 0.12
--Cement And Cement
Products
48 Union Bank of India -- 505 6,580 2.25% 0.71 0.32 1.58 14.29 0.08
Banks

Contd...

76
Contd...
Sl. Name of Security Issued Free Float Weight- Beta R2 Volatil- Returns Impact
No. Capital Market Capi- age ity Cost
talisation for
March 2010
( ` cr.) ( ` cr.) (%) (%) (%) (%)
49 United Phosphorous 88 4,723 1.62% 0.98 0.40 1.81 -1.45 0.11
Ltd. --Pesticides And
Agrochemicals
50 Zee Entertainment 43 6,811 2.33% 0.74 0.20 2.58 8.60 0.09
Enterprises Ltd. --Media
& Entertainment
Total 15,731 292,316 100.00% 1.00 -- 0.77 6.67 0.09

* Beta & R2 are calculated for the period 01-April-2009 to 31-March-2010


* Beta measures the degree to which any portfolio of stocks is affected as compared to the effect
on the market as a whole.
* The coefficient of determination (R2) measures the strength of relationship between two
variables, the return on a security versus that of the market.
* Volatility is the Std. deviation of the daily returns for the period 01-March-2010 to 31-March-
2010
* Last day of trading was 31-March-2010
* Impact Cost for CNX Nifty Junior is for a portfolio of ` 25 lakhs
* Impact Cost for CNX Nifty Junior is the weightage average impact cost

Table 4-10 : Industry-wise Weightages of S&P CNX NIFTY Securities


as on 31st March, 2010

Sl. No. Industry Market Cap ( ` Cr.) Weightage

1 Banks 269,197 17.65


2 Computers - Software 193,862 12.71
3 Refineries 188,371 12.35
4 Engineering 98,141 6.43
5 Steel And Steel Products 80,508 5.28
6 Finance - Housing 68,753 4.51
7 Cigarettes 68,261 4.48
8 Power 66,030 4.33
9 Electrical Equipment 62,632 4.11
10 Automobiles - 4 Wheelers 62,068 4.07
11 Telecommunication - Services 59,915 3.93
12 Oil Exploration/Production 50,208 3.29
13 Diversified 42,208 2.77
14 Cement And Cement Products 38,613 2.53
15 Pharmaceuticals 37,849 2.48
16 Metals 34,272 2.25
17 Aluminium 23,556 1.54
18 Construction 21,068 1.38
19 Gas 18,446 1.21
20 Automobiles - 2 And 3 Wheelers 17,488 1.15
21 Financial Institution 15,080 0.99
22 Finance 8,638 0.57
Total 1,525,162 100.00

77
Table 4-11 : S&P CNX NIFTY Index*

Month & Year Open High Low Close Volatility Price To


(%) Earning
Ratio#
1995-96 (Nov.-Mar.) 1000.00 1067.49 813.12 985.30 1.62 –
1996-97 988.33 1203.11 775.43 968.30 1.67 –
1997-98 931.95 1297.10 929.05 1116.90 1.52 –
1998-99 1117.15 1247.15 800.10 1078.05 1.86 16.53
1999-2000 1082.55 1818.15 916.00 1528.45 1.93 24.60
2000-01 1528.70 1636.95 1098.75 1148.20 1.98 17.21
2001-02 1148.10 1207.00 849.95 1129.55 1.40 18.10
2002-03 1129.85 1153.30 920.10 978.20 0.99 13.36
2003-04 977.40 2014.65 920.00 1771.90 1.43 20.70
2004-05 1771.45 2183.45 1292.20 2035.65 1.61 14.60
2005-06 2035.90 3433.85 1896.30 3402.55 1.04 20.26
2006-07 3403.15 4245.30 2595.65 3821.55 1.77 18.40
2007-08 3820.00 6357.100 3617.000 4734.500 2.02 20.63
Apr-08 4735.65 5230.75 4628.75 5165.90 1.28 22.20
May-08 5265.30 5298.85 4801.90 4870.10 1.21 20.74
Jun-08 4869.25 4908.80 4021.70 4040.55 1.91 17.28
Jul-08 4039.75 4539.45 3790.20 4332.95 2.97 18.22
Aug-08 4331.60 4649.85 4201.85 4360.00 1.61 18.43
Sep-08 4356.10 4558.00 3715.05 3921.20 2.32 16.85
Oct-08 3921.85 4000.50 2252.75 2885.60 5.03 12.57
Nov-08 2885.40 3240.55 2502.90 2755.10 3.83 12.08
Dec-08 2755.15 3110.45 2570.70 2959.15 2.46 12.97
Jan-09 2963.30 3147.20 2661.65 2874.80 2.73 13.40
Feb-09 2872.35 2969.75 2677.55 2763.65 1.81 13.12
Mar-09 2764.60 3123.35 2539.45 3020.95 2.34 14.30
2008-09 4735.65 5298.85 2252.75 3020.95 2.66 14.30
Apr-09 3023.85 3517.25 2965.70 3473.95 2.18 16.53
May-09 3478.70 4509.40 3478.70 4448.95 4.15 20.82
Jun-09 4450.40 4693.20 4143.25 4291.10 1.92 19.97
Jul-09 4292.30 4669.75 3918.75 4636.45 2.22 20.68
Aug-09 4633.80 4743.75 4353.45 4662.10 1.78 20.94
Sep-09 4662.20 5087.60 4576.60 5083.95 0.92 22.90
Oct-09 5087.20 5181.95 4687.50 4711.70 1.08 20.45
Nov-09 4712.25 5138.00 4538.50 5032.70 1.58 22.37
Dec-09 5039.70 5221.85 4943.95 5201.05 1.05 23.17
Jan-10 5200.90 5310.85 4766.00 4882.05 1.03 21.00
Feb-10 4882.05 4992.00 4675.40 4922.30 1.18 20.92
Mar-10 4935.60 5329.55 4935.35 5249.10 0.70 22.33
2009-2010 3023.85 5329.55 2965.70 5249.10 1.88 22.33
* S&P CNX Nifty commenced from November 3, 1995
# At the end of the period
Note : Volatility is calculated as standard deviation of the Natural Log of returns for the respective month/
year

78
Table 4-12 : CNX NIFTY Junior Index*

Month & Year Open High Low Close Volatility Price To


(%) Earning
Ratio#

1996-97 (Nov.-Mar.) 1000.00 1208.87 907.02 1032.95 1.76 --


1997-98 1028.30 1395.25 1016.65 1339.40 1.44 --
1998-99 1339.75 2079.10 1177.20 2069.20 2.14 18.92
1999-00 2099.75 5365.90 1631.90 3695.75 2.46 33.47
2000-01 3720.45 3771.80 1570.20 1601.80 2.75 9.69
2001-02 1601.40 1676.25 1038.75 1566.95 1.60 6.80
2002-03 1568.40 1690.35 1231.95 1259.55 1.23 11.68
2003-04 1260.75 3702.60 1259.75 3392.05 1.57 11.93
2004-05 3398.00 4705.25 2493.70 4275.15 1.83 13.82
2005-06 4275.35 6437.40 3998.80 6412.10 0.95 20.25
2006-07 6415.25 7566.65 4463.75 6878.05 2.05 18.48
2007-08 6675.85 13209.35 6559.55 7975.75 2.41 16.69
Apr-08 7982.75 9272.25 7699.35 9170.95 1.40 18.96
May-08 9236.40 9541.00 8075.50 8221.35 1.72 16.27
Jun-08 8228.20 8305.15 6201.05 6233.20 2.43 12.08
Jul-08 6239.20 7363.20 5756.85 6936.80 3.68 13.15
Aug-08 6877.80 7177.15 6799.55 7138.30 2.02 13.68
Sep-08 7118.20 7400.25 5633.10 6043.15 2.48 12.13
Oct-08 6070.10 6203.65 3603.20 4291.30 4.83 8.44
Nov-08 4435.40 4937.65 3706.70 3848.85 3.19 7.53
Dec-08 3853.85 4695.30 3675.50 4555.70 2.30 8.99
Jan-09 4568.55 5007.25 3964.95 4230.15 2.94 8.60
Feb-09 4214.15 4337.65 3869.25 3980.55 1.70 8.12
Mar-09 3941.55 4405.60 3587.60 4336.45 2.38 8.69
2008-09 7982.75 9541.00 3587.60 4336.45 2.80 8.69
Apr-09 4343.20 5466.40 4297.45 5281.80 2.55 10.46
May-09 5380.05 7544.45 5380.05 7474.30 3.51 15.02
Jun-09 7581.80 8169.25 7326.80 7794.70 2.52 15.36
Jul-09 7791.90 8537.45 6931.70 8473.65 2.51 14.95
Aug-09 8475.45 8697.40 7971.60 8542.40 1.86 15.00
Sep-09 8580.40 9373.50 8360.50 9360.65 1.02 16.48
Oct-09 9380.35 10094.90 9044.70 9162.40 1.44 14.21
Nov-09 9144.65 10096.50 8865.50 9933.20 1.61 15.57
Dec-09 9952.80 10456.75 9952.80 10382.70 0.96 16.28
Jan-10 10372.40 10896.50 9646.60 9985.70 1.37 14.71
Feb-10 9954.45 10287.25 9712.25 10099.95 1.20 14.75
Mar-10 10137.45 10822.40 10137.45 10773.75 0.77 15.76
2009-2010 4343.20 10896.50 4297.45 10773.75 1.97 15.76
* CNX Nifty Junior commenced from November 4, 1996
# At the end of period
Note : Volatility is calculated as standard deviation of the Natural Log of returns for the respective month/
year

79
Table 4-13 : Performance of NSE Indices during the year 2009-10
Indices Record high Date Closing Average Y-o-Y
index values Daily Returns
Value
(31-03-10) Volatility (%) %

S&P CNX Nifty 5329.55 29/Mar/10 5249.10 1.88 73.76

CNX Nifty Junior 10896.50 19/Jan/10 10773.75 1.97 148.45

CNX 100 5251.65 29/Mar/10 5188.05 1.87 83.09

S&P CNX 500 4524.30 19/Jan/10 4313.25 1.79 87.95

CNX Midcap 7885.35 19/Jan/10 7704.90 1.73 126.12

Nifty Midcap 50 2813.45 19/Jan/10 2692.95 2.09 131.15

CNX FMCG 7526.72 25/Nov/09 7273.30 1.46 41.65

CNX IT 6223.50 26/Mar/10 5855.95 2.02 152.55

CNX Finance* 4057.50 18/Jan/10 3687.36 2.16 102.06

S&P CNX Petrochemicals* 7036.80 17/Feb/10 6918.33 1.67 114.69

S&P CNX Pharmaceuticals* 6805.61 29/Mar/10 6804.07 1.37 96.36


* Closing Record High, Other - Record Intra-day High
Note : Volatility is calculated as standard deviation of the Natural Log of returns for the respective month/
year

Table 4-14 : Mutual Funds/ETFs: No of Trades and Trading Value


Month & Mutual Funds (MF’s) Exchange traded funds (ETF’s)
Year
No. of Trades Trading Value No. of Trades Trading Value
( ` cr.) (US $ mn.) ( ` cr.) (US $ mn.)

2007-08 107,172 288.84 72.26 294,091 1,912.55 478.50

Apr-08 5,632 18.97 3.72 34,930 588.88 115.58

May-08 4,605 17.19 3.37 52,396 221.75 43.52

Jun-08 5,247 26.29 5.16 50,864 252.92 49.64

Jul-08 4,685 68.13 13.37 67,007 584.22 114.67

Aug-08 2,742 14.18 2.78 81,896 237.00 46.52

Sep-08 5,622 21.35 4.19 88,739 486.11 95.41

Oct-08 5,253 20.47 4.02 147,770 541.54 106.29

Nov-08 2,513 7.09 1.39 119,429 277.60 54.48

Dec-08 2,338 14.99 2.94 111,034 309.10 60.67

Jan-09 685 0.90 0.18 85,273 268.22 52.64

Feb-09 384 0.47 0.09 102,870 310.93 61.03

Mar-09 531 0.92 0.18 95,849 322.24 63.25

2008-09 40,237 210.95 41.40 1,038,057 4,400.50 863.69

Apr-09 510 1.02 0.23 102,901 353.37 78.28

Contd...

80
Contd...
Month & Mutual Funds (MF’s) Exchange traded funds (ETF’s)
Year
No. of Trades Trading Value No. of Trades Trading Value
( ` cr.) (US $ mn.) ( ` cr.) (US $ mn.)

May-09 604 1.01 0.22 96,214 431.84 95.67

Jun-09 709 1.58 0.35 87,312 425.83 94.34

Jul-09 521 0.56 0.12 101,505 494.88 109.63

Aug-09 296 0.47 0.10 86,985 428.36 94.90

Sep-09 382 0.49 0.11 101,674 567.58 125.74

Oct-09 729 0.79 0.18 105,332 504.82 111.84

Nov-09 330 0.50 0.11 131,787 645.99 143.11

Dec-09 535 0.57 0.13 149,751 639.06 141.57

Jan-10 351 0.53 0.12 109,970 579.35 128.34

Feb-10 348 0.55 0.12 96,808 466.31 103.30

Mar-10 170 50.26 11.14 102,176 568.33 125.90

2009-2010 5,485 58.33 12.92 1,272,415 6,105.74 1,352.62

Table 4-15 : Settlement Cycle and Process in CM Segment

Activity T+2 Rolling Settlement


(From April 1, 2003)

Trading T

Custodial Confirmation T+1

Determination of Obligation T+1

Securities/Funds Pay-in T+2

Securities/Funds Pay-out T+2

Valuation Debit T+2

Auction T+3

Bad Delivery Reporting T+4

Auction Pay-in/Pay-out T+5

Close Out T+5

Rectified Bad Delivery Pay-in/Pay-out T+6

Re-bad Delivery Reporting T+8

Close Out of Re-bad Delivery T+9

T+1 means one working day after the trade day. Other T+ terms have similar meanings.

81
82
Table 4-16 : Settlement Statistics of the Capital Market Segment

Month/Year No. of Traded Quantity % of Trading Vol- Trading Vol- Value of % of Securities Short % of Unrecti- % of Funds
Trades Quantity of Shares Shares ume ume Shares Deliver- Paid-in / De- Short fied Bad Unrecti- Pay-in
Deliver- Deliver- Deliver- able to Value of livery Delivery Delivery fied Bad
able able to able Value of Shares de- (Auc- to Total (Auc- Delivery
Total Shares livered tioned Deliver- tioned to Deliv-
Shares Traded quan- able quantity) erable
Traded tity)
(lakh) (lakh) (lakh) ( ` cr.) (US $ mn.) ( ` cr.) ( ` cr.) (lakh) (lakh) ( ` cr.)

Nov 94-Mar 95 3 1,330 688 51.74 1,728 – 898 51.97 611 6 0.85 1.76 0.26 300
1995-96 64 39,010 7,264 18.62 65,742 – 11,775 17.91 5,805 179 2.46 32.17 0.44 3,258
1996-97 262 134,317 16,453 12.25 292,314 – 32,640 11.17 13,790 382 2.32 66.25 0.40 7,212
1997-98 383 135,217 22,051 16.31 370,010 – 59,775 16.15 21,713 333 1.51 72.90 0.33 10,827
1998-99 550 165,310 27,991 16.93 413,573 – 66,204 16.01 30,755 305 1.09 69.73 0.25 12,175
1999-00 958 238,605 48,713 20.42 803,050 184,099 82,607 10.29 79,783 635 1.30 110.13 0.23 27,992
2000-01 1,614 304,196 50,203 16.50 1,263,898 270,990 106,277 8.41 94,962 339 0.68 11.58 0.023 45,937
2001-02 1,720 274,695 59,299 21.59 508,121 104,123 71,766 14.12 64,353 364 0.61 0.08 0.0001 28,048
2002-03 2,397 365,403 82,353 22.54 621,569 130,857 87,956 14.15 87,447 469 0.57 0.00 0.0000 34,092
2003-04 3,750 704,533 175,550 24.92 1,090,963 251,432 221,364 20.29 220,341 1,014 0.58 0.00 0.00 81,588
2004-05 4,503 787,996 202,277 25.67 1,140,969 260,793 277,101 24.29 276,120 871 0.43 0.00 0.00 97,241
2005-06 6,000 818,438 227,240 27.77 1,516,839 340,022 409,353 26.99 407,976 894 0.39 0.00 0.00 131,426
2006-07 7,857 850,515 239,074 28.11 1,940,094 445,078 544,434 28.06 543,048 769 0.32 0.00 0.00 173,188
2007-08 11,645 1,481,229 367,971 24.84 3,519,919 880,640 972,803 27.64 970,618 997 0.27 0.00 0.00 309,543
Apr-08 1,069 111,364 24,919 22.38 262,423 51,506 63,492 24.19 63,383 55 0.22 0.00 0.00 19,339
May-08 1,079 115,499 25,379 21.97 278,962 54,752 68,903 24.70 68,799 54 0.21 0.00 0.00 21,745
Jun-08 1,122 110,685 23,871 21.57 272,697 53,522 64,330 23.59 64,217 55 0.23 0.00 0.00 22,216
Jul-08 1,329 131,998 25,311 19.18 290,699 57,056 61,406 21.12 61,311 55 0.22 0.00 0.00 21,015
Aug-08 1,082 106,909 22,822 21.35 238,279 46,767 54,447 22.85 54,369 43 0.19 0.00 0.00 17,862

Contd...
Contd...
Month/Year No. of Traded Quantity % of Trading Vol- Trading Vol- Value of % of Securities Short % of Unrecti- % of Funds
Trades Quantity of Shares Shares ume ume Shares Deliver- Paid-in / De- Short fied Bad Unrecti- Pay-in
Deliver- Deliver- Deliver- able to Value of livery Delivery Delivery fied Bad
able able to able Value of Shares de- (Auc- to Total (Auc- Delivery
Total Shares livered tioned Deliver- tioned to Deliv-
Shares Traded quan- able quantity) erable
Traded tity)
(lakh) (lakh) (lakh) ( ` cr.) (US $ mn.) ( ` cr.) ( ` cr.) (lakh) (lakh) ( ` cr.)

Sep-08 1,054 95,556 24,074 25.19 247,189 48,516 61,039 24.69 60,934 44 0.18 0.00 0.00 26,208
Oct-08 1,226 111,157 28,655 25.78 230,192 45,180 54,690 23.76 54,585 67 0.23 0.00 0.00 25,889
Nov-08 1,119 109,968 24,724 22.48 178,208 34,977 36,880 20.69 36,811 40 0.16 0.00 0.00 14,772
Dec-08 1,290 142,294 28,148 19.78 213,387 41,882 40,854 19.15 40,800 47 0.17 0.00 0.00 15,075
Jan-09 1,211 141,964 27,642 19.47 187,393 36,780 36,529 19.49 36,464 48 0.17 0.00 0.00 12,726
Feb-09 1,002 116,896 21,798 18.65 152,625 29,956 30,260 19.83 30,208 42 0.19 0.00 0.00 10,525
Mar-09 1,057 124,640 26,581 21.33 197395.5 38,743 38,706 19.61 38,617 75 0.28 0.00 0.00 13,332
2008-09 13,639 1,418,928 303,925 21.42 2,749,450 539,637 611,535 22.44 610,498 625 0.21 0.00 0.00 220,704
Apr-09 1,261 179,344 34,413 19.19 261,310 57,888 48,149 18.43 48,072 68 0.20 0.00 0.00 16,269
May-09 1,440 219,072 45,550 20.79 357,932 79,293 74,436 20.80 74,317 113 0.25 0.00 0.00 25,219
Jun-09 1,819 281,124 53,110 18.89 496,589 110,010 98,889 19.91 98,761 81 0.15 0.00 0.00 29,632
Jul-09 1,695 216,820 39,755 18.34 419,077 92,839 80,194 19.14 80,078 58 0.15 0.00 0.00 25,433
Aug-09 1,477 191,710 39,614 20.66 371,474 82,293 78,661 21.18 78,561 71 0.18 0.00 0.00 23,751
Sep-09 1,337 191,597 43,436 22.67 349,940 77,523 82,209 23.49 82,124 62 0.14 0.00 0.00 24,853
Oct-09 1,395 173,208 40,219 23.22 373,953 82,843 89,940 24.05 89,834 68 0.17 0.00 0.00 26,965
Nov-09 1,332 161,043 35,594 22.10 332,248 73,603 74,650 22.47 74,565 51 0.14 0.00 0.00 22,913
Dec-09 1,272 150,733 34,290 22.75 298,215 66,064 68,853 23.09 68,748 65 0.19 0.00 0.00 17,995
Jan-10 1,360 175,715 44,276 25.20 324,584 71,905 85,206 26.25 85,101 81 0.18 0.00 0.00 25,887
Feb-10 1,155 125,909 28,357 22.52 253,467 56,151 58,767 23.19 58,679 52 0.18 0.00 0.00 18,354
Mar-10 1,246 139,602 36,199 25.93 290,424 64,338 77,751 26.77 77,619 93 0.26 0.00 0.00 21,116
2009-2010 16,788 2,205,878 474,814 21.52 4,129,214 914,757 917,705 22.22 916,460 862 0.18 0.00 0.00 278,387

83
84
Wholesale Debt
Market Segment 5
86
Wholesale Debt Market Segment
5
The Exchange started its trading operations in June 1994 by enabling the Wholesale Debt Market
(WDM) segment of the Exchange. This segment provides a trading platform for a wide range of
fixed income securities that includes Central government securities, treasury bills (T-bills), state
development loans (SDLs), bonds issued by public sector undertakings (PSUs), floating rate bonds
(FRBs), zero coupon bonds (ZCBs), index bonds, commercial papers (CPs), certificates of deposit
(CDs), corporate debentures, SLR and non-SLR bonds issued by financial institutions (FIs), bonds
issued by foreign institutions and units of mutual funds (MFs).

To further encourage wider participation of all classes of investors, including the retail investors,
the Retail Debt Market segment (RDM) was launched on January 16, 2003. This segment provides
for a nation wide, anonymous, order driven, screen based trading system in government securities.
In the first phase, all outstanding and newly issued central government securities were traded in
the retail debt market segment. Other securities like state government securities, T-bills etc. will
be added in subsequent phases.

Trading Mechanism
The WDM trading system, known as NEAT (National Exchange for Automated Trading), is a fully
automated screen based trading system that enables members across the country to trade
simultaneously with enormous ease and efficiency. It supports an anonymous order driven market
which operates on a price/time priority and provides tremendous flexibility to users in terms of
orders with various time/price/quantity related conditions that can be placed on the system. It
also provides on-line market information like total order depth, best buys and sells available,
quantity traded, the high, low and last traded price for securities are available at all points of
time.

The WDM Trading system provides two market sub-types: continuous market and negotiated
market. In the continuous market, the buyer and seller do not know each other and they put their
best buy/sell orders, which are stored in order book with price/time priority. If orders match, it
results into a trade. The trades in WDM segment are settled directly between the participants,
who take an exposure to the settlement risk attached to any unknown counter-party. In the NEAT-
WDM system, all participants can set up their counter-party exposure limits against all probable
counter-parties. This enables the trading member/participant to reduce/ minimize the counter-
party risk associated with the counter-party to trade. A trade does not take place if both the buy/
sell participants do not invoke the counter-party exposure limit in the trading system.

In the negotiated market, the trades are normally decided by the seller and the buyer outside
the exchange, and reported to the Exchange through a trading member for approval. Thus, deals
negotiated or structured outside the exchange are disclosed to the market through NEAT-WDM
system. In negotiated market, as buyers and sellers know each other and have agreed to trade, no
counter-party exposure limit needs to be invoked.

87
Market Performance
Turnover

The trading volume on the WDM Segment of the Exchange witnessed a year on year
increase of 67.00% from ` 335,952 crore (US $ 65,937 million) during 2008-09 to
` 563,816 crore (US $ 124,904 million) during 2009-10. The average daily trading volume also
accelerated from ` 1,412 crore (US $ 277 million) during 2008-09 to ` 2,359 crore (US $ 523 million)
in fiscal 2009-10. The highest recorded WDM trading volume of ` 13,912 crore ( US $ 3,206 million)
was registered on August 25, 2003. The business growth of the WDM segment is presented in Table
5-1 and Chart 5-1.

Chart 5-1 : Business Growth of WDM Segment

The transactions in government securities accounted for a substantial share of 58.15 % during
2009-10 on the WDM segment. The details of transactions in different securities are presented
in Table 5-2. and Chart 5-2a There were no repo transactions recorded from the fiscal 2005-06
onwards till 2009-10.

The participant-wise distribution of WDM trades is presented in Table 5-3 and Chart 5-2(b). The
trading members accounted for 49.23 % of the total WDM trades followed by foreign banks which
held a share of 23.67 %. Share of Indian banks in WDM trades increased to 19.84 % during 2009-10
as compared with its share of 18.11 % in the corresponding period last year.

88
Chart 5-2 (a) : Security-wise Distribution of WDM Trades (2009-10)

Chart 5-2 (b) : Participant-wise distribution of WDM trades (2009-10)

The share of top ‘N’ securities/trading members/participants in turnover in WDM segment is


presented in Table 5-4. The share of top ‘5’ securities decreased from 31.31 % in 2008-09 to
24.19 % in 2009-10. The share of top ‘50’ and top ‘100’ securities accounted for 65.63% and 77.89%
respectively in the current year.

89
Market Capitalisation

Market capitalisation of the WDM segment has witnessed an increase of 11.15 % from ` 2,848,315
crore (US $ 559,041 million) as on March 31, 2009 to ` 3,165,929 crore (US $ 701,358 million) as
on March 31, 2010. Central Government securities accounted for the largest share of the market
capitalisation with 61.61%. The details of market capitalisation of WDM securities are presented
in Table 5-5.

Transaction Charges
The Exchange has waived the transaction charges for the Wholesale Debt Market segment of the
Exchange for the period April 1, 2010 to March 31, 2011.

Settlement
NSE 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.

In case of government securities, the actual settlement of funds and securities are effected directly
between participants or through Reserve Bank of India (RBI). 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.

FIMMDA-NSE MIBID/MIBOR
A reference rate is an accurate measure of the market price. In the fixed income market, it is
an interest rate that the market respects and closely matches. On these lines, NSE has been
computing and disseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter-
bank Offer Rate (MIBOR) for the overnight money market from June 15, 1998, the 14-day MIBID/
MIBOR from November 10, 1998, the 1 month and 3 month MIBID/MIBOR from December 1, 1998
and the 3 day MIBID/MIBOR from, from June 06, 2008 which is calculated and disseminated on
every last working day of the week. In view of the robust methodology of computation of these

90
rates and their extensive use by market participants, these have been co-branded with Fixed
Income and Money Market Dealers Association (FIMMDA) from March 4, 2002. These are now known
as FIMMDA-NSE MIBID/MIBOR. These are presented in Table 5-6. The Chart 5-3 presents overnight
MIBID/MIBOR for 2009-10.

Chart 5-3 : Overnight MIBID/MIBOR Rates, 2009-10 -


from 2 April 2009 to 31st March 2010

FIMMDA-NSE MIBID/MIBOR are based on rates polled by NSE from a representative panel of 33
banks /primary dealers. Overnight Rates for saturdays is calculated and disseminated at 1030Hrs
(IST). The 3 day rates are polled and processed on the last working day of the week. The rates
are broadcast through NEAT-WDM trading system immediately on release and also disseminated
through websites of NSE and FIMMDA , through leading information vendors ,financial dailies and
email.

The FIMMDA-NSE MIBID/MIBOR is used as a benchmark rate for majority of deals struck for interest
rate swaps, forward rate agreements, floating rate debentures and term deposits.

Zero Coupon Yield Curve


Keeping in mind the requirements of the banking industry, financial institutions, mutual funds,
insurance companies, etc. that have substantial investment in sovereign papers, NSE disseminates
a ‘Zero Coupon Yield Curve’ (NSE Zero Curve) to help in valuation of securities across all maturities
irrespective of its liquidity in the market. This product has been developed by using Nelson-Siegel
functional form to estimate the term structure of interest rate at any given point of time and been
successfully tested by using daily WDM trades data. This is being disseminated daily.

The ZCYC depicts the relationship between spot interest rates in the economy and the associated
term to maturity. It provides daily estimates of the term structure of interest rates using
information on secondary market trades in government securities from the WDM segment. The
term structure forms the basis for the valuation of all fixed income instruments. Modelled as a

91
series of cashflows due at different points of time in the future, the underlying price of such an
instrument is calculated as the net present value of the stream of cashflows. Each cashflow, in
such a formulation, is discounted using the interest rate for the associated term to maturity; the
appropriate rates are read off the estimated ZCYC. Once estimated, the interest rate-maturity
mapping is used to compute underlying valuations even for securities that do not trade on a given
day. Changes in the economy cause shifts in the term structure, changing the underlying valuations
of fixed income instruments. The daily ZCYC captures these changes, and is used to track the value
of portfolios of government securities on a day-to-day basis.

Chart 5-4 plots the spot interest rates at different maturities for the year 2009-10

Chart 5-4 : Zero Coupon Yield Curve, 2009-10

NSE-VaR System
NSE has developed a VaR system for measuring the market risk inherent in Government of India
(GOI) securities. NSE-VaR system builds on the NSE database of daily yield curves (ZCYC) and
provides measures of VaR using 5 alternative methods (variance-covariance (normal), historical
simulation method, weighted normal, weighted historical simulation and extreme value method).
Together, these 5 methods provide a range of options for market participants to choose from.

NSE-VaR system releases daily estimates of security-wise VaR at 1-day and multi-day horizons
for securities traded on WDM segment of NSE and all outstanding GoI securities with effect from
January 1, 2002. Participants can compute their portfolio risk as weighted average of security-wise
VaRs, the weights being proportionate to the market value of a given security in their portfolio.
1-day VaR (99%) measure for GoI Securities traded on NSE-WDM on March 31, 2010 is presented in
Table 5-7.

92
GOI-Bond Index
The increased activity in the government securities market in India and simultaneous emergence
of mutual (gilt) funds has given rise to the need for a well defined Bond Index to measure returns in
the bond market. The NSE-Government Securities Index prices components off the NSE Benchmark
ZCYC, so that the movements reflect returns to an investor on account of change in interest rates
only, and not those arising on account of the impact of idiosyncratic factors. The index provides a
benchmark for portfolio management by various investment managers and gilt funds. It also forms
the basis for designing index funds and for derivative products such as options and futures. Some
of the salient features of this index are:

• The base date for the index is 1st January 1997 and the base date index value is 100

• The index is calculated on a daily basis from 1st January 1997 onwards; weekends and
holidays are ignored.

• The index uses all Government of India bonds issued after April 1992. These were issued on
the basis of an auction mechanism that imparted some amount of market-relatedness to their
pricing. Bonds issued prior to 1992 were on the basis of administered interest rates.

• Each day, the prices for all these bonds are estimated off the NSE Benchmark-ZCYC for the
day.

• The constituents are weighted by their market capitalisation.

• Computations are based on arithmetic and not geometric calculations.

• The index uses a chain-link methodology i.e. today’s values are based on the previous value
times the change since the previous calculations. This gives the index the ability to add new
issues and remove old issues when redeemed.

• Coupons and redemption payments are assumed to be re-invested back into the index in
proportion to the constituent weights.

• Both the Total Returns Index and the Principal Returns Index are computed.

• The indices provided are: Composite, 1-3, 3-8, 8+ years, TB index, GS index

93
94
Table 5-1 : Business Growth of WDM Segment

Month/Year All Trades Retail Trade


No. of Number Trading Volume Average Daily Trading Average Number of Trading Volume Share in Total
active of Trades Volume Trade Size Trades Trading Volume
securities
( ` cr.) ( US $ mn) ( ` cr.) ( US $ mn) ( ` cr.) ( ` cr.) ( US $ mn) (%)
1994- 95 (June- 183 1,021 6,781 – 30 – 6.64 168 31.00 – 0.45
March)
1995-96 304 2,991 11,868 – 41 – 3.97 1,115 207.00 – 1.74
1996-97 524 7,804 42,278 – 145 – 5.42 1,061 201.00 – 0.47
1997-98 719 16,821 111,263 – 385 – 6.61 1,390 288.66 – 0.26
1998-99 1,071 16,092 105,469 24,857 365 86 6.55 1,522 307.77 72.54 0.29
1999-00 1,057 46,987 304,216 69,742 1,035 237 6.47 936 217.76 49.92 0.07
2000-01 1,038 64,470 428,582 91,891 1,483 318 6.65 498 131.00 28.09 0.03
2001-02 979 144,851 947,190 194,096 3,277 672 6.54 378 110.00 22.54 0.01
2002-03 1,123 167,778 1,068,701 224,990 3,598 758 6.37 1,252 300.00 63.16 0.03
2003-04 1,078 189,518 1,316,096 303,318 4,477 1,032 6.94 1,400 331.70 69.83 0.03
2004-05 1,151 124,308 887,294 202,810 3,028 692 7.14 1,278 410.13 93.74 0.05
2005-06 897 61,891 475,523 106,596 1,755 393 7.68 892 310.00 69.49 0.07
2006-07 762 19,575 219,106 50,265 898 206 11.19 399 101.52 23.29 0.05
2007-08 601 16,179 282,317 70,632 1,138 285 17.45 211 49.00 12.26 0.02
Apr-08 122 1,016 19,893 3,904 995 195 19.58 6 2.10 0.41 0.01
May-08 137 1,200 20,656 4,054 1,033 203 17.21 3 0.35 0.07 0.00
Jun-08 190 956 18,233 3,579 868 170 19.07 106 20.30 3.98 0.11
Jul-08 127 815 18,745 3,679 815 160 23.00 10 3.39 0.67 0.02
Aug-08 75 594 11,502 2,257 605 119 19.36 16 4.98 0.98 0.04
Sep-08 124 783 19,779 3,882 989 194 25.26 12 3.43 0.67 0.02
Contd...
Contd...
Month/Year All Trades Retail Trade
No. of Number Trading Volume Average Daily Trading Average Number of Trading Volume Share in Total
active of Trades Volume Trade Size Trades Trading Volume
securities
( ` cr.) ( US $ mn) ( ` cr.) ( US $ mn) ( ` cr.) ( ` cr.) ( US $ mn) (%)

Oct-08 126 922 19,966 3,919 1,109 218 21.66 10 2.45 0.48 0.01
Nov-08 140 1,093 23,143 4,542 1,286 252 21.17 7 2.79 0.55 0.01
Dec-08 218 2,857 46,864 9,198 2,232 438 16.40 11 6.03 1.18 0.01
Jan-09 232 2,218 45,015 8,835 2,251 442 20.30 15 4.77 0.94 0.01
Feb-09 221 1,891 42,949 8,430 2,260 444 22.71 28 5.78 1.13 0.01
Mar-09 265 1,784 49,205 9,658 2,590 508 27.58 33 7.17 1.41 0.01
2008-2009 711 16,129 335,952 65,937 1,412 277 20.83 257 64.00 12.56 0.02
Apr-09 313 2,408 45,653 10,114 2,853 632 18.96 14 5.40 1.20 0.01
May-09 270 2,089 40,266 8,920 2,013 446 19.28 8 3.60 0.80 0.01
Jun-09 243 1,948 44,568 9,873 2,026 449 22.88 26 7.50 1.66 0.02
Jul-09 272 2,582 51,222 11,347 2,227 493 19.84 80 18.38 4.07 0.04
Aug-09 274 1,583 38,232 8,470 1,912 423 24.15 86 22.96 5.09 0.06
Sep-09 275 2,301 58,674 12,998 3,088 684 25.5 266 49.12 10.88 0.08
Oct-09 266 1,875 43,731 9,688 2,302 510 23.32 284 45.02 9.97 0.10
Nov-09 279 2,564 64,999 14,399 3,250 720 25.35 253 46.42 10.28 0.07
Dec-09 201 1,735 37,567 8,322 1,789 396 21.65 382 59.48 13.18 0.16
Jan-10 265 1,957 57,036 12,635 2,852 632 29.14 433 81.54 18.06 0.14
Feb-10 260 1,455 34,800 7,709 1,832 406 23.92 195 39.28 8.70 0.11
Mar-10 320 1,572 47,068 10,427 2,353 521 29.94 208 54.13 11.99 0.11
2009-2010 1,144 24,069 563,816 124,904 2,359 523 23.42 2,235 433.00 95.92 0.08

95
96
Table 5-2 : Security-wise Distribution of WDM Trades

Turnover (In ` Cr.) Turnover (In %)


Month & Year Government T-Bills PSU /Inst. Others Total Turnover Government T-Bills PSU /Inst. Others
Securities Bonds Securities Bonds

1994-95 (June- 3,026 2,634 824 297 6,781 44.63 38.84 12.15 4.38
March)
1995-96 7,729 2,260 1,149 729 11,868 65.13 19.04 9.69 6.14
1996-97 27,352 10,957 2,769 1,199 42,278 64.70 25.92 6.55 2.84
1997-98 84,716 18,870 4,050 3,627 111,263 76.14 16.96 3.64 3.26
1998-99 84,576 10,705 5,041 5,147 105,469 80.19 10.15 4.78 4.88
1999-00 282,891 11,013 4,867 5,445 304,216 92.99 3.62 1.60 1.79
2000-01 390,952 23,143 7,886 6,600 428,582 91.22 5.40 1.84 1.54
2001-02 902,105 25,574 10,987 8,619 947,191 95.24 2.70 1.16 0.91
2003-03 1,000,518 32,275 19,985 15,924 1,068,701 93.62 3.02 1.87 1.49
2003-04 1,218,705 55,671 27,112 14,609 1,316,096 92.60 4.23 2.06 1.11
2004-05 724,830 124,842 17,835 19,787 887,294 81.69 14.07 2.01 2.23
2005-06 345,563 105,233 12,173 12,554 475,523 72.67 22.13 2.56 2.64
2006-07 153,370 51,954 4,418 9,365 219,106 70.00 23.71 2.02 4.27
2007-08 194,347 66,062 9,232 12,676 282,317 68.84 23.40 3.27 4.49
Apr-08 13,466 3,751 1,886 790 19,893 67.69 18.85 9.48 3.97
May-08 16,293 2,365 1,201 798 20,656 78.88 11.45 5.81 3.87
Jun-08 12,026 3,145 1,654 1,407 18,233 65.96 17.25 9.07 7.72
Jul-08 13,831 3,034 553 1,326 18,745 73.79 16.19 2.95 7.07
Aug-08 8,243 2,643 377 238 11,502 71.67 22.98 3.28 2.07

Contd...
Contd...

Turnover (In ` Cr.) Turnover (In %)


Month & Year Government T-Bills PSU /Inst. Others Total Turnover Government T-Bills PSU /Inst. Others
Securities Bonds Securities Bonds

Sep-08 12,854 5,212 939 774 19,779 64.99 26.35 4.75 3.91
Oct-08 13,859 3,836 1,887 384 19,966 69.41 19.21 9.45 1.92
Nov-08 16,526 4,960 965 693 23,143 71.41 21.43 4.17 2.99
Dec-08 32,725 6,952 5,093 2,095 46,864 69.83 14.83 10.87 4.47
Jan-09 33,734 4,251 5,160 1,870 45,015 74.94 9.44 11.46 4.15
Feb-09 27,053 8,152 5,287 2,457 42,949 62.99 18.98 12.31 5.72
Mar-09 33,677 8,522 5,006 2,000 49,205 68.44 17.32 10.17 4.06
2008-2009 234,288 56,824 30,008 14,831 335,952 69.74 16.91 8.93 4.41
Apr-09 25,184 6,971 9,215 4,284 45,653 55.16 15.27 20.18 9.38
May-09 24786 6,161 6,309 3010 40,266 61.56 15.30 15.67 7.47
Jun-09 28979 7,848 5,282 2459 44,568 65.02 17.61 11.85 5.52
Jul-09 33,609 5,824 7,798 3,992 51,222 65.61 11.37 15.22 7.79
Aug-09 20,086 5,979 7,502 4,665 38,232 52.54 15.64 19.62 12.20
Sep-09 38,351 8,094 7,857 4,372 58,674 65.36 13.79 13.39 7.45
Oct-09 23,816 8,656 6,224 5,036 43,731 54.46 19.79 14.23 11.52
Nov-09 42,052 7,472 7,940 7,534 64,999 64.70 11.50 12.22 11.59
Dec-09 24434 6,324 4,558 2251 37,567 65.04 16.83 12.13 5.99
Jan-10 31,368 10,504 7,001 8,163 57,036 55.00 18.42 12.27 14.31
Feb-10 18,063 6,990 6,322 3,425 34,800 51.90 20.09 18.17 9.84
Mar-10 17,110 12,137 10,825 6,995 47,068 36.35 25.79 23.00 14.86
2009-2010 327,837 92,961 86,833 56,185 563,816 58.15 16.49 15.40 9.97

97
98
Table 5-3 : Participant wise Distribution of WDM Turnover

Month/Year Turnover (In ` Cr.) Turnover (In %)


Trading FIs/MFs/ Primary Indian Foreign Total Trading FIs/MFs/ Primary Indian Foreign
Members Corporates Dealers Banks Banks Turnover Members Corporates Dealers Banks Banks
1994-95 (June-
3,921 436 1 960 1,463 6,781 57.82 6.43 0.02 14.16 21.57
March)
1995-96 2,787 902 138 3,569 4,473 11,868 23.48 7.60 1.16 30.07 37.69
1996-97 9,703 1,611 2,579 12,688 15,698 42,278 22.95 3.81 6.10 30.01 37.13
1997-98 21,975 4,784 13,418 45,885 25,201 111,263 19.75 4.30 12.06 41.24 22.65
1998-99 16,327 5,200 15,441 44,424 24,079 105,469 15.48 4.93 14.64 42.12 22.83
1999-00 56,675 12,716 59,079 129,961 45,785 304,216 18.63 4.18 19.42 42.72 15.05
2000-01 99,602 17,915 94,888 143,746 72,430 428,582 23.24 4.18 22.14 33.54 16.90
2001-02 222,779 39,403 213,118 346,672 125,219 947,191 23.52 4.16 22.50 36.60 13.22
2002-03 265,145 40,290 235,435 414,336 113,496 1,068,701 24.81 3.77 22.03 38.77 10.62
2003-04 458,001 60,014 224,131 478,533 95,417 1,316,096 34.80 4.56 17.03 36.36 7.25
2004-05 301,325 45,607 164,149 265,212 111,000 887,294 33.96 5.14 18.50 29.89 12.51
2005-06 152,215 18,641 104,092 133,479 67,096 475,523 32.01 3.92 21.89 28.07 14.11
2006-07 67,660 5,916 43,427 57,033 45,070 219,106 30.88 2.70 19.82 26.03 20.57
Apr-07 5,206 319 2,902 4,811 3,921 17,159 30.34 1.86 16.91 28.04 22.85
May-07 7,140 135 1,962 4,142 4,105 17,483 40.84 0.77 11.22 23.69 23.48
Jun-07 6,600 269 2,247 4,814 3,405 17,335 38.07 1.55 12.96 27.77 19.64
Jul-07 13,604 1,150 4,149 9,272 5,640 33,815 40.23 3.40 12.27 27.42 16.68
Aug-07 9,807 606 1,633 4,087 5,298 21,431 45.76 2.83 7.62 19.07 24.72
Sep-07 7,670 338 887 3,776 4,231 16,902 45.38 2.00 5.25 22.34 25.03
Oct-07 12,380 398 1,412 6,057 5,247 25,493 48.56 1.56 5.54 23.76 20.58
Nov-07 7,347 338 1,238 3,015 5,766 17,704 41.50 1.91 6.99 17.03 32.57
Dec-07 10,639 792 2,363 8,466 10,606 32,865 32.37 2.41 7.19 25.76 32.27
Jan-08 16,154 1,226 3,004 9,429 12,911 42,724 37.81 2.87 7.03 22.07 30.22
Feb-08 7,201 757 1,863 6,047 8,175 24,044 29.95 3.15 7.75 25.15 34.00
Mar-08 3,959 273 745 3,218 7,166 15,362 25.77 1.78 4.85 20.95 46.65

Contd...
Contd...

Month/Year Turnover (In ` Cr.) Turnover (In %)


Trading FIs/MFs/ Primary Indian Foreign Total Trading FIs/MFs/ Primary Indian Foreign
Members Corporates Dealers Banks Banks Turnover Members Corporates Dealers Banks Banks
2007-08 107,704 6,606 24,392 67,135 76,480 282,317 38.15 2.34 8.64 23.78 27.09
Apr-08 7,016 400 1,102 3,233 8,142 19,893 35.27 2.01 5.54 16.25 40.93
May-08 5,583 361 1,739 5,540 7,432 20,656 27.03 1.75 8.42 26.82 35.98
Jun-08 6,755 330 841 3,306 7,002 18,233 37.05 1.81 4.61 18.13 38.40
Jul-08 8,746 174 1,430 3,488 4,906 18,745 46.66 0.93 7.63 18.61 26.17
Aug-08 5,384 109 1,064 1,856 3,088 11,502 46.81 0.95 9.25 16.14 26.85
Sep-08 9,969 135 775 3,054 5,847 19,779 50.40 0.68 3.92 15.44 29.56
Oct-08 7,435 1,232 1,737 3,754 5,808 19,966 37.24 6.17 8.70 18.80 29.09
Nov-08 8,547 1,435 1,521 3,726 7,915 23,143 36.93 6.20 6.57 16.10 34.20
Dec-08 22,898 2,057 4,546 9,776 7,587 46,864 48.86 4.39 9.70 20.86 16.19
Jan-09 21,337 1,373 3,412 5,388 13,505 45,015 47.40 3.05 7.58 11.97 30.00
Feb-09 21,273 1,503 2,414 6,983 10,776 42,949 49.53 3.50 5.62 16.26 25.09
Mar-09 25,070 2,298 1,525 10,746 9,566 49,205 50.95 4.67 3.10 21.84 19.44
2008-09 150,014 11,408 22,106 60,851 91,573 335,952 44.65 3.40 6.58 18.11 27.26
Apr-09 23,370 1,360 2,776 7,784 10,363 45,653 51.19 2.98 6.08 17.05 22.70
May-09 19,102 1,256 1,921 7,655 10,332 40,266 47.44 3.12 4.77 19.01 25.66
Jun-09 19,904 1,319 2,362 8,290 12,693 44,568 44.66 2.96 5.30 18.60 28.48
Jul-09 21,856 1,286 2,797 12,734 12,549 51,222 42.67 2.51 5.46 24.86 24.50
Aug-09 18,443 956 1,870 8,606 8,358 38,232 48.24 2.50 4.89 22.51 21.86
Sep-09 23,839 1,637 2,464 15,848 14,886 58,674 40.63 2.79 4.20 27.01 25.37
Oct-09 23,864 1,067 1,754 7,001 10,045 43,731 54.57 2.44 4.01 16.01 22.97
Nov-09 31,583 1,820 3,380 13,578 14,638 64,999 48.59 2.80 5.20 20.89 22.52
Dec-09 20,519 1,345 2,006 8,456 5,241 37,567 54.62 3.58 5.34 22.51 13.95
Jan-10 31,604 810 1,101 8,932 14,590 57,036 55.41 1.42 1.93 15.66 25.58
Feb-10 16,881 797 1,215 7,270 8,637 34,800 48.51 2.29 3.49 20.89 24.82
Mar-10 26,626 1,116 2,452 5,733 11,141 47,068 56.57 2.37 5.21 12.18 23.67
2009-2010 277,592 14,769 26,096 111,886 133,472 563,816 49.23 2.63 4.63 19.84 23.67

99
Table 5-4 : Share of Top ‘N’ Securities/Trading Members/
Participants in Turnover in WDM Segment.

Year In Percent
Top 5 Top 10 Top 25 Top 50 Top 100
Securities
1994-95 42.84 61.05 80.46 89.81 97.16
1995-96 57.59 69.46 79.60 86.58 93.24
1996-97 32.93 48.02 65.65 78.32 90.17
1997-98 30.65 46.92 71.25 85.00 92.15
1998-99 26.81 41.89 64.30 78.24 86.66
1999-00 37.11 55.57 82.12 90.73 95.28
2000-01 42.20 58.30 80.73 89.97 95.13
2001-02 51.61 68.50 88.73 94.32 97.19
2002-03 43.10 65.15 86.91 92.74 96.13
2003-04 37.06 54.43 81.58 90.66 95.14
2004-05 43.70 57.51 71.72 80.59 89.55
2005-06 47.42 59.78 72.02 81.04 89.36
2006-07 40.90 51.29 65.82 77.15 86.91
2007-08 39.65 53.31 68.35 79.64 89.55
2008-09 31.31 43.05 60.42 72.45 83.87
2009-2010 24.19 35.14 53.05 65.63 77.89
Trading Members
1994-95 51.99 73.05 95.37 100.00 –
1995-96 44.36 68.58 96.10 100.00 –
1996-97 30.02 51.27 91.57 99.96 100.00
1997-98 27.17 47.85 83.38 99.82 100.00
1998-99 29.87 50.45 86.55 99.98 100.00
1999-00 32.38 53.41 84.46 100.00 –
2000-01 35.17 54.25 86.82 100.00 –
2001-02 35.18 58.68 88.36 100.00 –
2002-03 31.77 53.71 85.49 100.00 –
2003-04 30.72 53.01 86.71 100.00 –
2004-05 35.75 56.84 86.74 100.00 –
2005-06 39.68 60.63 89.38 100.00 –
2006-07 57.75 78.01 96.43 100.00 –
2007-08 65.32 80.24 97.60 100.00 –
2008-09 69.92 82.89 98.38 100.00 –
2009-2010 73.72 85.28 97.98 100.00 –
Participants
1994-95 18.37 27.38 38.40 42.20 –
1995-96 29.66 47.15 70.49 76.32 76.58
1996-97 25.27 44.92 67.00 76.33 77.10
1997-98 23.60 38.96 65.59 77.96 80.22
1998-99 22.47 37.39 62.79 79.27 84.51
1999-00 15.54 27.87 52.51 74.76 81.32
2000-01 17.51 28.85 50.64 69.72 76.78
2001-02 17.49 29.25 50.19 69.16 76.49
2002-03 17.27 28.29 49.22 68.14 75.20
2003-04 16.66 25.96 44.25 59.87 65.17
2004-05 16.82 28.64 47.24 61.71 66.00
2005-06 17.5 30.53 53.61 65.84 67.97
2006-07 25.85 40.65 59.99 68.17 69.09
2007-08 28.36 40.64 55.58 61.77 61.84
2008-09 24.08 38.24 51.19 55.34 55.38
2009-2010 23.40 36.87 47.64 50.77 –

100
Table 5-5 : Market Capitalisation of WDM Securities

Month/Year Govt. PSU bonds State loans T-bills Others Total Total Govt. PSU bonds State loans T-bills Others
securities securities
( ` cr) (US $ mn) (in percent)
Jun-94 60,719 20,439 1,833 18,476 20,052 121,518 38,663 49.97 16.82 1.51 15.20 16.50
Mar-95 86,175 25,675 5,867 17,129 23,334 158,181 50,328 54.48 16.23 3.71 10.83 14.75
Mar-96 125,492 30,074 13,850 8,452 29,915 207,783 60,490 60.40 14.47 6.67 4.07 14.40
Mar-97 169,830 36,211 18,891 13,460 54,380 292,772 81,598 58.01 12.37 6.45 4.60 18.57
Mar-98 196,290 35,323 23,989 17,497 70,091 343,191 86,818 57.20 10.29 6.99 5.10 20.42
Mar-99 260,002 34,994 30,516 11,292 74,666 411,470 96,976 63.19 8.50 7.42 2.74 18.15
Mar-00 319,865 39,357 39,477 15,345 79,989 494,033 113,258 64.75 7.97 7.99 3.11 16.19
Mar-01 397,228 36,365 44,624 17,725 84,894 580,836 113,258 68.39 6.26 7.68 3.05 14.62
Mar-02 542,601 39,944 61,385 23,849 89,016 756,794 155,719 71.70 5.28 8.11 3.15 11.76
Mar-03 658,002 38,383 72,094 34,919 61,084 864,481 181,996 76.12 4.44 8.34 4.04 7.06
Mar-04 959,302 56,832 79,340 32,692 87,698 1,215,864 280,218 78.90 4.67 6.53 2.69 7.21
Mar-05 1,006,107 68,398 223,208 73,502 90,519 1,461,734 334,111 68.83 4.68 15.27 5.03 6.19
Mar-06 1,059,789 88,716 241,927 70,186 106,956 1,567,574 351,395 67.61 5.66 15.43 4.48 6.82
Mar-07 1,182,278 89,628 249,847 115,183 147,865 1,784,801 409,452 66.24 5.02 14.00 6.45 8.28
Mar-08 1,392,219 96,268 315,661 111,562 207,636 2,123,346 531,235 65.57 4.53 14.87 5.25 9.77
Apr-08 1,437,643 98,524 314,716 110,280 207,488 2,168,651 425,643 66.29 4.54 14.51 5.09 9.57
May-08 1,438,743 98,845 317,972 126,469 210,154 2,192,183 430,262 65.63 4.51 14.50 5.77 9.59
Jun-08 1,434,072 101,085 317,095 133,061 209,648 2,194,961 430,807 65.33 4.61 14.45 6.06 9.55
Jul-08 1,424,369 101,200 319,827 133,488 207,843 2,186,727 429,191 65.14 4.63 14.63 6.10 9.50
Aug-08 1,455,397 103,866 322,447 133,768 210,117 2,225,595 436,819 65.39 4.67 14.49 6.01 9.44
Sep-08 1,471,565 108,330 325,475 135,187 213,708 2,254,265 442,447 65.28 4.81 14.44 6.00 9.48

Contd...

101
102
Contd...

Month/Year Govt. PSU bonds State loans T-bills Others Total Total Govt. PSU bonds State loans T-bills Others
securities securities
( ` cr) (US $ mn) (in percent)
Oct-08 1,535,826 108,922 324,218 141,680 218,959 2,329,604 457,233 65.93 4.68 13.92 6.08 9.40
Nov-08 1,621,942 111,178 332,923 146,154 230,372 2,442,569 479,405 66.40 4.55 13.63 5.98 9.43
Dec-08 1,808,270 119,165 344,721 141,888 254,872 2,668,916 523,830 67.75 4.46 12.92 5.32 9.55
Jan-09 1,848,128 129,070 364,204 145,121 265,364 2,751,888 540,115 67.16 4.69 13.23 5.27 9.64
Feb-09 1,868,684 129,609 376,820 144,336 290,538 2,809,987 551,518 66.50 4.61 13.41 5.14 10.34
Mar-09 1,849,971 129,499 422,362 147,617 298,867 2,848,315 559,041 64.95 4.55 14.83 5.18 10.49
Apr-09 1,959,534 131,993 423,688 161,591 311,526 2,988,332 662,014 65.57 4.42 14.18 5.41 10.42
May-09 1,983,740 135,139 431,371 146,531 311,626 3,008,407 666,461 65.94 4.49 14.34 4.87 10.36
Jun-09 2,034,163 136,587 436,946 145,391 322,819 3,075,905 681,414 66.13 4.44 14.21 4.73 10.50
Jul-09 2,065,255 138,718 446,610 139,816 327,377 3,117,776 690,690 66.24 4.45 14.32 4.48 10.50
Aug-09 1,898,003 144,572 457,731 137,492 332,661 2,970,459 658,055 63.90 4.87 15.41 4.63 11.20
Sep-09 1,932,681 145,624 472,392 137,580 336,139 3,024,417 670,008 63.90 4.81 15.62 4.55 11.11
Oct-09 1,961,349 151,364 486,363 133,615 340,042 3,072,733 680,712 63.83 4.93 15.83 4.35 11.07
Nov-09 1,970,002 153,577 497,652 132,538 345,444 3,099,214 686,578 63.56 4.96 16.06 4.28 11.15
Dec-09 1,979,339 155,927 509,722 134,388 350,372 3,129,747 693,342 63.24 4.98 16.29 4.29 11.19
Jan-10 1,966,140 161,856 516,934 133,224 360,024 3,138,177 695,210 62.65 5.16 16.47 4.25 11.47
Feb-10 1,956,862 163,590 530,091 133,186 369,630 3,153,360 698,573 62.06 5.19 16.81 4.22 11.72
Mar-10 1,950,436 162,979 536,996 135,696 379,823 3,165,929 701,358 61.61 5.15 16.96 4.29 12.00
Table 5-6 : FIMMDA NSE MIBID/MIBOR Rates 2009-10

Month/Date OVERNIGHT AT 3 DAY AT 9.40 14 DAY AT 11.30 1 MONTH RATE 3 MONTH RATE
9.40 a.m. a.m. a.m. AT AT
11.30 a.m. 11.30 a.m.
MIBID MIBOR MIBID MIBOR MIBID MIBOR MIBID MIBOR MIBID MIBOR
29-Apr-09 3.24 3.31 3.25 3.31 3.43 3.87 4.06 4.42 5.18 5.64

30-May-09 3.22 3.30 3.21 3.27 3.31 3.74 3.81 4.16 4.84 5.29

30-Jun-09 3.22 3.30 3.22 3.28 3.10 3.46 3.48 3.82 4.35 4.72

31-Jul-09 3.21 3.28 3.22 3.28 3.15 3.50 3.43 3.80 4.29 4.52

31-Aug-09 3.23 3.29 3.18 3.27 3.09 3.47 3.35 3.77 4.23 4.58

29-Sep-09 3.26 3.33 3.22 3.30 3.12 3.57 3.43 3.92 4.26 4.67

31-Oct-09 3.21 3.30 3.23 3.30 3.11 3.41 3.40 3.72 4.24 4.61

30-Nov-09 3.23 3.30 3.23 3.29 3.10 3.49 3.36 3.74 4.13 4.44

31-Dec-09 3.44 3.59 3.44 3.56 3.27 3.67 3.55 3.98 4.18 4.60

30-Jan-10 3.21 3.31 3.23 3.30 3.32 3.59 3.62 3.90 4.23 4.59

26-Feb-10 3.25 3.31 3.29 3.35 3.27 3.69 3.65 4.17 4.37 4.97

31-Mar-10 5.25 5.47 5.25 5.44 3.88 4.53 4.49 5.09 5.02 5.69

Overnight : Disseminated since June 15, 1998.


3 day : disseminated since June 06, 2008 is calculated and disseminated on every last working day of
the week
The 3 day rates in the table are rates of the last working day of the week at the end of the
month
14 Day : Disseminated since November 10, 1998.
1 month : Disseminated since December 1, 1998.
3 month : Disseminated Since December 1, 1998.

Table 5-7 : 1-day Value-at-Risk (99%) for Government of India Securities


Traded as on March 31, 2010

Security Security Issue Normal Weighted Historical Weighted EVT Clean Accrued_
Type Name Name Normal Simulation Historical Price (off Interest
Simulation NSE-ZCYC)

GS CG2010 12.25% 0.31 0.584 0.398 0.508 0.337 102.279 2.9534

GS CG2010 7.55% 0.164 0.315 0.207 0.271 0.176 100.565 2.8338

GS CG2011 11.50% 0.845 1.333 1.040 0.914 0.913 108.148 1.7889

GS CG2012 7.40% 0.985 1.489 1.265 1.049 1.065 102.821 3.0422

GS CG2013 7.27% 1.108 1.669 1.340 1.133 1.12 101.313 0.5654

GS CG2016 7.02% 1.302 1.626 1.391 2.353 1.141 96.48 0.858

GS CG2016 7.59% 1.263 1.643 1.396 1.497 1.061 99.701 3.5631

TB 182D 240610 0.28 0.530 0.357 0.459 0.306 99.242 0

TB 364D 180610 0.264 0.500 0.333 0.432 0.285 99.304 0

TB 364D 250311 0.75 1.234 0.918 0.921 0.819 95.553 0

TB 91D 160410 0.062 0.120 0.082 0.104 0.067 99.876 0

TB 91D 180610 0.264 0.500 0.333 0.432 0.285 99.304 0

103
104
Futures & Options
Segment 6
106
Futures & Options Segment 6
The Futures and Options segment of NSE witnessed huge increase in volumes during 2009-10 and
continued to achieve a commendable place on the international front. In the year 2009 NSE ranked
as the seventh largest derivatives exchange in the world1, the second largest exchange in single
stock futures and stock index options and the third largest in the stock index futures category. The
rankings are based in terms of number of contracts traded.2

The derivatives trading at NSE commenced on June 12, 2000 with futures trading on S&P CNX Nifty
Index. Subsequently, the product base has been increased to include trading in options on S&P CNX
Nifty Index, futures and options on CNX IT, Bank Nifty Nifty Midcap 50 Indices and 190 single stocks
(Table 6-1) as of March 2010. The various products on the derivative segment of NSE and their date
of launch is shown in the table below.

Products available for trading on Equity Derivatives Segment

Products on Derivative Segment Date of Launch


S&P CNX Nifty Futures June 12, 2000
S&P CNX Nifty Options June 4, 2001
Single Stock Options July 2, 2001
Single Stock Futures November 9, 2001
CNX IT Futures & Options August 29, 2003
Bank Nifty Futures & Options June 13, 2005
Nifty Midcap 50 Futures & Options October 5, 2007
Mini Nifty Futures & Options on S&P CNX Nifty January 1, 2008
Long term Options on S&P CNX Nifty March 3, 2008

Since inception, NSE established itself as the sole market leader in this segment in the country and
during 2009-10, it accounted for 99 % of the market share.

Trading Mechanism
The derivatives trading system at NSE is called NEAT-F&O trading system. It provides a fully
automated screen-based trading for all kind of derivative products available on NSE on a nationwide
basis. It supports an anonymous order driven market, which operates on a strict price/time priority.
It provides tremendous flexibility to users in terms of kinds of orders that can be placed on the
system. Various time and price related conditions like Immediate or Cancel, Limit/Market Price,
Stop Loss, etc. can be built into an order. Trading in derivatives is essentially similar to that of
trading of securities in the CM segment.

The NEAT-F&O trading system distinctly identifies two groups of users. The trading user more
popularly known as trading member has access to functions such as, order entry, order matching
and order & trade management. The clearing user (clearing member) uses the trader workstation
for the purpose of monitoring the trading member(s) for whom he clears the trades. Additionally,
he can enter and set limits on positions, which a trading member can take.

Contract Specification
The contract specification for derivative products traded on NSE are summarised in Table 6-2 &
Table 6-3.

At any point of time there are o nly three contract months available for trading, with 1 month,
1
FIA, March 2010
2
WFE

107
2 months and 3 months to expiry. These contracts expire on last Thursday of the expiry month
and have a maximum of 3-month expiration cycle. If the last Thursday is a trading holiday, the
contracts expire on the previous trading day. A new contract is introduced on the next trading day
following the expiry of the near month contract. All the derivatives contracts are presently cash
settled.

The long term option contracts are available for 3 serial month contracts, 3 quarterly months of
the cycle March / June / September / December and 8 following semi-annual months of the cycle
June / December. Thus, at any point in time there would be options contracts available up to 5
year tenure.

Selection Criteria for Stocks and Index eligibility for trading


Eligibility Criteria of Stocks

The eligibility criteria for inclusion of scrips in F&O segment is as under:


• The stock is chosen from amongst the top 500 stocks in terms of average daily market
capitalization and average daily traded value in the previous six months on a rolling basis.
• The stock’s median quarter sigma order size over the last six months should not be less than
` 5 lakh.
• The market wide position limit (MWPL) in the stock should not be less than ` 100 crore.

The criteria for exclusion of scrips in F&O segment will be as under:

For an existing F&O stock, the continued eligibility criteria is that market wide position limit in
the stock should not be less than ` 60 crores and stock’s median quarter-sigma order size over the
last six months shall be not less than ` 2 lakh. If the existing security fails to meet the eligibility
criteria for three months consecutively, then no fresh month contract would be issued on that
security. However, the existing unexpired contracts would be permitted to trade till expiry and
new strikes would also be introduced in the existing contract months. Further, once the stock is
excluded from the F&O list, it is not considered for re-inclusion for a period of one year.

Eligibility Criteria of Indices


• The Exchange may consider introducing derivative contracts on an index if the stocks
contributing to 80% weightage of the index are individually eligible for derivative trading.
However, no single ineligible stocks in the index should have a weightage of more than 5% in
the index..
• The above criteria is applied every month, if the index fails to meet the eligibility criteria for
three months consecutively, then no fresh month contract are issued on that index. However,
the existing unexpired contacts are permitted to trade till expiry and new strikes may also be
introduced in the existing contracts.

Re-introduction of dropped stocks

A stock which is dropped from derivatives trading may become eligible once again. In such
instances, the stock is required to fulfill the eligibility criteria for three consecutive months to be
re-introduced for derivatives trading.

Eligibility criteria of stocks for derivatives trading especially on account of corporate


restructuring

The eligibility criteria for stocks for derivatives trading on account of corporate restructuring is as
under. All the following conditions should be met in the case of shares of a company undergoing

108
restructuring through any means for eligibility to reintroduce derivative contracts on that company
from the first day of listing of the post restructured company/(s) (as the case may be) stock
(herein referred to as post restructured company) in the underlying market.
a) The Futures and options contracts on the stock of the original (pre restructure) company were
traded on any exchange prior to its restructuring;
b) The pre restructured company had a market capitalisation of at least ` 1000 crores prior to its
restructuring;
c) The post restructured company would be treated like a new stock and if it is, in the opinion
of the exchange, likely to be at least one-third the size of the pre restructuring company in
terms of revenues, or assets, or (where appropriate) analyst valuations; and
d) In the opinion of the exchange, the scheme of restructuring does not suggest that the post
restructured company would have any characteristic (for example extremely low free float)
that would render the company ineligible for derivatives trading.

If the above conditions are satisfied, then the exchange takes the following course of action in
dealing with the existing derivative contracts on the pre-restructured company and introduction
of fresh contracts on the post restructured company
a) In the contract month in which the post restructured company begins to trade, the Exchange
introduce near month, middle month and far month derivative contracts on the stock of the
restructured company.
b) In subsequent contract months, the normal rules for entry and exit of stocks in terms of
eligibility requirements would apply. If these tests are not met, the exchange shall not permit
further derivative contracts on this stock and future month series shall not be introduced.

Trading Value & Contract Traded


The total turnover on the F&O Segment increased by 60.43 % to ` 17,663,665 crore (US $ 3,913,085
million) during 2009-10 as compared with ` 11,010,482 crore (US $ 2,161,037 million) during
2008-09. The average daily turnover during 2009-10 was ` 72,392 crore (US $ 16,037 million). The
business growth of F&O segment and the number of contracts traded during the year is presented
in Table 6-5 and Chart 6-1.

Chart 6-1: Business Growth of F&O Segment

109
The total number of contracts traded increased by 3 % to 68 crore contracts during 2009-10. Out
of the total contracts traded, 50.26 % of the contracts were traded on Index options followed by
index futures on which 26.25% of the contracts were traded. Number of contracts traded on Stock
futures was 21.45% while 2.06% of the total contracts were traded on stock options. (Chart 6-2).

Chart 6-2 : Product wise Number of Contracts Traded during 2009-10

Product wise turnover on F&O Segment:

During 2009-10, the traded value of index futures saw a year-on-year increase of 10.20 % and
amounted to ` 3,934,389 crore (US $ 871,597 million) in 2009-10 as against ` 3,570,111 crore
(US $ 700,709 million) during 2008-09.

The traded value in stock futures increased by 49.30 % to ` 5,195,247 crore (US $ 1,150,919
million) during 2009-10 over the turnover of ` 3,479,642 crore (US $ 682,952 million) during
2008-09.

Index options recorded turnover of ` 8,027,964 crore (US $ 1,778,459 million) during 2009-10,
an increase of 115.14 % over the turnover of ` 3,731,502 crore (US $ 732,385 million) during
2008-09.

Stock options recorded turnover of ` 506,065 crore (US $ 112,110 million) during
2009-10, a decrease of 120.77 % over the turnover of ` 229,227 crore (US $ 44,991 million) during
2008-09.

Index Options accounted for 45.45% of the total turnover during the 2009-10 fiscal followed by the
trading in stock futures at 29.41 %. (Chart 6-3)

110
Chart 6-3 Product wise trading volumes during 2009-10

Futures and Options on Benchmark Indices

The details of traded volumes on Index Futures and Options, having the underlying as the NSE
indices is shown in the table below.

Benchmark Indices Contracts & Trading Volume in F&O Segment of NSE (2009-10)

Products Underlying No. of Contracts Turnover


` cr. US $ mn
NIFTY S&P CNX Nifty 493,133,483 11,491,391 2,545,722
BANKNIFTY BANK Nifty 7,784,206 296,336 65,648
MINIFTY S&P CNX Nifty 18,699,392 170,675 37,810
JUNIOR* CNX Nifty Junior 23 2 0.33
CNXIT CNX IT 44,658 2,246 497
CNX100* CNX 100 99 3 1
Nifty Midcap 50 Nifty Midcap 50 24,551 1,699 376
Long term Option Contracts S&P CNX Nifty 657,205 16,632 3,684
DEFTY* S&P CNX Defty 0 0 0
TOTAL 520,343,617 11,978,985 2,653,740

* F&O contracts in Junior, CNX100 and Defty indices have been discountinued w.e.f. July 31,2009.

During 2009-10, the S&P CNX Nifty Index accounted for more than 95.93 % of the turnover in Index
futures and options. The S&P CNX Nifty accounted for 94.77 % of the total contracts.

Sectorwise Stock Futures & Options Turnover

Sectorwise turnover of stock futures and options is presented in the table below. Companies
belonging to the Manufacturing Sector and Infrastructure Sector accounted for 31.81 % and 18.68%
respectively of the total stock futures and options turnover on the Exchange .

111
Sectorwise Classification of turnover of the Single Stock Futures during 2009-10

Classification Total Turnover ( ` cr) Total Turnover ( US $ mn)


Manufacturing 1,183,445 401,738
Petrochemicals 675,955 149,746
Infrastructure 1,064,984 235,929
Banks 704,924 156,164
Information Technology 399,272 88,452
Finance 383,044 84,857
Telecommunication 225,280 49,907
Pharmaceuticals 118,527 26,258
ENGINEERING 115,135 25,506
FMCG 101,295 22,440
Media & Entertainment 36,461 8,077
Services 44,660 9,894
Miscellaneous 18,331 4,061
TOTAL 5,701,312 1,263,209

The stock futures and option turnover of top 5 companies in each sector for the period 2009-10 is
presented in Table 6-6.

Participant wise turnover on F&O Segment:

During 2009-10, the retail investors accounted for 54.86 % of the turnover on the F&O segment
of the Exchange. The gross turnover of the retail participants in the F&O Segment amounted to
` 19,378,966 crore (US $ 4,293,081 million) followed by the Proprietary segment with gross turnover
of ` 11,175,447 crore (US $ 2,475,730 million) and the Institutional players with gross turnover of
` 4,772,915 crore (US $ 1,057,358 million). The share of proprietary participants and institutional
participants in the gross turnover was 31.63 % and 13.51 % respectively.

The month wise details of the turnover for the participants in the F&O segment is presented in
Table 6-7 and Chart 6-4 shows the participant wise F&O turnover during 2009-10.

Chart 6-4 Participant wise F&O Turnover during 2008-09

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Memberwise turnover on the Exchange:

During 2009-10, there were 780 members which accounted for turnover of ` 1,000 crore and more
while 67 members registered turnover between ` 500 crore and ` 1,000 crore collectively in the
futures and options category. In the month of March 2010, 366 trading members accounted for a
turnover of ` 1,000 crore and more, which was the highest number of members during the fiscal
year 2009-10.

The number of members in different turnover brackets in Futures and Options segment is presented
6-8a & 6-8 b.

High Volume Members

In the Futures segment, the share of top 5 and top ‘10’ members in turnover was 15% and 22%
respectively , while in the options segment the share of top 5 and top 10 trading members in
turnover was 25% and 32 % respectively. (Table 6-8 c).

Internet Trading

At the end of March 2010, a total number of 356 members were permitted to allow investor’s
web based access to NSE’s trading system. The members of the exchange in turn had registered
3,529,947 clients for web based access as on March 31, 2010. In the Futures and Options Segment
the trading volume of ` 2,694,513 crore (US $ 596,924 million) during the year 2009-10, constituting
15.25 % of total trading volume was routed and executed through the internet. The following table
shows the growth of internet trading during the during 2006-07 to 2009-10.

Internet Trading in the F&O Segment of the Exchange

Year Enabled Registered Internet Trading Internet Trading % to Total


Members* Clients* Value Value Trading Value
( ` cr) (US $ mn)
2006-07 242 1,616,218 1,214,961 278,725 16.52

2007-08 305 3,432,771 2,417,165 604,745 18.47

2008-09 337 4,426,577 1,686,208 330,953 15.31

2009-10 356 3,529,947 2,694,513 596,924 15.25

* At the end of financial year.

Traded Value Records

Trading volumes in the F&O Segment during 2009-10 reached a high of ` 166,193 crore (US $ 36,817
million) on January 28, 2010. The following table gives the record turnover of different products
in the F&O Segment.

Records Achieved in the F&O Segment : 2009-10

Product Traded Value Traded Value Date


( ` cr.) (US $ mn.)

Index Futures 36,745 8,140 27-Jan-10

Stock Futures 43,370 9,608 28-Jan-10

Index Options 84,101 18,631 28-Jan-10

Stock Options 3,436 761 15-Jun-09

Total F&O Traded Value 166,193 36,817 28-Jan-10

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Top 20 Futures and Option contracts

During 2009-10, top 20 Futures and options contracts in terms of number of contracts traded have
been presented in Table 6-8 and Table 6-9.

The top 20 Futures contracts accounted for 50.54% of the total no. of contracts traded in the
Futures segment while top 20 Option contracts accounted for 21.91% of the total option contracts
traded during 2009-10.

Among the top 20 future contracts, Nifty July 2009 futures accounted for 10.19% of the total top
20 contracts while Nifty May 2009 futures and Nifty August 2009 contributed 8.62% and 8.57%
respectively.

Top 3 option contracts on the basis of number of contracts traded during 2009-10 were Nifty Feb
2010 CE 4900, Nifty Dec 2009 CE 5200 and Nifty Feb 2010 PE 4800. Together these three option
contracts formed 19.86 % of the total number of contracts traded of top 20 option contracts.

Number of Trades
During 2009-10, maximum number of trades in the F&O Segment were witnessed in Stock Futures
(45.14%), Index futures (21.63%), Index Options (28.91%) and Stock Options (4.32%) as mentioned
in the table below.

Number of Trades in F&O Segment (2009-10)

Products Number of Trades (%)

Stock Futures 45.14

Index Futures 21.63

Index Options 28.91

Stock Options 4.32

TOTAL 100.00

The details of month wise trades on Index futures & options and stock futures & options is presented
in Table 6-11.

Charges
Brokerage Charges

The maximum brokerage chargeable by a trading member in relation to trades effected in the
contracts admitted to dealing on the F&O segment of NSE is fixed at 2.5% of the contract value
in case of index futures and stock futures. In case of index options and stock options it is 2.5%
of notional value of the contract [(Strike Price + Premium) × Quantity)], exclusive of statutory
levies.

Transaction Charges

The transaction charges payable to the exchange by the trading member for the trades executed
by him on the F&O segment were fixed at the rate of ` 2 per lakh of turnover (0.002%) subject to
a minimum of ` 1,00,000 per year.

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In continuation of the above the Exchange has reduced the transaction charges for trades done
in the Futures segment from its present level to a slab based structure as given below w.e.f 1st
October 2009.

Total Traded Value in a month Revised Transaction Charges


( ` per lakh of Traded Value)
Up to First ` 2500 cores ` 1.90 each side
More than ` 2500 crores up to ` 7500 crores ` 1.85 each side
(on incremental volume)
More than ` 7500 crores up to ` 15000 crores ` 1.80 each side
(on incremental volume)
Exceeding ` 15000 crores ` 1.75 each side
(on incremental volume)

The transactions in the options sub-segment the transaction charges are levied on the premium
value at the rate of 0.05% (each side) instead of on the strike price as levied earlier.

Securities Transaction Tax

The trading members are also required to pay securities transaction tax (STT) on non-delivery
transactions at the rate of 0.017 (payable by the seller) for derivatives w. e. f June 1, 2008.

Taxable securities transaction Rate (%) Taxable Value Payable by

Sale of an option in securities 0.017 Option premium Seller

Sale of an option in securities, where option is exercised 0.125 Settlement Price Purchaser
Sale of a futures in securities 0.017 Price at which such Seller
“Futures” is traded

Value of taxable securities transaction relating to an “option in securities” will be the option
premium, in case of sale of an option in securities.

Value of taxable securities transaction relating to an “option in securities” will be the settlement
price, in case of sale of an option in securities, where option is exercised.

Contribution to Investor Protection Fund (F&O Segment)

The trading members contribute to Investor Protection Fund of F&O segment at the rate of Re.1/-
per ` 100 crore of the traded value (each side) in case of Futures segment and ` 1/- per ` 100 crore
of the premium amount (each side) in case of Options segment.

CLEARING AND SETTLEMENT


Clearing and Settlement

NSCCL undertakes clearing and settlement of all trades executed on the F&O Segment of the
Exchange. It also acts as legal counterparty to all trades on this segment and guarantees their
financial settlement. The Clearing and Settlement process comprises of three main activities, viz.,
Clearing, Settlement and Risk Management.

Clearing Mechanism

The clearing mechanism essentially involves working out open positions and obligations of clearing
(self-clearing/trading-cum-clearing/professional clearing) members. This position is considered
for exposure and daily margin purposes. The open positions of CMs are arrived at by aggregating
the open positions of all the TMs and all custodial participants clearing through him, in contracts
in which they have traded. A TM’s open position is arrived at as the summation of his proprietary

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open position and clients’ open positions, in the contracts in which he has traded. While entering
orders on the trading system, TMs are required to identify the orders. These orders can be
proprietary (if they are their own trades) or client (if entered on behalf of clients) through ‘Pro/
Cli’ indicator provided in the order entry screen. Proprietary positions are calculated on net basis
(buy - sell) for each contract. Clients’ positions are arrived at by summing together net (buy - sell)
positions of each individual client. A TM’s open position is the sum of proprietary open position,
client open long position and client open short position.

Settlement Mechanism

All futures and options contracts are cash settled i.e. through exchange of cash. The settlement
amount for a CM is netted across all their TMs/clients, with respect to their obligations on MTM,
premium and exercise settlement. For the purpose of settlement, all CMs are required to open a
separate bank account with NSCCL designated clearing banks for F&O segment.

Settlement of Futures Contracts on Index or Individual Securities

Futures contracts have two types of settlements, the MTM settlement which happens on a T+1 day
basis and the final settlement which happens on the next day of the expiry day

• MTM Settlement for Futures: The positions in futures contracts for each member are marked-
to-market to the daily settlement price of the relevant futures contract at the end of each
day. The CMs who have suffered a loss are required to pay the mark-to-market (MTM) loss
amount in cash which is in turn passed on to the CMs who have made a MTM profit. This is
known as daily mark-to-market settlement. CMs are responsible to collect and settle the
daily MTM profits/losses incurred by the TMs and their clients clearing and settling through
them. Similarly, TMs are responsible to collect/pay losses/ profits from/to their clients by the
next day. The pay-in and pay-out of the mark-to-market settlement are effected on the day
following the trade day (T+1).

After completion of daily settlement computation, all the open positions are reset to the daily
settlement price. Such positions become the open positions for the next day.

• Final Settlement for Futures: On the expiry day of the futures contracts, after the close of
trading hours, NSCCL marks all positions of a CM to the final settlement price and the resulting
profit/loss is settled in cash. Final settlement loss/profit amount is debited/credited to the
relevant CM’s clearing bank account on the day following expiry day of the contract.

• Settlement Prices for Futures: Daily settlement price on a trading day is the closing price
of the respective futures contracts on such day. The closing price for a futures contract is
currently calculated as the last half an hour weighted average price of the contract in the
F&O Segment of NSE. Final settlement price is the closing price of the relevant underlying
index/security in the Capital Market segment of NSE, on the last trading day of the contract.
The closing price of the underlying Index/security is currently its last half an hour weighted
average value in the Capital Market Segment of NSE.

Settlement of Options Contracts on Index or Individual Securities

Options contracts have three types of settlements, premium settlement, interim exercise settlement
in the case of option contracts on securities and final exercise settlement.

• Daily premium settlement

Buyer of an option is obligated to pay the premium towards the options purchased by him. Similarly,
the seller of an option is entitled to receive the premium for the option sold by him. The premium

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payable amount and the premium receivable amount are netted to compute the net premium
payable or receivable amount for each client for each option contract.

• Interim exercise settlement

Interim exercise settlement takes place only for option contracts on securities. An investor
can exercise his in-the-money options at any time during trading hours, through his trading
member. Interim exercise settlement is effected for such options at the close of the trading
hours, on the day of exercise. Valid exercised option contracts are assigned to short positions
in the option contract with the same series (i.e. having the same underlying, same expiry
date and same strike price), on a random basis, at the client level. The CM who has exercised
the option receives the exercise settlement value per unit of the option from the CM who has
been assigned the option contract

• Final exercise settlement

Final exercise settlement is effected for all open long in-the-money strike price options
existing at the close of trading hours, on the expiration day of an option contract. All such
long positions are exercised and automatically assigned to short positions in option contracts
with the same series, on a random basis. The investor who has long in-the-money options on
the expiry date will receive the exercise settlement value per unit of the option from the
investor who is short on the option

• Settlement Prices for Options

Interim exercise settlement price for option contracts on individual securities

Interim Exercise settlement price for an option contract is the closing price of the relevant
underlying security in the Normal Market of the Capital market segment. The closing price
of the underlying Index/security is currently its last half an hour weighted average value in
the Capital Market Segment of NSE on the interim exercise day

Final Exercise settlement price for an option contract

Final Exercise settlement price for an option contract shall be the closing price of the relevant
underlying security/index in the Normal Market of the Capital market segment on the expiry
day. The closing price of the underlying Index/security is currently its last half an hour weighted
average value in the Capital Market Segment of NSE on expiry day

Settlement Statistics

All derivative contracts are currently cash settled. The participants discharge their obligations
through payment/receipt of cash. During 2009-109, such cash settlement amounted to ` 76,942.78
crore (US $ 17,045.37 million). The settlement of futures and options involved ` 62,050.97 crore
(US $ 13,746.34 million) and ` 14,891.81 (US $ 3,299.03 million) respectively. The details of
settlement in the futures and options segment is presented in Table 6-12.

RISK MANAGEMENT SYSTEM


NSCCL has developed a comprehensive risk containment mechanism for the F&O segment. The
salient features of risk containment measures on the F&O segment are:

• The financial soundness of the members is the key to risk management. Therefore, the
requirements for membership in terms of capital adequacy (net worth, security deposits) are
quite stringent. These requirements have already been explained in Table 2-1 in Chapter 2 of
this publication.

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• NSCCL charges an upfront initial margin for all the open positions of a Clearing Member (CM).
It specifies the initial margin requirements for each futures/options contract on a daily basis.
It follows VaR-based margining computed through SPAN. The CM in turn collects the initial
margin from the trading members (TMs) and their respective clients.

• The open positions of the members are marked to market based on contract settlement price
for each contract at the end of the day. The difference is settled in cash on a T+1 basis.

• NSCCL’s on-line position monitoring system monitors a CM’s open position on a real-time basis.
Limits are set for each CM based on his effective deposits. The on-line position monitoring
system generates alert messages whenever a CM reaches 70 %, 80 %, 90 % and a disablement
message at 100 % of the limit. NSCCL monitors the CMs for Initial Margin violation, Exposure
margin violation, while TMs are monitored for Initial Margin violation and position limit
violation.

• CMs are provided a trading terminal for the purpose of monitoring the open positions of all
the TMs clearing and settling through him. A CM may set limits for a TM clearing and settling
through him. NSCCL assists the CM to monitor the intra-day limits set up by a CM and whenever
a TM exceed the limits, it stops that particular TM from further trading.

• A member is alerted of his position to enable him to adjust his exposure or bring in additional
capital. Margin violations result in disablement of trading facility for all TMs of a CM in case
of a violation by the CM.

• A separate Settlement Guarantee Fund for this segment has been created out of deposits of
members.

The most critical component of risk containment mechanism for F&O segment is the margining
system and on-line position monitoring. The actual position monitoring and margining is carried
out on-line through Parallel Risk Management System (PRISM) using SPAN(R)3∗ (Standard Portfolio
Analysis of Risk) system for the purpose of computation of on-line margins, based on the parameters
defined by SEBI.

NSE - SPAN ®

The objective of NSE-SPAN is to identify overall risk in a portfolio of all futures and options
contracts for each member. The system treats futures and options contracts uniformly, while at
the same time recognising the unique exposures associated with options portfolios, like extremely
deep out-of-the-money short positions and inter-month risk.

Its over-riding objective is to determine the largest loss that a portfolio might reasonably be
expected to suffer from one day to the next day based on 99% VaR methodology.

SPAN considers uniqueness of option portfolios. The following factors affect the value of an
option:
i. Underlying market price.
ii. Volatility (variability) of underlying instrument, and
iii. Time to expiration.

As these factors change, the value of options maintained within a portfolio also changes. Thus,
SPAN constructs scenarios of probable changes in underlying prices and volatilities in order to
identify the largest loss a portfolio might suffer from one day to the next. It then sets the margin
requirement to cover this one-day loss.

3 SPAN ® is a registered trademark of the Chicago Mercantile Exchange (CME) used here under license.

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The complex calculations (e.g. the pricing of options) in SPAN are executed by NSCCL. The results
of these calculations are called risk arrays. Risk arrays, and other necessary data inputs for margin
calculation are provided to members daily in a file called the SPAN Risk Parameter file. Members
can apply the data contained in the Risk Parameter files, to their specific portfolios of futures and
options contracts, to determine their SPAN margin requirements.

Hence, members need not execute a complex option pricing calculations, which is performed by
NSCCL. SPAN has the ability to estimate risk for combined futures and options portfolios, and also
re-value the same under various scenarios of changing market conditions.

NSCCL generates six risk parameters file for a day taking into account price and volatilities at
various time intervals and are provided on the website of the Exchange.

Margins

The margining system for F&O segment is as below:

• Initial margin: Margin in the F&O segment is computed by NSCCL upto client level for open
positions of CMs/TMs. These are required to be paid up-front on gross basis at individual client
level for client positions and on net basis for proprietary positions. NSCCL collects initial
margin for all the open positions of a CM based on the margins computed by NSE-SPAN. A CM
is required to ensure collection of adequate initial margin from his TMs up-front. The TM is
required to collect adequate initial margins up-front from his clients.

• Premium Margin: In addition to Initial Margin, Premium Margin is charged at client level.
This margin is required to be paid by a buyer of an option till the premium settlement is
complete.

• Assignment Margin for Options on Securities: Assignment margin is levied in addition to initial
margin and premium margin. It is required to be paid on assigned positions of CMs towards
interim and final exercise settlement obligations for option contracts on individual securities,
till such obligations are fulfilled. The margin is charged on the net exercise settlement value
payable by a CM towards interim and final exercise settlement.

• Exposure Margins: Clearing members are subject to exposure margins in addition to initial
margins.

• Client Margins: NSCCL intimates all members of the margin liability of each of their client.
Additionally members are also required to report details of margins collected from clients to
NSCCL, which holds in trust client margin monies to the extent reported by the member as
having been collected form their respective clients.

Position Limits

The market wide limit of open position (in terms of the number of underlying stock) on futures and
option contracts on a particular underlying stock should be 20% of the number of shares held by
non-promoters in the relevant underlying security i.e. free–float holding. This limit is applicable
on all open positions in all futures and option contracts on a particular underlying stock. The
enforcement of the market wide limits is done in the following manner:

• At end of the day the exchange tests whether the market wide open interest for any scrip
exceeds 95% of the market wide position limit for that scrip. In case it does so, the exchange
takes note of open position of all client/TMs as at end of that day for that scrip and from next
day onwards they can trade only to decrease their positions through offsetting positions.

119
• At the end of each day during which the ban on fresh positions is in force for any scrip,
the exchange tests whether any member or client has increased his existing positions or
has created a new position in that scrip. If so, that client is subject to a penalty equal to
a specified percentage (or basis points) of the increase in the position (in terms of notional
value). The penalty is recovered before trading begins next day.

• The normal trading in the scrip is resumed after the open outstanding position comes down
to 80% or below of the market wide position limit. Further, the exchange also checks on
a monthly basis, whether a stock has remained subject to the ban on new position for a
significant part of the month consistently for three months. If so, then the exchange phases
out derivative contracts on that underlying.

Trading Member wise Position Limits

Index Futures Contract:

The trading member position limits in equity index futures contracts is higher of ` 500 Crore or
15% of the total open interest in the market in equity index futures contracts. This limit would be
applicable on open positions in all futures contracts on a particular underlying index.

Index Options Contract:

The trading member position limits in equity index option contracts is higher of ` 500 Crore or
15% of the total open interest in the market in equity index option contracts. This limit would be
applicable on open positions in all option contracts on a particular underlying index.

Futures and Option contracts on individual securities :

i. For stocks having applicable market-wise position limit (MWPL) of ` 500 crores or more,
the combined futures and options position limit is 20% of applicable MWPL or ` 300 crores,
whichever is lower and within which stock futures position cannot exceed 10% of applicable
MWPL or ` 150 crores, whichever is lower.

ii. For stocks having applicable market-wise position limit (MWPL) less than ` 500 crores, the
combined futures and options position limit would be 20% of applicable MWPL and futures
position cannot exceed 20% of applicable MWPL or ` 50 crore which ever is lower. The Clearing
Corporation shall specify the trading member-wise position limits on the last trading day of
the month which shall be reckoned for the purpose during the next month.

Client level position limits

The gross open position for each client, across all the derivative contracts on an underlying,
should not exceed 1% of the free float market capitalization (in terms of number of shares) or 5%
of the open interest in all derivative contracts in the same underlying stock (in terms of number
of shares) whichever is higher.

Disclosure for Client Positions in Index based contracts

Any person or persons acting in concert who together own 15% or more of the open interest on a
particular underlying index is required to report this fact to the Exchange/ Clearing Corporation.
Failure to do so shall be treated as a violation and shall attract appropriate penal and disciplinary
action in accordance with the Rules, Byelaws and Regulations of Clearing Corporation.

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Position limits for FII, Mutual Funds:

FII & MF Position limits in Index options contracts: FII & MF position limit in all index options
contracts on a particular underlying index is ` 500 Crores or 15 % of the total open interest of the
market in index options, whichever is higher. This limit would be applicable on open positions in
all options contracts on a particular underlying index.

FII & MF Position limits in Index futures contracts : FII & MF position limit in all index futures
contracts on a particular underlying index is ` 500 crores or 15 % of the total open interest of the
market in index futures, whichever is higher. This limit would be applicable on open positions in
all futures contracts on a particular underlying index.

In addition to the above, FIIs & MF’s shall take exposure in equity index deriv atives subject to
the following limits:

a) Short positions in index derivatives (short futures, short calls and long puts) not exceeding (in
notional value) the FII’s / MF’s holding of stocks.

b) Long positions in index derivatives (long futures, long calls and short puts) not exceeding
(in notional value) the FII’s / MF’s holding of cash, government securities, T-Bills and similar
instruments.

The FIIs should report to the clearing members (custodian) the extent of the FIIs holding of stocks,
cash, government securities, T-bills and similar instruments before the end of the day. The clearing
member (custodian) in turn should report the same to the exchange. The exchange monitors the FII
position limits. The position limit for sub-account is same as that of client level position limits.

Stock Futures & Options:

For stocks having applicable market-wise position limit (MWPL) of ` 500 crores or more, the
combined futures and options position limit is 20% of applicable MWPL or ` 300 crores, whichever
is lower and within which stock futures position cannot exceed 10 % of applicable MWPL or ` 150
crores, whichever is lower.

For stocks having applicable market-wise position limit (MWPL) less than ` 500 crores, the combined
futures and options position limit is 20% of applicable MWPL and futures position cannot exceed
20 % of applicable MWPL or ` 50 crore which ever is lower

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Table 6-1 : List of Securities on which Futures & Options available at NSE
(as on 31 March 2010)
Sr.No Security Symbol Launch Date Market Lot
1 ABAN OFFSHORE LTD. ABAN 29-Dec-06 400
2 ABB LTD. ABB 20-Apr-05 500
3 ADITYA BIRLA NUVO LIMITED ABIRLANUVO 14-May-07 400
4 ACC LIMITED ACC 02-Jul-01 376
5 ADANI ENTERPRISES LIMITED ADANIENT 19-Feb-10 400
6 ALLAHABAD BANK ALBK 20-Apr-05 2450
7 AMBUJA CEMENTS LTD AMBUJACEM 02-Jul-01 4124
8 ANDHRA BANK ANDHRABANK 29-Aug-03 2300
9 ALSTOM PROJECTS INDIA LTD APIL 14-May-07 600
10 APOLLO TYRES LTD APOLLOTYRE 19-Feb-10 3400
11 AREVA T&D INDIA LIMITED AREVAT&D 19-Feb-10 750
12 ASHOK LEYLAND LTD ASHOKLEY 20-Apr-05 9550
13 ASIAN PAINTS LIMITED ASIANPAINT 21-Aug-08 200
14 AUROBINDO PHARMA LTD AUROPHARMA 12-May-05 700
15 AXIS BANK LIMITED AXISBANK 20-Apr-05 450
16 BAJAJ AUTO LIMITED BAJAJ-AUTO 26-May-08 200
17 BAJAJ HINDUSTAN LTD BAJAJHIND 29-Dec-06 1425
18 BALRAMPUR CHINI MILLS LTD BALRAMCHIN 29-Dec-06 2400
19 BANK OF BARODA BANKBARODA 29-Aug-03 700
20 BANK OF INDIA BANKINDIA 29-Aug-03 950
21 BHARAT ELECTRONICS LTD BEL 31-Jan-03 276
22 BEML LIMITED BEML 29-Dec-06 375
23 BGR ENERGY SYSTEMS LTD BGRENERGY 19-Feb-10 400
24 BHARAT FORGE LTD BHARATFORG 20-Apr-05 2000
25 BHARTI AIRTEL LIMITED BHARTIARTL 20-Apr-05 500
26 BHEL BHEL 02-Jul-01 150
27 BHUSHAN STEEL LIMITED BHUSANSTL 06-Sep-07 500
28 BIOCON LIMITED. BIOCON 06-Sep-07 1800
29 BOSCH LIMITED BOSCHLTD 30-Nov-07 100
30 BHARAT PETROLEUM CORP LT BPCL 02-Jul-01 550
31 BOMBAY RAYON FASHIONS LTD BRFL 14-May-07 1150
32 CAIRN INDIA LIMITED CAIRN 09-Jan-07 1250
33 CANARA BANK CANBK 29-Aug-03 800
34 CENTURY TEXTILES LTD CENTURYTEX 20-Apr-05 848
35 CESC LTD CESC 12-May-05 1100
36 CHAMBAL FERTILIZERS LTD CHAMBLFERT 12-May-05 3450
37 CHENNAI PETROLEUM CORP LT CHENNPETRO 20-Apr-05 1800
38 CIPLA LTD CIPLA 02-Jul-01 1250
39 COLGATE PALMOLIVE LTD. COLPAL 17-Dec-07 550
40 CONTAINER CORP OF IND LTD CONCOR 21-Aug-08 250
41 CROMPTON GREAVES LTD CROMPGREAV 29-Dec-06 1750
42 CUMMINS INDIA LTD CUMMINSIND 20-Apr-05 950
43 DABUR INDIA LTD DABUR 20-Apr-05 2700
44 DECCAN CHRONICLE HOLD LTD DCHL 21-Aug-08 3400
45 DENA BANK DENABANK 14-May-07 5250
46 DISH TV INDIA LTD. DISHTV 21-Aug-08 5150
47 DIVI’S LABORATORIES LTD DIVISLAB 12-May-05 620
Contd...

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Contd...
Sr.No Security Symbol Launch Date Market Lot
48 DLF LIMITED DLF 05-Jul-07 800
49 DR. REDDY’S LABORATORIES DRREDDY 02-Jul-01 400
50 EDUCOMP SOLUTIONS LTD EDUCOMP 14-May-07 375
51 EVEREST KANTO CYLINDERLTD EKC 14-May-07 2000
52 ESSAR OIL LTD ESSAROIL 12-May-05 1412
53 FEDERAL BANK LTD FEDERALBNK 12-May-05 851
54 FINANCIAL TECHNO (I) LTD FINANTECH 14-May-07 150
55 FORTIS HEALTHCARE LTD FORTIS 19-Feb-10 1300
56 FIRSTSOURCE SOLU. LTD. FSL 21-Aug-08 9500
57 GAIL (INDIA) LTD GAIL 26-Sep-03 1125
58 THE GE SHPG.LTD GESHIP 27-Nov-06 1200
59 GLAXOSMITHKLINE PHARMA LT GLAXO 20-Apr-05 300
60 GMR INFRASTRUCTURE LTD. GMRINFRA 21-Aug-06 2500
61 GODREJ INDUSTRIES LTD GODREJIND 19-Feb-10 1300
62 GRASIM INDUSTRIES LTD GRASIM 02-Jul-01 176
63 GUJARAT STATE PETRO LTD GSPL 21-Aug-08 6100
64 GTL LTD GTL 29-Dec-06 750
65 GTL INFRA.LTD GTLINFRA 21-Aug-08 4850
66 GREAT OFFSHORE LTD GTOFFSHORE 30-Nov-07 1000
67 GVK POW. & INFRA LTD. GVKPIL 21-Aug-08 4750
68 HINDUSTAN CONSTRUCTION CO HCC 29-Dec-06 2100
69 HCL TECHNOLOGIES LTD HCLTECH 31-Jan-03 1300
70 HDFC LTD HDFC 02-Jul-01 150
71 HDFC BANK LTD HDFCBANK 29-Aug-03 200
72 HOUSING DEV & INFRA LTD HDIL 24-Jul-07 774
73 HERO HONDA MOTORS LTD HEROHONDA 31-Jan-03 200
74 HINDALCO INDUSTRIES LTD HINDALCO 02-Jul-01 3518
75 HINDUSTAN PETROLEUM CORP HINDPETRO 02-Jul-01 650
76 HINDUSTAN UNILEVER LTD. HINDUNILVR 02-Jul-01 1000
77 HINDUSTAN ZINC LIMITED HINDZINC 30-Nov-07 500
78 HOTEL LEELA VENTURES LTD HOTELEELA 14-May-07 7500
79 INDIABULLS REAL EST. LTD IBREALEST 21-Aug-08 1300
80 ICICI BANK LTD. ICICIBANK 31-Jan-03 350
81 ICSA (INDIA) LIMITED ICSA 21-Aug-08 1200
82 IDBI BANK LIMITED IDBI 20-Apr-05 2400
83 IDEA CELLULAR LIMITED IDEA 09-Mar-07 2700
84 INFRA. DEV. FIN. CO. LTD IDFC 12-Aug-05 2950
85 IFCI LTD IFCI 27-May-05 7880
86 THE INDIAN HOTELS CO. LTD INDHOTEL 20-Apr-05 3798
87 THE INDIA CEMENTS LIMITED INDIACEM 27-May-05 1450
88 INDIA INFOLINE LIMITED INDIAINFO 14-May-07 2500
89 INDIAN BANK INDIANB 01-Mar-07 2200
90 INFOSYS TECHNOLOGIES LTD INFOSYSTCH 02-Jul-01 200
91 INDIAN OVERSEAS BANK IOB 20-Apr-05 2950
92 INDIAN OIL CORP LTD IOC 26-Sep-03 1200
93 ISPAT INDUSTRIES LIMITED ISPATIND 30-Nov-07 12450
94 ITC LTD ITC 02-Jul-01 1125
95 IVRCL INFRAST & PROJ LTD. IVRCLINFRA 27-May-05 2000

Contd...

123
Contd...
Sr.No Security Symbol Launch Date Market Lot
96 JINDAL SAW LIMITED JINDALSAW 30-Nov-07 5000
97 JINDAL STEEL & POWER LTD JINDALSTEL 20-Apr-05 960
98 JAIN IRRIGATION SYSTEMS JISLJALEQS 19-Feb-10 250
99 JAIPRAKASH ASSOCIATES LTD JPASSOCIAT 29-Dec-06 1688
100 JAIPRAKASH POWER VEN. LTD JPPOWER 18-Apr-05 3125
101 JSW STEEL LIMITED JSWSTEEL 29-Dec-06 412
102 KINGFISHER AIRLINES LTD KFA 14-May-07 4250
103 KOTAK MAHINDRA BANK LTD KOTAKBANK 29-Dec-06 550
104 K S OILS LIMITED KSOILS 21-Aug-08 5900
105 LIC HOUSING FINANCE LTD LICHSGFIN 20-Apr-05 425
106 LANCO INFRATECH LTD. LITL 27-Nov-06 6380
107 LARSEN & TOUBRO LTD. LT 15-Sep-06 200
108 LUPIN LIMITED LUPIN 29-Dec-06 350
109 MAHINDRA & MAHINDRA LTD M&M 02-Jul-01 624
110 MARUTI SUZUKI INDIA LTD. MARUTI 09-Jul-03 200
111 UNITED SPIRITS LIMITED MCDOWELL-N 29-Dec-06 250
112 MCLEOD RUSSEL INDIA LTD. MCLEODRUSS 19-Feb-10 900
113 MERCATOR LINES LIMITED MLL 21-Aug-08 4900
114 MOSER-BAER (I) LTD MOSERBAER 14-May-07 2475
115 MPHASIS LIMITED MPHASIS 12-May-05 800
116 MRPL MRPL 20-Apr-05 4450
117 MAHANAGAR TELEPHONE NIGAM MTNL 02-Jul-01 3200
118 MUNDRA PORT & SEZ LTD MUNDRAPORT 19-Feb-10 300
119 NAGARJUNA CONSTRN. CO. LT NAGARCONST 29-Dec-06 2000
120 NAGARJUNA FERT & CHEM LTD NAGARFERT 27-May-05 5250
121 NATIONAL ALUMINIUM CO LTD NATIONALUM 31-Jan-03 575
122 NEYVELI LIGNITE CORPORATI NEYVELILIG 20-Apr-05 1475
123 NOIDA TOLL BRIDGE CO LTD NOIDATOLL 21-Aug-08 8200
124 NTPC LTD NTPC 05-Nov-04 1625
125 ORACLE FIN SERV SOFT LTD. OFSS 30-May-03 300
126 OIL AND NATURAL GAS CORP. ONGC 31-Jan-03 225
127 ONMOBILE GLOBAL LTD. ONMOBILE 19-Feb-10 550
128 OPTO CIRCUITS (I) LTD. OPTOCIRCUI 21-Aug-08 2040
129 ORCHID CHEM & PHARMA LTD ORCHIDCHEM 12-May-05 2100
130 ORIENTAL BANK OF COMMERCE ORIENTBANK 29-Aug-03 1200
131 PANTALOON RETAIL (I) LTD PANTALOONR 14-May-07 850
132 PATEL ENGINEERING LTD. PATELENG 14-May-07 1000
133 PATNI COMPUTER SYST LTD PATNI 20-Apr-05 1300
134 PETRONET LNG LIMITED PETRONET 14-May-07 4400
135 POWER FIN CORP LTD. PFC 23-Feb-07 1200
136 PIRAMAL HEALTHCARE LTD PIRHEALTH 15-Feb-08 1500
137 PUNJAB NATIONAL BANK PNB 29-Aug-03 300
138 POLARIS SOFTWARE LAB LTD POLARIS 31-Jan-03 2800
139 POWER GRID CORP. LTD. POWERGRID 05-Oct-07 1925
140 PRAJ INDUSTRIES LTD PRAJIND 29-Dec-06 2200
141 PTC INDIA LIMITED PTC 21-Aug-08 2350
142 PUNJ LLOYD LIMITED PUNJLLOYD 06-Jan-06 1500
143 RANBAXY LABS LTD RANBAXY 02-Jul-01 800

Contd...

124
Contd...
Sr.No Security Symbol Launch Date Market Lot
144 RELIANCE COMMUNICATIONS L RCOM 15-Sep-06 700
145 RURAL ELEC CORP. LTD. RECLTD 12-Mar-08 1950
146 RELIANCE CAPITAL LTD RELCAPITAL 20-Apr-05 276
147 RELIANCE INDUSTRIES LTD RELIANCE 02-Jul-01 300
148 RELIANCE INFRASTRUCTU LTD RELINFRA 02-Jul-01 276
149 RELIANCE MEDIAWORKS LTD RELMEDIA 31-Jul-09 600
150 SHREE RENUKA SUGARS LTD RENUKA 29-Dec-06 5000
151 REL. NAT. RESOURCES LTD. RNRL 14-May-07 3576
152 ROLTA INDIA LTD ROLTA 14-May-07 1800
153 RELIANCE POWER LTD. RPOWER 11-Feb-08 2000
154 STEEL AUTHORITY OF INDIA SAIL 15-Sep-06 1350
155 STATE BANK OF INDIA SBIN 02-Jul-01 132
156 SHIPPING CORP OF INDIA LT SCI 31-Jan-03 2400
157 SESA GOA LTD SESAGOA 29-Dec-06 1500
158 SIEMENS LTD SIEMENS 20-Apr-05 752
159 SINTEX INDUSTRIES LTD SINTEX 21-Aug-08 1400
160 STERLITE INDS (IND) LTD STER 20-Apr-05 438
161 STERLING BIOTECH LTD STERLINBIO 14-May-07 2500
162 SUN PHARMACEUTICALS IND. SUNPHARMA 20-Apr-05 225
163 SUN TV NETWORK LIMITED SUNTV 24-Apr-06 1000
164 SUZLON ENERGY LIMITED SUZLON 19-Oct-05 3000
165 SYNDICATE BANK SYNDIBANK 26-Sep-03 3800
166 TATA CHEMICALS LTD TATACHEM 20-Apr-05 1350
167 TATA COMMUNICATIONS LTD TATACOMM 20-Apr-05 525
168 TATA MOTORS LIMITED TATAMOTORS 02-Jul-01 850
169 TATA POWER CO LTD TATAPOWER 02-Jul-01 200
170 TATA STEEL LIMITED TATASTEEL 02-Jul-01 764
171 TATA TEA LTD TATATEA 02-Jul-01 550
172 TATA CONSULTANCY SERV LT TCS 25-Aug-04 1000
173 TECH MAHINDRA LIMITED TECHM 06-Sep-07 600
174 TITAN INDUSTRIES LTD TITAN 12-May-05 206
175 TRIVENI ENGG. & INDS. LTD TRIVENI 29-Dec-06 3850
176 TATA TELESERV(MAHARASTRA) TTML 29-Dec-06 10450
177 TULIP TELECOM LIMITED TULIP 06-Sep-07 500
178 TV18 INDIA LIMITED TV-18 21-Aug-08 1825
179 UCO BANK UCOBANK 21-Aug-08 5000
180 ULTRATECH CEMENT LIMITED ULTRACEMCO 29-Dec-06 400
181 UNION BANK OF INDIA UNIONBANK 29-Aug-03 1050
182 UNITED PHOSPHORUS LIMITED UNIPHOS 14-May-07 1400
183 UNITECH LTD UNITECH 14-May-07 4500
184 VIDEOCON INDUSTRIES LIMIT VIDEOIND 19-Feb-10 854
185 VIJAYA BANK VIJAYABANK 20-Apr-05 6900
186 VOLTAS LTD VOLTAS 29-Dec-06 2700
187 WELSPUN GUJ ST. RO. LTD. WELGUJ 06-Sep-07 1600
188 WIPRO LTD WIPRO 31-Jan-03 600
189 YES BANK LIMITED YESBANK 06-Sep-07 2200
190 ZEE ENTERTAINMENT ENT LTD ZEEL 12-Feb-07 1400

125
126
Table 6-2 : Contract Specification for Index Futures and Options

Particulars Index Futures Index Options Mini Index Futures Mini Index Options Long Term Index Options

Security Description FUTIDX OPTIDX FUTIDX --------------------------------OPTIDX--------------------------------

Underlying Index S&P CNX Nifty/ Bank Nifty/ CNX IT/Nifty Midcap 50 ----------------------------------------------S&P CNX Nifty----------------------------------------------

Style of Option NA European NA -------------------------------European-------------------------------


Contract Size As specified by SEBI, currently minimum ` 2 lakhs at the As specified by SEBI currently minimum ` 1 lakh at the time As specified by SEBI currently
time of introduction of introduction minimum ` 2 lakhs at the
time of introduction
Price Step ` 0.05

Last Trading/Expiration Day Last Thursday of the expiry month or the preceding trading day, if last Thursday is a trading holiday

Expiration Period upto 3 months upto 5 years


Trading Cycle 3 month trading cycle - the near month (one), the next month (two) and the far month (three) Three quarterly expiries
(March, June, Sept & Dec
cycle) and next 8 half yearly
expiries (Jun, Dec cycle)
Price Bands Operating range of 10% of A contract specific price Operating range of 10% of A contract specific price range based on its delta value is
the base price range based on its delta the base price computed and updated on a daily basis
value is computed and
updated on a daily basis
Strike Price Intervals NA Depending on the underlying NA Depending on the underlying price as in Table 6-2a
price as in Table 6-2a

Table 6-2 a : Strike Price Intervals for Index Options


The number of contracts provided in options on index is based on the range in previous day’s closing value of the
underlying index and applicable as per the following table:
Index Level Strike Interval Scheme of Strike to be introduced
upto 2000 50 4- 1- 4
>2001 upto 4000 100 6- 1- 6
>4001 upto 6000 100 6- 1- 6
>6000 100 7- 1-7
The above strike parameters scheme shall be applicable for all Long terms contracts also.
Table 6-3 : Contract Specification for Stock Futures and Options

Particulars Stock Futures Stock Options

Security Description FUTSTK OPTSTK

Underlying Individual Securities

Style of Option NA American


Contract Size As specified by SEBI; Currently minimum ` 2 lakhs at the time of
introduction
Price Steps ` 0.05
Expiration Period Upto 3 months
Trading Cycle 3 month trading cycle - the near month (one), the next month (two)
and the far month (three)
Last Trading/Expiration Day Last Thursday of the expiry month or the preceding trading day, if last
Thursday is a trading holiday
Price Bands Operating range of 20% of the A contract specific price range
base price based on its delta value is
computed and updated on a daily
basis
Strike Price Intervals NA Depending on the underlying price
as in Table 6-3 a

Table 6-3 a : Strike Price Intervals for Index Options

Underlying Closing Price Strike Price Interval No. of Strikes Provided No. of additional
In the money- At the strikes which may be
money- Out of the enabled intraday in
money either direction
Less than or equal to ` 50 2.5 5- 1- 5 5

> ` 50 to ≤ ` 100 5 5- 1- 5 5

> ` 100 to ≤ ` 250 10 5- 1- 5 5

> ` 250 to ≤ ` 500 20 5- 1- 5 5

> ` 500 to ≤ ` 1000 20 10- 1- 10 10

> ` 1000 50 10- 1- 10 10


The Exchange, at its discretion, may enable additional strikes as mentioned in the above table in the direction
of the price movement, intraday, if required. The additional strikes may be enabled during the day at regular
intervals and message for the same shall be broadcast to all trading terminals.
New contracts with new strike prices for existing expiration date are introduced for trading on the next
working day based on the previous day’s underlying close values, as and when required. In order to decide
upon the at-the-money strike price, the underlying closing value is rounded off to the nearest strike price
interval.
The in-the-money strike price and the out-of-the-money strike price are based on the at-the-money strike
price interval.

127
Table 6-4 : Settlement Price Equity Derivatives

Product Settlement Schedule

Futures Contracts Daily Settlement Closing price of the futures contracts on the
on Index or trading day. (closing price for a futures contract
Individual Security shall be calculated on the basis of the last half an
hour weighted average price of such contract)

Un-expired illiquid Daily Settlement Theoretical Price computed as per formula F=S *
futures contracts ert

Futures Contracts Final Settlement Closing price of the relevant underlying index /
on Index or security in the Capital Market segment of NSE, on
Individual Securities the last trading day of the futures contracts.

Options Contracts Interim Exercise Settlement Closing price of such underlying security on the
on Individual day of exercise of the options contract.
Securities

Options Contracts Final Exercise Settlement Closing price of such underlying security (or index)
on Index and on the last trading day of the options contract.
Individual Securities

128
Table 6-5 : Business Growth of Futures & Options Market Segment

Month/ Index Futures Stock Futures Index Options Stock Options Total Average Daily
Year Call Put Call Put Trading Volume
Contracts Trading Contracts Trading Contracts Notional Contracts Notional Contracts otional Contracts Notional Contracts Trading Volume
Traded Volume Traded Value Traded Trading Traded Trading Traded Trading Traded Trading Traded
Volume Volume Volume Volume
(No.) ( ` cr.) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (US $ mn) ( ` cr) (US $ mn)

Jun-00 to 90,580 2,365 – – – – – – – – – – 90,580 2,365 555 12 2.49


Mar-01
2001-02 1,025,588 21,482 1,957,856 51,516 113,974 2,466 61,926 1,300 768,159 18,780 269,370 6,383 4,196,873 101,927 20,887 413 8.46

2002-03 2,126,763 43,951 10,676,843 286,532 269,674 5,670 172,567 3,577 2,456,501 69,644 1,066,561 30,489 16,768,909 439,864 92,603 1,752 368.94

2003-04 17,191,668 554,462 32,368,842 1,305,949 1,043,894 31,801 688,520 21,022 4,248,149 168,174 1,334,922 49,038 56,886,776 2,130,649 491,046 8,388 1933.25

2004-05 21,635,449 772,174 47,043,066 1,484,067 1,870,647 69,373 1,422,911 52,581 3,946,979 132,066 1,098,133 36,792 77,017,185 2,547,053 582,183 10,067 2301.12

2005-06 58,537,886 1,513,791 79,586,852 2791721 6,413,467 168,632 6,521,649 169,837 4,165,996 143,752 1,074,780 36,518 156,300,630 4,824,250 1,081,428 19,220 4308.48

2006-07 81,487,424 2,539,575 104,955,401 3,830,972 12,632,349 398,219 12,525,089 393,693 4,394,292 161,902 889,018 31,909 216,883,573 7,356,271 1,687,605 29,543 6777.53

2007-08 156,598,579 3,820,667 203,587,952 7,548,563 26,667,882 668,816 28,698,156 693,295 8,002,713 308,443 1,457,918 50,693 425,013,200 13,090,478 3,275,076 52,153 13,048

Apr-08 12,063,172 280,100 15,601,531 336,901 2,672,588 67,954 2,692,643 65,611 573,744 13,139 126,146 2,725 33,729,824 766,431 150,428 38,322 7,521

May-08 11,161,427 267,641 16,693,260 380,161 2,243,173 58,115 2,835,787 70,951 740,079 17,239 166,329 3,801 33,840,055 797,908 156,606 39,895 7,830

Jun-08 17,941,870 377,939 19,154,946 375,987 6,056,056 139,919 7,508,380 168,790 740,229 17,009 199,648 4,421 51,601,129 1,084,064 212,770 51,622 10,132

Jul-08 20,423,139 395,380 22,232,227 382,601 9,144,707 198,174 7,744,997 159,035 944,602 19,354 307,688 5,630 60,797,360 1,160,174 227,708 50,442 9,900

Aug-08 14,433,984 300,449 17,594,216 324,011 7,568,163 174,797 6,267,479 137,305 820,895 16,880 208,806 4,003 46,893,543 957,445 187,919 47,872 9,396

Sep-08 19,332,343 380,198 20,076,138 332,728 12,161,148 268,033 9,237,282 193,589 1,035,531 18,688 269,124 4,636 62,111,566 1,197,872 235,107 57,042 11,196

Oct-08 21,649,445 324,962 19,858,409 239,264 12,967,476 231,565 7,769,905 132,945 689,231 9,951 200,362 2,960 63,134,828 941,646 184,818 47,082 9,241

Nov-08 19,471,367 256,950 17,949,270 187,211 10,296,361 158,042 9,624,563 134,092 561,864 6,429 241,953 2,632 58,145,378 745,356 146,292 41,409 8,127

Dec-08 20,007,895 269,997 22,262,785 230,466 11,144,623 171,697 10,014,156 141,919 927,467 10,562 436,840 4,526 64,793,766 829,166 162,741 39,484 7,750

Jan-09 17,695,542 234,141 22,814,332 215,830 10,573,686 158,702 10,641,985 150,570 1,214,695 12,872 562,425 6,004 63,502,665 778,118 152,722 38,906 7,636

Contd...

129
130
Contd...
Month/ Index Futures Stock Futures Index Options Stock Options Total Average Daily
Year Call Put Call Put Trading Volume
Contracts Trading Contracts Trading Contracts Notional Contracts Notional Contracts otional Contracts Notional Contracts Trading Volume
Traded Volume Traded Value Traded Trading Traded Trading Traded Trading Traded Trading Traded
Volume Volume Volume Volume
(No.) ( ` cr.) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (No.) ( ` cr) (US $ mn) ( ` cr) (US $ mn)

Feb-09 15,750,767 205,679 17,156,838 185,121 9,986,938 147,329 11,488,263 158,270 893,075 10,387 468,695 5,585 55,744,576 712,370 139,818 37,493 7,359

Mar-09 20,497,152 276,677 10,184,028 289,362 15,617,055 228,218 15,831,030 215,881 621,556 19,332 344,986 10,461 63,095,807 1,039,931 204,108 51,997 10,205

2008-09 210,428,103 3,570,111 221,577,980 3,479,642 110,431,974 2,002,544 101,656,470 1,728,957 9,762,968 171,843 3,533,002 57,384 657,390,497 11,010,482 2,161,037 45,311 8,893

Apr-09 18,662,382 301,764 9,858,642 356,383 13,687,468 240,150 13,194,502 213,639 558,380 22,168 248,943 9,259 56,210,317 1,143,362 253,293 67,257 14,900

May-09 16,617,516 317,415 9,528,178 448,155 11,196,349 235,522 10,299,192 194,993 485,011 24,185 159,269 6,983 48,285,515 1,227,252 271,877 61,363 13,594

Jun-09 16,207,959 346,934 11,127,649 589,657 12,689,872 295,511 11,499,770 250,133 718,536 41,345 164,411 8,400 52,408,197 1,531,980 339,384 69,635 15,427

Jul-09 18,271,805 382,924 15,500,535 450,632 16,453,611 376,753 15,333,132 324,495 963,541 30,092 304,462 8,615 66,827,086 1,573,509 348,584 68,413 15,156

Aug-09 16,892,217 366,312 13,113,118 412,363 14,778,755 351,830 13,757,102 306,927 863,860 28,215 265,335 7,999 59,670,387 1,473,646 326,461 70,174 15,546

Sep-09 13,032,242 302,425 13,157,621 434,119 11,009,117 276,647 14,064,924 332,429 943,618 32,975 293,810 9,783 52,501,332 1,388,378 307,572 69,419 15,379

Oct-09 13,615,447 329,610 14,044,526 465,829 12,398,618 318,747 14,272,634 350,844 1,064,644 35,426 313,925 9,961 55,709,794 1,510,417 334,607 75,521 16,730

Nov-09 15,178,552 363,523 13,260,546 438,220 14,799,488 377,439 18,165,786 438,968 1,001,744 32,622 358,959 11,044 62,765,075 1,661,816 368,147 83,091 18,407

Dec-09 13,337,833 329,496 11,307,332 395,954 14,570,566 382,975 14,955,374 373,702 946,883 32,696 306,015 10,160 55,424,003 1,524,982 337,834 72,618 16,087

Jan-10 12,056,359 298,849 12,546,679 444,134 13,184,721 345,896 13,899,884 349,964 1,083,640 39,502 330,538 11,951 53,101,821 1,490,297 330,150 78,437 17,376

Feb-10 13,891,843 326,871 10,725,789 354,485 17,317,434 434,844 17,271,270 412,391 922,728 31,359 300,899 9,926 60,429,963 1,569,876 347,779 78,494 17,389

Mar-10 10,542,734 268,266 11,420,625 405,316 15,597,929 412,952 16,982,025 430,214 1,061,562 38,572 355,557 12,826 55,960,432 1,568,147 347,396 74,674 16,543

2009-10 178,306,889 3,934,389 145,591,240 5,195,247 167,683,928 4,049,266 173,695,595 3,978,699 10,614,147 389,158 3,402,123 116,907 679,293,922 17,663,665 3,913,085 72,392 16,037
Table 6-6 : Sectorwise Trading Value of Top 5 companiesin the F&O Segment (2009-10)

BANKS FMCG

Company Name Turnover Company Name Turnover


( ` cr) ( ` cr)

ICICI Bank Ltd 194,232.37 ITC Ltd. 38,052.93

State Bank of India 172,700.39 Hindustan Unilever Limited 34,828.85

Axis Bank Limited 82,183.52 United Spirits Limited 18,137.83

HDFC Bank Ltd 51,039.65 Tata Tea Ltd 5,996.34

IDBI Bank Limited 38,393.79 Dabur India Ltd 1,824.47

INFRASTRUCTURE MEDIA & ENTERTAINMENT

Company Name Turnover Company Name Turnover


( ` cr) ( ` cr)
Unitech Ltd 172,349.04 Dish TV India Limited 12,281.59

DLF Limited 169,442.30 Reliance MediaWorks Limited 12,268.30


Housing Development and 106,817.11 Zee Entertainment Enterprises Ltd 6,387.85
Infrastructure Limited
Reliance Infrastructure Limited 100,778.49 Television Eighteen India Ltd. 3,086.71

Jaiprakash Associates Limited 95,597.96 Sun TV Network Limited 1,497.73

Pharmaceuticals TELECOMMUNICATION

Company Name Turnover Company Name Turnover


( ` cr) ( ` cr)
Ranbaxy Laboratories Ltd 27,023.12 Bharti Airtel Limited 89,740.45

Cipla Ltd. 18,482.40 Reliance Communications Limited 75,561.36


Orchid Chemicals & 13,504.72 Idea Cellular Limited 22,049.55
Pharmaceuticals Ltd
Biocon Limited 10,276.46 GTL Infrastructure Limited 10,012.78

Dr. Reddy’s Laboratories Ltd. 9,328.55 Mahanagar Telephone Nigam Ltd. 9,601.25

FINANCE INFORMATION TECHNOLOGY

Company Name Turnover Company Name Turnover


( ` cr) ( ` cr)
Reliance Capital Limited 113,514.36 Infosys Technologies Ltd. 111,475.86

IFCI Limited 97,642.65 Tata Consultancy Services Limited 69,647.99


Infrastructure Development 58,062.63 Educomp Solutions Limited 47,565.59
Finance Company Limited
Housing Development Finance 54,183.50 Tech Mahindra Limited 26,905.02
Corporation Ltd.
LIC Housing Finance Ltd 27,147.21 Wipro Ltd 25,019.12

Contd...

131
Contd...

PETROCHEMICALS MANUFACTURING

Company Name Turnover Company Name Turnover


( ` cr) ( ` cr)
Reliance Industries Ltd 354,860.32 Tata Steel Limited 256,505.12

Aban Offshore Ltd. 84,616.52 Tata Motors Limited 153,789.84

Oil & Natural Gas Corpn Ltd 46,732.89 Suzlon Energy Limited 141,551.64

Essar Oil Limited 41,353.70 JSW Steel Limited 95,862.48

Cairn India Limited 39,032.02 Jindal Steel & Power Ltd. 91,679.06

ENGINEERING (4 companies in this sector trade


SERVICES
in the F&O segment)

Company Name Turnover Company Name Turnover


( ` cr) ( ` cr)
Kingfisher Airlines Limited 8,592.50 Larsen & Toubro Limited 95,143.69
The Great Eastern Shipping Co. 7,217.86 Praj Industries Ltd 11,421.71
Limited
Mercator Lines Limited 6,644.59 Reliance Industrial Infrastructure 5,470.20
Limited
Deccan Chronicle Holdings Ltd. 6,008.46 BEML Limited 3,099.82
The Indian Hotels Company 5,084.97
Limited

Miscellaneous

Company Name Turnover


( ` cr)
Pantaloon Retail (India) Ltd. 6,380.25

Titan Industries Ltd. 3,171.68

Noida Toll Bridge Company Ltd 3,079.95

Sintex Industries Ltd. 2,968.69

Fortis Healthcare Limited 1,733.27

132
Table 6-7 : Participant wise Trading Value in the F&O Segment (2009-10)

Month/Year Institutional investors Retail Proprietary


Gross Traded Value % to Gross Gross Traded Value % to Gross Gross Traded Value % to Gross
` crore US $ mn Turnover ` crore US $ mn Turnover ` crore US $ mn Turnover

2007-08 3,256,034 814,619 12.44 16,485,724 4,124,524 62.97 6,439,196 1,611,007 24.59
Apr-08 266,039 52,216 17.36 852,917 167,403 55.64 413,906 81,238 27.00
May-08 274,787 53,933 17.22 876,167 171,966 54.90 444,863 87,314 27.88
Jun-08 331,733 65,110 15.30 1,158,405 227,361 53.43 677,991 133,070 31.27
Jul-08 319,854 62,778 13.78 1,265,173 248,317 54.53 735,320 144,322 31.69
Aug-08 250,935 49,251 13.10 1,079,934 211,960 56.40 584,021 114,626 30.50
Sep-08 290,713 57,058 12.13 1,361,914 267,304 56.85 743,118 145,852 31.02
Oct-08 233,594 45,848 12.40 1,034,923 203,125 54.95 614,776 120,663 32.64
Nov-08 166,700 32,718 11.18 835,439 163,972 56.04 488,574 95,893 32.77
Dec-08 178,521 35,038 10.77 934,367 183,389 56.34 545,444 107,055 32.89
Jan-09 184,701 36,251 11.87 869,059 170,571 55.84 502,477 98,622 32.29
Feb-09 183,607 36,037 12.89 807,243 158,438 56.66 433,891 85,160 30.45
Mar-09 263,270 51,672 12.66 1,174,488 230,518 56.47 642,103 126,026 30.87
2008-09 2,944,454 577,911 13.37 12,250,029 2,404,324 55.63 6,826,484 1,339,840 31.00
Apr-09 297,985 66,014 13.03 1,245,056 275,821 54.45 743,685 164,751 32.52
May-09 345,864 76,620 14.09 1,309,580 290,115 53.35 799,060 177,018 32.55
Jun-09 391,422 86,713 12.78 1,636,840 362,614 53.42 1,035,699 229,442 33.80
Jul-09 449,782 99,642 14.29 1,628,417 360,748 51.74 1,068,819 236,779 33.96
Aug-09 418,249 92,656 14.19 1,625,127 360,019 55.14 903,915 200,247 30.67
Sep-09 405,221 89,770 14.59 1,519,726 336,669 54.73 851,809 188,704 30.68
Oct-09 415,738 92,100 13.76 1,665,165 368,889 55.12 939,932 208,226 31.11
Nov-09 444,197 98,404 13.36 1,833,992 406,290 55.18 1,045,442 231,600 31.45
Dec-09 370,730 82,129 12.16 1,660,586 367,875 54.45 1,018,649 225,664 33.40
Jan-10 434,120 96,172 14.56 1,619,619 358,799 54.34 926,855 205,329 31.10
Feb-10 411,091 91,070 13.10 1,791,672 396,914 57.06 936,989 207,574 29.84
Mar-10 388,516 86,069 12.39 1,843,186 408,327 58.77 904,593 200,397 28.84
2009-10 4,772,915 1,057,358 13.51 19,378,966 4,293,081 54.86 11,175,447 2,475,730 31.63

133
Table 6-8a : Number of Members in different turnover brackets during 2009-10

Upto ` 10 ` 10 crores ` 50 crores ` 250 crores ` 500 crores ` 1000


crores upto ` 50 upto ` 250 upto ` 500 upto ` 1000 crores and
crores crores crores crores more

2007-08 12 13 45 37 54 691

Apr-08 55 95 218 112 103 242

May-08 59 104 215 109 110 243

Jun-08 50 100 211 109 89 289

Jul-08 58 99 195 126 85 297

Aug-08 64 114 210 117 97 273

Sep-08 58 107 219 114 87 301

Oct-08 78 130 229 102 102 246

Nov-08 90 127 251 96 102 212

Dec-08 80 112 248 106 100 237

Jan-09 93 123 253 99 110 220

Feb-09 100 124 252 103 102 215

Mar-09 72 126 201 118 104 280

2008-09 21 28 81 65 91 661

Apr-09 73 107 242 119 92 285

May-09 63 93 232 122 119 297

Jun-09 58 81 204 115 134 343

Jul-09 55 85 229 115 115 343

Aug-09 61 96 224 118 119 333

Sep-09 53 108 234 118 120 319

Oct-09 53 98 241 96 123 344

Nov-09 56 96 221 116 123 350

Dec-09 64 100 229 110 121 341

Jan-10 66 103 227 103 133 344

Feb-10 68 101 224 118 117 349

Mar-10 68 108 201 105 131 366

2009-10 19 38 68 48 67 780

134
Table 6-8b : Number of members in different turnover brackets in Futures and Options Segment

Month Futures Segment Options Segment


Number of Members Number of Members
Upto ` 10 ` 10 crores ` 50 crores ` 250 ` 500 ` 1000 Upto ` 10 ` 10 crores ` 50 crores ` 250 ` 500 ` 1000
crores upto ` 50 upto ` 250 crores crores upto crores and crores upto ` 50 upto ` 250 crores crores upto crores and
crores crores upto ` 500 ` 1000 more crores crores upto ` 500 ` 1000 more
crores crores crores crores

2007-08 13 14 50 42 57 676 98 96 176 96 91 295


Apr-08 60 110 226 115 101 213 316 189 187 43 35 55
May-08 66 111 230 106 115 212 325 189 194 38 33 61
Jun-08 62 119 234 97 98 238 271 179 180 69 43 106
Jul-08 71 121 222 106 97 243 262 163 196 64 61 114
Aug-08 80 133 229 106 102 225 291 154 209 63 57 101
Sep-08 78 121 245 118 91 233 260 163 195 73 70 125
Oct-08 103 150 251 99 95 189 297 182 181 76 38 113
Nov-08 114 152 255 105 82 170 314 190 175 68 25 106
Dec-08 96 142 269 102 94 180 316 178 171 73 47 98
Jan-09 111 158 269 97 87 176 324 180 177 68 46 103
Feb-09 120 156 273 98 93 156 314 182 191 48 55 106
Mar-09 99 142 241 108 104 207 270 179 196 67 46 143
2008-09 29 36 95 70 104 613 111 99 162 103 90 382
Apr-09 94 130 259 122 91 222 282 180 206 59 62 129
May-09 84 113 241 137 113 238 283 202 196 64 59 122
Jun-09 75 102 223 114 133 288 260 194 203 82 56 140
Jul-09 77 108 246 123 114 274 229 184 211 87 71 160
Aug-09 84 119 242 131 106 269 255 180 207 91 70 148
Sep-09 77 128 247 138 105 257 251 192 215 82 65 147
Oct-09 78 128 245 112 124 268 248 191 211 78 63 164
Nov-09 74 133 251 117 119 268 244 168 214 94 70 172
Dec-09 89 131 253 119 117 256 249 178 205 84 74 175
Jan-10 93 142 233 136 110 262 248 174 219 88 75 172
Feb-10 102 130 258 121 122 244 223 188 204 89 72 201
Mar-10 88 139 246 143 115 248 245 157 191 92 74 220
2009-10 28 41 93 55 88 715 96 85 146 88 94 511

135
Table 6-8c : Segment wise Contribution of Top ‘N’ Members to turnover on
Futures and Options segment
(in percent)
Month Futures Segment Options Segment

Top 5 Top 10 Top 15 Top 25 Top 5 Top 10 Top 15 Top 25


Members Members Members Members Members Members Members Members

2005-06 12 20 26 36 23 36 45 55

2006-07 14 22 28 38 23 36 46 58

2007-08 14 23 29 39 23 34 43 56

Apr-08 17 26 33 43 22 37 48 61

May-08 16 25 32 42 21 35 45 59

Jun-08 17 26 33 43 18 32 42 55

Jul-08 18 26 33 43 17 30 40 54

Aug-08 17 26 32 42 18 31 42 56

Sep-08 16 25 31 41 20 33 42 56

Oct-08 16 23 30 41 21 34 44 56

Nov-08 17 25 31 42 22 34 43 56

Dec-08 17 25 32 42 23 35 44 57

Jan-09 16 24 31 41 21 32 41 55

Feb-09 16 24 31 42 21 32 41 55

Mar-09 15 23 30 41 23 34 42 55

2008-09 17 25 31 41 18 31 40 54

Apr-09 16 24 31 42 25 37 45 59

May-09 16 25 31 41 25 36 45 58

Jun-09 16 23 30 40 26 36 45 59

Jul-09 15 22 28 38 26 36 44 57

Aug-09 14 22 29 39 26 37 45 59

Sep-09 15 22 29 39 26 37 45 57

Oct-09 15 22 28 38 27 38 45 56

Nov-09 14 22 28 38 26 37 45 56

Dec-09 15 22 29 39 25 34 42 54

Jan-10 14 22 28 38 24 33 40 52

Feb-10 14 21 28 38 24 33 40 51

Mar-10 14 22 28 37 23 32 39 50

2009-10 15 22 28 38 25 32 42 54

136
Table 6-9 : Top 20 Futures contracts according to number of contracts 2009-10

S. Name of the Contract Number of Turnover Percentage


No. Contracts of contracts
to Top 20
( ` cr.) (US $ mn) contracts
1 NIFTY JULY 2009 16,685,014 360,347.82 79,828.94 10.19
2 NIFTY MAY 2009 14,108,649 272,041.49 60,266.17 8.62
3 NIFTY AUGUST 2009 14,027,712 318,562.24 70,572.05 8.57
4 NIFTY APRIL 2009 13,809,370 231,659.98 51,320.33 8.44
5 NIFTY JUNE 2009 13,049,245 288,559.59 63,925.47 7.97
6 NIFTY DECEMBER 2009 12,908,225 327,730.73 72,603.17 7.89
7 NIFTY FEBRUARY 2009 12,122,626 294,013.30 65,133.65 7.41
8 NIFTY NOVEMBER 2009 12,098,963 296,951.31 65,784.52 7.39
9 NIFTY OCTOBER 2009 11,805,291 294,906.84 65,331.60 7.21
10 NIFTY SEPTEMBER 2009 11,128,597 265,970.56 58,921.26 6.80
11 NIFTY JANUARY 2010 9,116,083 233,712.04 51,774.93 5.57
12 NIFTY MARCH 2010 8,563,741 217,939.59 48,280.81 5.23
13 NIFTY APRIL 2010 2,534,395 66,584.25 14,750.61 1.55
14 MINIFTY JULY 2009 1,860,576 16,042.41 3,553.92 1.14
15 MINIFTY AUGUST 2009 1,773,464 16,061.90 3,558.24 1.08
16 MINIFTY MAY 2009 1,742,971 13,146.58 2,912.40 1.06
17 MINIFTY DECEMBER 2009 1,738,887 17,609.85 3,901.16 1.06
18 MINIFTY APRIL 2009 1,602,742 10,726.92 2,376.37 0.98
19 MINIFTY NOVEMBER 2009 1,525,735 14,968.54 3,316.03 0.93
20 MINIFTY SEPTEMBER 2009 1,487,061 14,122.60 3,128.62 0.91
TOTAL 163,689,347 3,571,658.52 791,240.26 100.00

Table 6-10 : Top 20 Option contracts according to number of contracts traded 2009-10
S. Name of the Contract Number of Turnover Percentage
No. Contracts of contracts
to Top 20
( ` cr) (US $ mn) contracts
1 NIFTY February 2010 CE 4900 5,449,250 135,003.53 29,907.74 7.00
2 NIFTY December 2009 CE 5200 5,149,244 135,253.46 29,963.11 6.61
3 NIFTY February 2010 PE 4800 4,868,777 118,405.92 26,230.82 6.25
4 NIFTY March 2010 CE 5200 4,663,405 122,331.46 27,100.46 5.99
5 NIFTY December 2009 CE 5100 4,282,227 111,168.38 24,627.47 5.50
6 NIFTY December 2009 PE 5000 4,213,118 106,988.38 23,701.46 5.41
7 NIFTY April 2009 CE 3400 4,041,812 70,130.84 15,536.30 5.19
8 NIFTY March 2010 CE 5100 3,725,904 96,682.95 21,418.46 4.78
9 NIFTY February 2010 CE 4800 3,691,610 90,339.19 20,013.11 4.74
10 NIFTY August 2009 CE 4700 3,690,850 87,956.82 19,485.34 4.74
11 NIFTY October 2009 CE 5100 3,633,995 94,044.64 20,833.99 4.67
12 NIFTY November 2009 CE 5000 3,579,202 90,806.46 20,116.63 4.60
13 NIFTY October 2009 PE 5000 3,487,231 88,796.34 19,671.32 4.48
14 NIFTY July 2009 CE 4500 3,473,793 79,493.63 17,610.46 4.46
15 NIFTY February 2010 PE 4700 3,460,789 82,323.31 18,237.33 4.44
16 NIFTY April 2009 CE 3500 3,391,384 60,111.34 13,316.65 4.35
17 NIFTY October 2009 PE 4900 3,323,287 82,624.92 18,304.15 4.27
18 NIFTY February 2010 CE 5000 3,289,648 82,922.54 18,370.08 4.22
19 NIFTY November 2009 CE 5100 3,271,285 84,049.90 18,619.83 4.20
20 NIFTY December 2009 PE 5100 3,189,001 82,769.70 18,336.22 4.09
TOTAL 77,875,812 1,902,203.71 421,400.91 100.00

137
Table 6-11 : Number of trades in the Futures & Options Segment

Month/Year Index Futures Stock Futures Index Options Stock Options Total

2007-08 30,897,058 153,187,768 10,370,483 7,767,865 202,223,174

Apr-08 3,271,644 11,208,858 1,224,318 544,051 16,248,871

May-08 2,816,276 12,191,813 1,047,539 685,693 16,741,321

Jun-08 4,490,539 13,547,829 2,648,194 681,604 21,368,166

Jul-08 5,557,672 15,679,079 3,713,214 933,961 25,883,926

Aug-08 4,103,495 12,452,067 3,082,063 764,533 20,402,158

Sep-08 5,289,846 13,859,395 4,276,123 844,724 24,270,088

Oct-08 5,781,231 13,374,817 4,458,908 605,226 24,220,182

Nov-08 5,779,280 12,154,631 4,857,126 584,173 23,375,210

Dec-08 6,220,608 14,899,917 4,816,107 934,064 26,870,696

Jan-09 5,136,302 14,413,326 4,226,118 1,155,822 24,931,568

Feb-09 4,631,594 11,035,948 4,021,976 870,032 20,559,550

Mar-09 5,819,745 8,438,603 5,368,456 727,417 20,354,221

2008-09 58,898,232 153,256,283 43,740,142 9,331,300 265,225,957

Apr-09 5,649,871 8,597,278 5,190,117 675,735 20,113,001

May-09 5,060,456 8,426,655 4,522,973 556,564 18,566,648

Jun-09 4,973,415 9,869,779 5,620,651 758,811 21,222,656

Jul-09 5,718,277 12,707,974 7,059,595 1,012,373 26,498,219

Aug-09 5,564,804 10,828,499 6,884,745 879,903 24,157,951

Sep-09 4,352,169 10,694,165 6,728,710 1,008,393 22,783,437

Oct-09 4,509,316 11,348,231 6,354,351 1,121,540 23,333,438

Nov-09 5,093,232 10,775,226 7,914,266 1,092,392 24,875,116

Dec-09 4,832,800 9,233,972 6,759,250 1,069,940 21,895,962

Jan-10 3,838,625 10,207,739 5,917,021 1,164,875 21,128,260

Feb-10 4,621,592 8,587,808 7,174,462 1,002,358 21,386,220

Mar-10 3,349,892 8,885,707 6,823,851 1,151,828 20,211,278

2009-10 57,564,449 120,163,033 76,949,992 11,494,712 266,172,186

138
Table 6-12 : Settlement Statistics in F&O Segment

Month/Year Index/Stock Futures Index/Stock Options Total


MTM Final Premium Exercise
Settlement Settlement Settlement Settlement

( ` cr) ( ` cr) ( ` cr) ( ` cr) ( ` cr) (US $ mn)

2000-01 84.08 1.93 -- -- 86.01 18.44


2001-02 505.25 21.93 164.76 93.95 785.88 161.04

2002-03 1,737.90 45.76 331.21 195.88 2,310.76 486.47

2003-04 10,821.98 138.95 858.94 476.12 12,295.98 2833.83

2004-05 13,024.18 227.50 941.06 455.87 14,648.62 3348.25

2005-06 25,585.51 597.89 1,520.58 817.84 28,521.80 6393.59

2006-07 61,313.70 797.54 3,194.38 1,188.84 66,494.47 15254.52

2007-08 144,654.70 1,312.12 6,760.17 3,792.26 156,519.23 39,227.88

Apr-08 5,391.50 66.71 785.96 164.02 6,408.19 1,257.74

May-08 5,601.50 203.64 603.59 190.78 6,599.51 1,295.29

Jun-08 9,182.80 137.30 1,126.00 341.86 10,787.96 2,117.36

Jul-08 11,070.00 59.52 1,015.90 208.83 12,354.25 2,424.78

Aug-08 4,844.80 129.30 742.07 145.52 5,861.69 1,150.48

Sep-08 7,120.40 225.92 921.39 178.64 8,446.35 1,657.77

Oct-08 9,409.20 54.34 1,384.10 1,418.90 12,266.54 2,407.56

Nov-08 5,782.10 45.97 785.52 160.42 6,774.01 1,329.54

Dec-08 4,300.70 151.65 770.55 581.94 5,804.84 1,139.32

Jan-09 4,476.70 58.28 936.39 154.79 5,626.16 1,104.25

Feb-09 3,247.10 65.42 800.53 134.22 4,247.27 833.62

Mar-09 4,766.80 300.24 1,088.50 507.66 6,663.20 1,307.79

2008-09 75,193.60 1,498.29 10,960.50 4,187.58 91,839.97 18,025.51

Apr-09 4,855.50 273.61 944.53 494.81 6,568.45 1,455.13

May-09 7,817.80 141.21 1,289.20 1,068.90 10,317.11 2,285.58


Jun-09 6,960.70 157.54 915.78 572.96 8,606.97 1,906.73

Jul-09 6,108.80 108.56 1,065.90 217.81 7,501.07 1,661.73

Aug-09 5,022.40 36.94 894.05 124.88 6,078.27 1,346.54

Sep-09 3,243.30 65.76 848.17 214.06 4,371.29 968.39

Oct-09 4,705.90 180.26 696.71 140.63 5,723.51 1,267.95

Nov-09 5,312.90 148.63 870.25 173.88 6,505.65 1,441.22

Dec-09 3,955.10 58.57 954.82 332.57 5,301.06 1,174.36

Jan-10 4,759.00 107.57 762.19 188.94 5,817.70 1,288.81

Feb-10 5,140.00 45.83 798.36 133.03 6,117.23 1,355.17

Mar-10 2,774.30 70.79 971.08 218.30 4,034.47 893.77

2009-10 60,655.70 1,395.27 11,011.04 3,880.77 76,942.78 17,045.37

139
140
Currency Derivatives
Segment 7
142
Currency Derivatives Segment 7
This chapter on currency derivatives segment is broadly divided into two parts: Currency Futures
and Interest Rate futures. The Currency Derivatives segment at NSE commenced operations on
August 29, 2008 with the launch of currency futures trading in US Dollar-India Rupee (USD-INR).
Trading in other currency pairs like Euro-INR, Pound Sterling-INR and Japanese Yen-INR was further
made available for trading in March 2010. On the same segment, interest rate futures were
introduced for trading on August 31, 2009.

Trading Mechanism
The Currency derivatives trading system of NSE, called NEAT-CDS (National Exchange for Automated
Trading – Currency Derivatives Segment) trading system, provides a fully automated screen-based
trading for currency futures on a nationwide basis as well as an online monitoring and surveillance
mechanism. Two products, currency futures and interest rate futures trade on this segment.

The NEAT-CDS system supports an order driven market, wherein orders match automatically.
Order matching is essentially on the basis of security, its price and time. All quantity fields are in
contracts and price in Indian rupees. The exchange notifies the contract size and tick size for each
of the contracts traded on this segment from time to time. When any order enters the trading
system, it is an active order. It tries to find a match on the opposite side of the book. If it finds a
match, a trade is generated. If it does not find a match, the order becomes passive and sits in the
respective order book in the system.

Currency Futures
The contract specification, trading, clearing and settlement mechanism for currency futures is
explained below.

Contract Specifications for Currency Futures

NSE trades Currency Derivatives contracts having near 12 calendar month expiry cycles. All
contracts expire two working days prior to the last working day of every calendar month (subject
to holiday calendars). This is also the last trading day for the expiring contract. The contract
would cease to trade at 12:00 noon on the last trading day. A new contract with 12th month expiry
would be introduced immediately ensuring availability of 12 monthly contracts for trading at any
point.

Each futures contract has a separate limit order book. All passive orders are stacked in the system
in terms of price-time priority and trades take place at the passive order price (order which has
come earlier and residing in the system). The best buy order for a given futures contract will be
the order to buy at the highest price whereas the best sell order will be the order to sell at the
lowest price.

The contract specification for US Dollars – Indian Rupee (USDINR), Euro – Indian Rupee (EURINR),
Pound sterling – Indian Rupee (GBPINR) and Japanese Yen – Indian Rupee (JPYINR) is summarized
in the table below.

143
Symbol USD-INR EUR-INR GBP-INR JPY-INR
Market Type Normal Normal Normal Normal
Instrument Type FUTCUR FUTCUR FUTCUR FUTCUR
Unit of trading 1 - 1 unit denotes 1 - 1 unit 1 - 1 unit 1 - 1 unit denotes
1000 USD. denotes denotes 100000 JAPANESE
1000 EURO. 1000 POUND YEN.
STERLING.
Underlying / Order Quotation The exchange rate The The exchange The exchange rate
in Indian Rupees exchange rate in Indian in Indian Rupees
for US Dollars rate in Rupees for 100 Japanese
Indian for Pound Yen.
Rupees for Sterling.
Euro.
Tick size ` 0.25 paise or INR 0.0025
Trading hours 9:00 am to 5:00 pm (Monday to Friday on working days)
Contract trading cycle 12 month trading cycle.
Last trading day Two working days prior to the last business day of the expiry month at
12 noon.
Final settlement day Last working day (excluding Saturdays) of the expiry month. The last
working day will be the same as that for Interbank Settlements in
Mumbai.
Quantity Freeze 10,001 or greater
Base price DSP of the contract.
Price operating Tenure upto 6 +/-3 % of base price.
range months
Tenure greater +/- 5% of base price.
than 6 months
Position limits Clients higher of 6% of higher higher of 6% higher of 6% of
total open interest of 6% of of total open total open interest
or USD 10 million total open interest or or JPY 200 million
interest GBP 5 million
or EURO 5
million
Trading Members higher of 15% of higher of higher of 15% higher of 15% of
the total open 15% of the of the total the total open
interest or USD 50 total open open interest interest or JPY
million interest or or GBP 25 1000 million
EURO 25 million
million
Banks higher of 15% of higher of higher of 15% higher of 15% of
the total open 15% of the of the total the total open
interest or USD total open open interest interest or JPY
100 million interest or or GBP 50 2000 million
EURO 50 million
million
Initial margin SPAN Based Margin
Extreme loss margin 1% of MTM value of 0.3% of MTM 0.5% of MTM 0.7% of MTM value
gross open position value of value of gross of gross open
gross open open position position
position

Contd...

144
Contd...
Symbol USD-INR EUR-INR GBP-INR JPY-INR
Calendar spreads ` 400 for spread of ` 700 for ` 1500 for ` 600 for spread of
1 month spread of 1 spread of 1 1 month
month month
` 500 for spread of ` 1000 for ` 1800 for ` 1000 for spread
2 months spread of 2 spread of 2 of 2 months
months months
` 800 for spread of ` 1500 for ` 2000 for ` 1500 for spread
3 months spread of 3 spread of 3 of 3 months and
months and months and more
more more
` 1000 for spread
of 4 months and
more
Settlement Daily settlement : T + 1
Final settlement : T + 2
Mode of settlement Cash settled in Indian Rupees
Daily settlement price (DSP) Calculated on the basis of the last half an hour weighted average
price.
Final settlement price (FSP) RBI reference rate RBI Exchange rate Exchange rate
reference published published by RBI
rate by RBI in its in its Press Release
Press Release captioned RBI
captioned reference Rate for
RBI reference US$ and Euro
Rate for US$
and Euro

TURNOVER
The trading activity in currency futures has been witnessing a rapid growth. The total traded
volume from August 2008 till March 2009 was ` 162,272 crore (US $ 31,849 million) and increased
by 998.53% to ` 17,82,608 crore (US $ 394,907 million) in 2009-10. Total number of contracts
traded during 2009-10 were 378,606,983. The average traded volumes during the same period
were ` 7,428 crore (US $ 1,645 million). The business growth of Currency Futures Segment is shown
in Table 7-1 and Chart 7-1.

Chart 7-1 : Business Growth of Currency Futures at NSE

145
Open Interest

As of March 31, 2010, the open interest of 427,873 currency futures contracts stood at worth
` 1,964 crore.

Traded Value Records

The following table shows the record highs in the currency derivatives segment, from the date of
inception till March 31, 2010.

CDS Segment Date Number/Value

Record Number of Trades January 11, 2010 78935


Record No. of Contracts Traded March 30, 2010 4,353,053
Record Daily Turnover (value in ` crores) March 30, 2010 ` 19,927

Top 5 Currency Futures Contracts

During 2009-10, details of top 5 currency futures contracts in terms of turnover are presented in
the table below.

Rank Contract Name Total Total Total Total Traded


Traded Traded Traded Value (%) to
Instrument Type Contract Expiry Quantity Value Value (US Currency
Symbol ( ` Crs) $ mn) Futures Total
Traded Value
1 FUTCUR USDINR 27-Jan-10 55,464,691 254,911 56,471 14.30

2 FUTCUR USDINR 29-Mar-10 55,164,397 252,289 55,890 14.15

3 FUTCUR USDINR 24-Feb-10 48,512,671 224,913 49,826 12.62

4 FUTCUR USDINR 29-Dec-09 43,373,761 202,419 44,843 11.36

5 FUTCUR USDINR 26-Nov-09 32,897,164 153,691 34,048 8.62

Note:- Total Traded Value Currency Futures ` in Crs 1782608.043

CLEARING AND SETTLEMENT


NSCCL undertakes clearing and settlement of all trades executed on the Currency Derivatives
Segment (CDS) of the Exchange. It also acts as legal counterparty to all trades on this segment and
guarantees their financial settlement. The Clearing and Settlement process comprises of three
main activities, viz., Clearing, Settlement and Risk Management.

Clearing Entities

Clearing and settlement activities in the Currency Derivatives segment are undertaken by NSCCL
with the help of the following entities:

Clearing and Settlement Mechanism of Currency Futures

Currency futures contracts are cash settled, i.e. through exchange of cash in Indian Rupees. The
settlement amount for a clearing member is netted across all their TMs/clients, with respect to
their obligations on MTM settlement. Currency futures contracts have two types of settlements,
the MTM settlement which happens on a continuous basis at the end of each day, and the final
settlement which happens on the last business day of the expiry month of futures contract.

146
Mark to Market settlement (MTM Settlement):

All futures contracts for each member are marked-to-market (MTM) to the daily settlement price
of the relevant futures contract at the end of each day. The profits/losses are computed as the
difference between:

1. The traded price and the day's settlement price for contracts executed during the day but
not squared up.

2. The previous day's settlement price and the current day's settlement price for brought forward
contracts.

3. The buy price and the sell price for contracts executed during the day and squared up.

The CMs who have a loss are required to pay the mark-to-market (MTM) loss amount in cash which
is in turn is passed on to the CMs who have made a MTM profit. This is known as daily mark-to-
market settlement. CMs are responsible to collect and settle the daily MTM profits/losses incurred
by the TMs and their clients clearing and settling through them. Similarly, TMs are responsible to
collect/pay losses/profits from/to their clients by the next day. The pay-in and pay-out of the
mark-to-market settlement are effected on the day following the trade day. In case a futures
contract is not traded on a day, or not traded during the last half hour, a ‘theoretical settlement
price’ is computed. After completion of daily settlement computation, all the open positions are
reset to the daily settlement price. Such positions become the open positions for the next day.

Final settlement for futures

On the last trading day of the futures contracts, at 12:00 pm, NSCCL marks all positions of a CM
to the final settlement price as published by RBI and the resulting profit/loss is settled in cash.
Final settlement loss/profit amount is debited/ credited to/from the relevant CM’s clearing bank
account on T+2 working day following last trading day of the contract (Contract expiry Day).

Settlement prices for futures

Daily settlement price on a trading day is the closing price of the respective futures contracts
on such day. The closing price for a futures contract is currently calculated as the last half an
hour weighted average price of the contract in the Currency Derivatives Segment of NSE. In case
a futures contract is not traded on a day, or not traded during the last half hour, a ‘theoretical
settlement price’ is computed. The final settlement price is the RBI reference rate on the last
trading day of the futures contract. All open positions shall be marked to market on the final
settlement price. Such marked to market profit / loss shall be paid to / received from clearing
members.

Settlement Statistics

During 2009-10, cash settlement for currency futures amounted to ` 367.37 crore (US $ 72.10
million). The details of settlement statistics for currency futures is presented in Table 7-2.

Margining System

NSCCL has developed a comprehensive risk containment mechanism for the Currency Derivatives
segment. The most critical component of a risk containment mechanism is the online position
monitoring and margining system. The actual margining is done on-line, on an intra-day basis
using PRISM (Parallel Risk Management System) which is the real-time position monitoring and risk
management system. The risk of each trading and clearing member is monitored on a real-time
basis and alerts/disablement messages are generated if the member crosses the set limits. NSCCL

147
uses the SPAN®* (Standard Portfolio Analysis of Risk); a portfolio based margining system, for the
purpose of calculating initial margins.

Margin Requirement

NSCCL intimates all members of the margin liability of each of their client. Additionally members
are also required to report details of margins collected from clients to NSCCL, which holds in trust
client margin monies to the extent reported by the member as having been collected form their
respective clients. The margining system for Currency Derivatives segment is explained below:

a) Initial margin: Margin in the Currency Derivatives segment is computed by NSCCL upto client
level for open positions of CMs/TMs. These are required to be paid up-front on gross basis at
individual client level for client positions and on net basis for proprietary positions. NSCCL
collects initial margin for all the open positions of a CM based on the margins computed by
NSCCL- SPAN®. A CM is required to ensure collection of adequate initial margin from his TMs
up-front. The TM is required to collect adequate initial margins up-front from his clients. The
parameters used in the computation of margins shall be revised five times a day based on the
prices at Begin of Day, 11:00 am, 12:30 pm, 2:00 pm and at End of Day for currency futures.

b) Extreme loss margin of calculated on the value of the gross open positions shall be adjusted
from the liquid assets of the clearing member on an on line, real time basis.

Position Limit for Currency Futures

Client Level Position Limit

The client level position limit shall be applicable where the gross open position of the client across
all contracts exceeds 6% of the total open interest or 10 million USD, whichever is higher.

Trading Member Level Position Limit

The trading member position limit shall be higher of 15% of the total open interest or 50 million
USD. However, the position limit for a Trading Member, which is a bank, shall be higher of 15% of
the total open interest or 100 million USD.

Clearing Member Position Limit

No separate position limit is prescribed at the level of clearing member. However, the clearing
member should ensure that his own trading position and the position of each trading member
clearing through him are within the limits specified above.

INTEREST RATE FUTURES


Contract Specification

The interest rate futures contract can be entered for a minimum lot size of 2000 bonds at the rate
of ` 100 per bond (Face Value) leading to a contract value of ` 200,000. The expiries specified in the
current contract cycle are two days prior to the last business days of March, June, September and
December. (Contracts are referred to by their respective expiry months. For example, December
2010 contract means a contract expiring in December 2010.) Thus, at any given time, a maximum
of four contracts can be allowed for trading on the exchange (Viz., March, June, September and
December contracts). Currently, at NSE only two contracts are allowed to be traded.

SPAN® is a registered trademark of the Chicago Mercantile Exchange (CME) used here under licence

148
The table below summarizes the contract specifications.

Table: Contract Specification of Interest Rate Futures

Symbol 10YGS7
Market Type Normal (N)
Instrument Type FUTIRD
Contract Size INR 2 lakhs
Underlying 10 Year Notional 7% Coupon bearing Government of India (GOI) security.
Notional Coupon 7% with semi-annual Compounding
Tick size 0.25 paise or INR 0.0025
Trading hours 9:00 am to 5:00 pm (Monday to Friday on working days)
Contract trading cycle Four fixed quarterly contracts for entire year ending March, June, September
and December. To start with NSE has introduced two quarterly contracts
Last trading day Two business days prior to the last working day of the contract expiry month.
Quantity Freeze 1251 lots or greater
Base price Theoretical price of the 1st day of the contract.
On all other days, DSP of the contract.
Daily Settlement Price Volume Weighted average price of the contract during the time period specified
by the Exchange. If not traded in specified timings then the theoretical price of
the contract as determined by the exchange will be the daily settlement price
Price operating range +/-5 % of the base price
Position limits Clients Trading Members
6% of total open interest or ` 300 15% of the total open interest or ` 1000
crores whichever is higher crores whichever is higher
Initial margin SPAN Based Margin
Extreme loss margin 0.3% of the value of the gross open positions of the futures contract.
Settlement Daily settlement MTM: T + 1 in cash
Delivery settlement: T + 2 Last business day of the expiry month.

Delivery Settlement
Deliverable Grade Secu- GoI securities maturing at least 8 years but not more than 10.5 years from the
rities first day of the delivery month with
• Minimum total outstanding stock of ` 10,000 crore.
Conversion Factor The conversion factor would be equal to the price of the deliverable security
(per rupee of principal) on the first calendar day of the delivery month, to
yield 7% with semiannual compounding
Invoice Price Daily Settlement price times a conversion factor + Accrued Interest
Delivery day Last business day of the expiry month
Intent to Deliver Two business days prior to the delivery day.

TURNOVER
The trading value in interest rate futures for the period August 31, 2009 till March 31, 2009 was
` 2,975 crore (US $ 659.06 million) with total number of contracts of 160,894. The average traded
volume during the same period was ` 21.25 crore (US $ 4.71 million). The business growth of
interest rate futures is shown in Table 7-1.

Open Interest

As of March 31, 2010, the open interest of 758 interest rate futures contracts stood at worth
` 14.15 crore (US $ 3.13 million).

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Traded Value Records

The following table shows the record highs in interest rate futures traded at NSE.

Interest Rate Futures Date Number/Value

Record number of trades 31-Aug-09 1,475


Record number of contracts 31-Aug-09 14,559
Record daily turnover (` crore) 31-Aug-09 267.31

Top 5 Interest Rate Future Contracts

During 2008-09, top 5 Interest Rate Future contracts in terms of turn over are presented in the
table below.

Rank Contract Name Total Turnover Total Traded Value


Traded (%) to Currency
Instrument Contract Expiry Quantity ` cr US $ mn Futures Total
Type Symbol Traded Value
1 FUTIRD 10YGS7 18-Dec-09 118,797 2,203 488.03 74.06

2 FUTIRD 10YGS7 22-Mar-10 34,280 628 139.18 21.12


3 FUTIRD 10YGS7 21-Jun-10 7,817 143 31.76 4.82

Clearing and Settlement for Interest Rate Futures

For IRF, settlement is done at two levels: mark-to-market (MTM) settlement which is done on a
daily basis and final settlement which happens on last business day of the expiry month. Final
settlement involves physical delivery of the GOI securities from the list of deliverable grade
securities .

Mark-to-Market (MTM) Settlement

MTM is the difference between the today’s daily settlement price and previous day’s daily settle-
ment price. This process helps the clearing corporation in managing the counterparty risk of the
future contracts by requiring the party incurring a loss due to adverse price movements to part
with the loss amount on a daily basis.

To ensure a fair mark-to-market process, the clearing corporation computes and declares the
settlement price for each day for determining daily gains and losses. This price is called the “daily
settlement price” and represents the closing price of the futures contract for a given day.

The Daily Settlement Price is the closing price of the 10 year notional 7% coupon bearing GoI secu-
rities futures contract on the trading day. Daily Settlement price is the Volume Weighted Average
Price (VWAP) of:

• Trades in the last 30 minutes subject to at least 5 trades for a minimum aggregate notional
Face value of ` 10 crore, failing which

• Trades in the last 60 minutes subject to at least 5 trades for a minimum aggregate notional
Face value of ` 10 crore, failing which

• Trades in the last 120 minutes subject to at least 5 trades for a minimum aggregate notional
Face value of ` 10 crore.

In the absence of trading in the above stipulated time frame the theoretical price, to be deter-
mined by the Exchanges, would be considered as Daily Settlement Price. Theoretical pricing is

150
calculated on the basis of the cash and carry model using underlying prices of GOI securities from
the delivery basket.

The MTM gains and losses are calculated everyday by computing the difference between the fu-
tures settlement price of that day and of the preceding day. These gains (or losses) of each client
are credited into (or debited from) that particular client’s account.

Physical Settlement

During the expiry month, the contract is settled by physical delivery of deliverable grade securities
using the electronic book entry system of the existing Depositories (NSDL and CDSL) and Public
Debt Office (PDO) of the RBI. The delivery of the deliverable grade securities takes place on the
last business day of the delivery month. The short position holder in an expiring futures contract
holds the right to decide which security to deliver from the deliverable basket as specified by the
exchange. The underlying notional bond may not exist in reality and therefore, a basket of bonds
is identified which qualify for delivery, any one of which adjusted with conversion factor can be
used for delivery in lieu of the notional bond.

Margin Requirements

Broadly two types of margins are required from each investor entering into a futures contract;
namely, Initial Margin and Extreme Loss Margin. When the investors enter into a futures contract,
they have to deposit cash or liquid assets equal to the total of these two margins. The initial mar-
gin is arrived at by taking various scenarios of market price movements to protect the exchange
against the default risk of the parties and is subject to a minimum of 1.6% at any point of time.
Extreme loss margin on the other hand is equivalent to 0.3% of the contract amount.

Position Limits

As a risk management strategy to guard against heavy build-up of positions with one particular
entity, the exchange imposes limits on the size of positions that can be taken by various entities
in case of interest rate futures.

Client Level: The gross open positions of a client across all contracts should not exceed 6% of the
total open interest or ` 300 crores, whichever is higher.

Trading Member Level: The gross open positions of the trading member across all contracts should
not exceed 15% of the total open interest of the entire market or ` 1000 crores, whichever is
higher.

Clearing Member Level: No separate position limit is prescribed at the level of the clearing mem-
ber. However, the clearing member should ensure that his own trading position and the positions
of each trading member clearing through him is within the limits specified above.

Foreign Institutional Investors (FIIs): The sum of gross long position in (a) the debt market and (b)
the IRF market should not exceed their individual permissible limit for investment in government
of India securities as prescribed from time to time. Further, short position in Interest Rate Futures
contract should not exceed the sum stated above.

Risk Management

The Clearing Corporation of the Exchange i.e National Securities Clearing Corporation Ltd (NSCCL)
becomes the central counter party for all trades executed on exchange and thereby reduces the
credit risk faced by the participants. NSCCL also provides settlement guarantee which provides
market stability and integrity by ensuring that a single party default does not lead to any systemic
risk.

151
NSCCL manages timely settlements without defaults through ‘risk management’. The various steps
in risk management include implementing a risk estimation methodology, computation of margins,
collection of margins, and corrective action in case of non-collection. The implementation of risk
management is inter-alia through the margining framework.

Initial Margin

Initial margin shall be payable on all open positions of Clearing Members, upto client level, and shall
be payable upfront by Clearing Members. The CM in turn collects the initial margin from the TMs and
their respective clients. NSCCL has implemented the SPAN (Standard Portfolio Analysis of Risk) based
methodology for margining which is being used world over by various Exchanges/Clearing Corpora-
tion. SPAN is a portfolio based margining system.

Initial Margin shall include SPAN margins and such other additional margins that may be specified by
the Clearing Corporation from time to time. The parameters used in the computation of margins shall
be revised six times a day based on the prices at Begin of Day, 11:00 am, 12:30 pm, 2:00 pm, 3:30 pm
and at End of Day for IRF.

As an additional line of defense, ‘Extreme loss margin’ is charged as fixed percentage as specified
by regulators. This is also computed and deducted on an on line, real time basis from the available
collaterals.

On-line position monitoring system generates alerts whenever the margins of a member reaches 70%,
80%, 90% and 100% of the collaterals deposited at CM and TM level. NSCCL monitors the CMs limit for
initial margin and extreme loss margin violations, while TMs are monitored for initial margin violation.
Margin violations result in withdrawal of trading facility for all TMs of a CM in case of a violation by
the CM.

The open positions of the members are marked to market based on contract settlement price for
each contract at the end of the day. The difference is settled in cash on a T+1 basis.

As a Investor protection measures, a separate Settlement Guarantee Fund for this segment has
been created and maintained for the currency derivatives segment.

152
Table 7-1 : Business Growth of Currency Futures

Month/ Year No. of trading No. of Con- Trading Value Trading Value Average Daily Average Daily No. of Con- Trading Value Trading Value
days tracts ( ` Cr) (US $ mn) Trading Value Trading Value tracts ( ` Cr.) (US $ mn)
Traded ( ` Cr) (US $ mn)
Sep-08* 22 1,258,099 5,763 1,131 262 51.42 90,871 428 84.00
Oct-08 20 2,275,261 11,142 2,187 557 109.32 170,202 851 167.03
Nov-08 18 3,233,679 15,969 3,134 887 174.09 146,262 737 144.65
Dec-08 21 4,681,593 22,840 4,483 1,088 213.54 177,520 867 170.17
Jan-09 20 4,900,904 23,980 4,707 1,199 235.33 254,797 1,247 244.75
Feb-09 19 6,416,059 31,761 6,234 1,672 328.16 315,317 1,612 316.39
Mar-09 19 9,907,173 50,817 9,974 2,675 525.02 257,554 1,313 257.70
Aug-08-March 09 139 32,672,768 162,272 31,849 1,167 229.05 257,554 1,313 257.70
Apr-09 16 7,851,502 39,386 8,725 2,462 545.41 206,620 1,039 230.17
May-09 20 13,682,468 66,431 14,717 3,322 735.93 318,203 1,504 333.19
Jun-09 22 15,724,507 75,363 16,695 3,426 758.97 267,400 1,285 284.67
Jul-09 23 19,888,011 96,523 21,383 4,197 929.77 318,298 1,531 339.17
Aug-09 20 18,672,623 90,396 20,026 4,520 1001.33 394,756 1,933 428.22
Sep-09 19 22,251,896 107,789 23,879 5,673 1256.76 360,603 1,739 385.25
Oct-09 20 32,267,958 150,843 33,417 7,542 1670.80 447,812 2,109 467.21
Nov-09 20 33,794,926 157,554 34,903 7,878 1745.24 493,018 2,297 508.86
Dec-09 21 41,004,341 191,415 42,405 9,115 2019.27 406,200 1,896 420.03
Jan-10 20 60,223,714 276,742 61,307 13,837 3065.35 615,612 2,852 631.81
Feb-10 19 52,112,185 246,875 54,691 12,993 2878.38 637,465 2,976 659.28
Mar-10 20 61,132,852 283,292 62,759 14,165 3138.02 427,873 1,964 435.09
2009-10 240 378,606,983 1,782,608 394,907 7,428 1645.55 427,873 1,964 435.09
* Includes turnover details for August 29,2008- the first day of trading of Currency futures at NSE.

153
Table 7-2 : Settlement Statistics In Currency Futures Segment

Month/Year Currency Futures


MTM Settlement Final Settlement
` cr US $ mn ` Cr US $ mn
Aug-08 0.22 0.05 --
Sep-08 22.86 5.06 0.77 0.17
Oct-08 52.33 11.59 0.04 0.01
Nov-08 58.56 12.97 0.95 0.21
Dec-08 58.00 12.85 1.14 0.25
Jan-09 33.76 7.48 0.31 0.07
Feb-09 59.89 13.27 0.54 0.12
Mar-09 76.19 16.88 1.82 0.40
Aug ‘08-Mar ‘09 361.80 80.15 5.57 1.23

Table 7-3 : Business Growth of Interest Rate Futures

Month/ No. of No. of Trading Trading Average Average Open Interest at the end of
Year trading Con- Value Value Daily Daily No. of Trading Trading
days tracts ( ` Cr) (US $ Trading Trading Con- Value Value
Traded mn) Value Value tracts ( ` Cr.) (US $
( ` Cr) (US $ mn)
mn)
Aug-09 1 14559 267.31 59.22 267.31 59.22 1,893 34.66 7.68
Sep-09 19 79,648 1,473.37 326.40 77.55 17.18 4,952 92.28 20.44
Oct-09 20 21,198 394.09 87.30 19.71 4.37 6,128 113.57 25.16
Nov-09 20 18,134 337 74.66 16.84 3.73 6,600 124 27.47
Dec-09 21 11,687 215.32 47.70 10.25 2.27 2,305 42.22 9.35
Jan-10 20 6443 118.82 26.32 5.94 1.32 2,576 47.77 10.58
Feb-10 19 3,124 57.415 12.72 3.02 0.67 3,547 64.92 14.38
Mar-10 20 6,101 111.38 24.67 5.57 1.23 758 14.15 3.13
Aug 2009- 140 160,894 2,975.00 659.06 21.25 4.71 758 14.15 3.13
Mar2010
Note: Trading in Interest Rate Futures on Currency Derivatives Segment was introduced on August 31,2009

Table 7-4: Settlement Statistics in Interest Rate Futures Segment


(Amount in ` Cr.)
Month/Year MTM Settlement Final Settlement
` Cr US $ mn ` Cr US $ mn
Aug-09 0.07 0.02 Not Applicable
Sep-09 3.86 0.86 Not Applicable
Oct-09 5.24 1.16 Not Applicable
Nov-09 7.15 1.58 Not Applicable
Dec-09 5.19 1.15 72.42 16.04
Jan-10 2.98 0.66 - --
Feb-10 1.36 0.30 - --
Mar-10 1.98 0.44 37.24 8.25
2009-10* 27.82 6.16 109.66 24.29
The final settlement in Interest Rate Futures is physical settlement
* Figures are from August 31, 2009 commencement of IRF

154
Investor Services,
Arbitration 8
156
Investor Services, Arbitration 8
Investors are the backbone of the securities market. Protection of their interests is paramount
for NSE. In furtherance of their interests, NSE has put in place systems to ensure availability
of adequate, up-to-date and correct information to investors to enable them to take informed
decisions. It ensures that critical and price-sensitive information reaching the exchange is made
available to all classes of investor at the same point of time. Such price-sensitive information
as bonus announcements, mergers, new line of business, etc. received from the companies is
disseminated to all the market participants through the network of NSE terminals all over India.
Action is initiated by the Exchange where any kind of price-sensitive information is not provided to
the Exchange at the prescribed time. It ascertains the veracity of rumours and disseminates facts
in the interest of investors. It also conducts various seminars and programs for the investors all
over the country with a view to educate them on their rights and obligations. They are also made
aware of the precautions they need to take while dealing in the securities market. It makes an
audit trail available on request for all transactions executed on NSE to enable investors to counter-
check trade details for the trades executed on his behalf by the member. It has also prescribed and
makes effort to ensure the implementation of various safeguards like time schedules for issuing
contract notes, for receiving funds and securities purchased by investors, segregation of client
funds and securities from those of members, etc. The Exchange has also launched a facility to
verify trades on the NSE website. Using this facility, an investor who had received a contract note
from the trading member of the Exchange can check whether the trade has been executed.

Investor Services
NSE has put in place a system for redressal of investor grievances for matters/issues related to/
against trading members/companies. The Investor services Cell of NSE is manned by a team of
professionals possessing relevant experience in the areas of securities markets, company and legal
affairs, and specially trained to identify problems faced by the investor and to find and effect a
solution quickly. It takes up complaints in respect of trades executed on the NSE through its NEAT
terminal and routed through the NSE trading member or SEBI registered sub-broker of NSE trading
member and trades pertaining to companies traded on NSE. The status of receipt and disposal of
investor grievances by the Exchange is presented in Table 8-1.

Investor Protection Fund

Some cushion to the interests of investors is provided by the Investor Protection Fund (IPF) set
up by the stock exchange. The exchanges maintains an IPF to take care of investor claims, which
may arise out of non settlement of obligations by the trading member, who has been declared a
defaulter, in respect of trades executed on the Exchange. The maximum amount of claim payable
from the Fund to the investor is reviewed by Exchange periodically maximum amount payable out
of IPF was ` 10 lakhs upto December 31, 2007 and same has been enhanced to ` 11 Lakhs in respect
of claims against members declared defaulter after January 1, 2008.

Arbitration
Arbitration is a speedy and alternative dispute resolution mechanism provided by the Exchange for
resolving disputes between the trading members and between a trading member and his client, in
respect of trades done on the Exchange. The arbitration mechanism is provided by the Exchange in
all its Regional offices to facilitate the speedy dispute resolution mechanism. The parties to dispute
appoint an arbitrator from the panel of arbitrators maintained by the Exchange and approved by
SEBI. The arbitrator(s) pronounces an award after going through various documents submitted by

157
the parties and hearing them. The status of arbitration matters with the Exchange as at end March
2010 is presented in Table 8-2.

In order to ensure transparency in grievance redressal available at Stock Exchanges, SEBI has
advised the exchanges to disclose complaints/arbitration/penal action against trading members/
listed companies on their website. It is envisaged that transparency will also improve the general
functioning of the market by providing investors the means to make informed choice. NSE
has been disseminating on the website the investor complaints and arbitration details in the
various prescribed reports.

158
Table 8-1: Receipt and Disposal of Investor Grievance

Year Against Members Against Companies


Pending Received Disposed Pending Pending Received Disposed Pending
at the at the at the at the
beginning end beginning end

1994-95 – – – – – 2 – 2
1995-96 – 56 13 43 2 39 17 24
1996-97 43 320 72 291 24 415 102 337
1997-98 291 259 439 111 337 576 716 197
1998-99 111 383 347 147 197 592 380 409
1999-00 147 197 298 46 409 808 842 375
2000-01 46 263 201 108 375 1,095 1,111 359
2001-02 108 789 710 187 359 607 667 299
2002-03 187 345 418 114 299 587 626 260
2003-04 114 282 253 143 260 527 558 229
2004-05 143 435 409 169 229 1,304 1,128 405
2005-06 169 1,128 1,051 246 405 1,023 1,200 228
2006-07 246 1,367 1,460 153 228 774 769 233
2007-08 153 1,915 1,101 967 233 964 888 309
2008-09 967 5,191 5,020 1,138 309 734 983 60
2009-10 1138 5892 6226 804 60 881 772 169

Table 8-2: Status Report of Arbitration Matters

Year No. of Cases Withdrawn Awards Pending


Received

1998 164 2 162 0


1999 CM 153 5 148 0
1999 WDM 2 1 1 0
2000 CM 149 6 143 0
2000 WDM 1 0 1 0
2001 CM 342 19 323 0
2001 WDM 0 0 0 0
2001 F&O 1 0 1 0
2002 CM 275 7 268 0
2002 WDM 0 0 0 0
2002 F&O 5 0 5 0
2003 CM 136 4 132 0
2003 WDM 0 0 0 0
2003 F&O 17 0 17 0
2004 CM 119 6 113 0
2004 WDM 0 0 0 0
2004 F&O 42 3 39 0
2005 CM 138 3 135 0

Contd...

159
Contd...
Year No. of Cases Withdrawn Awards Pending
Received

2005 WDM 0 0 0 0
2005 F&O 66 0 66 0
2006 CM 224 5 219 0
2006 WDM 0 0 0 0
2006 F&O 191 8 183 0
2006 CO 1 0 1 0
2007 CM 275 9 266 0
2007 F&O 221 3 218 0
2008 CM upto March 2008 61 1 60 0
2008 F&O upto March 2008 116 1 115 0
2008-09 CM 758 21 699 38
2008-09 F&O 2,433 98 2195 140
2009-10 CM 517 52 253 212
2009-10 F&O 502 43 260 199
Total 6,909 297 6,023 589

160
Knowledge Initiative 9
162
Knowledge Initiative 9
An important aspect of financial reforms is the development of a pool of human resources having
right skills and expertise to help enhance quality intermediation in the financial markets. Among
the financial markets, securities market is growing tremendously in terms of size, new asset classes
and huge number of investors. Therefore, it has become quintessential to disseminate the related
knowledge in such a way that increasing number of people can benefit from it.

NSE aims at cultivating a culture of knowledge to help investors take informed decisions relating
to the securities market. It has initiated a number of educational initiatives such as certification
programs, high school level courses and development of educational materials on financial
markets.

NSE began its journey towards its knowledge initiative in the year 1998, when it introduced NSE's
Certification in Financial Markets (NCFM), taking into account international experience and the
needs of the Indian financial markets. It was introduced with a view of protecting interests of
investors in financial markets and more importantly, for minimizing risks of losses arising out of
deficient understanding of markets and instruments.

About NSE’s Certification in Financial Markets (NCFM)


NCFM is an on-line testing system which tests the practical knowledge and skills required to operate
in the financial markets. NCFM has become extremely popular and is sought by the candidates as
well as employers due to its unique on-line testing and certification programme. NCFM offers a
comprehensive range of modules covering many different areas in finance (Table 9-1). The entire
process from generation of question paper, testing, assessing, scores reporting and certifying is
fully automated. It allows tremendous flexibility in terms of testing centres, test dates and test
timing and provides easy accessibility and convenience to candidates. (As of June 2010, 5,05,989
candidates have taken 10,22,482 NCFM tests.)

New Modules introduced under NCFM in 2009-10


During the year 2009-10, there were a wide range of new NCFM modules introduced such as
Currency Derivatives: A Beginner’s Module, Equity Derivatives: A Beginner’s Module, Interest Rate
Derivatives : A Beginners module, Investment analysis and Portfolio Management and a module on
Commercial Banking.

Currency Derivatives: A Beginner’s Module: This module has been designed with a view to
improve awareness about the ‘Currency Derivatives’ product, which has been made available for
trading in the Indian securities market in 2009. The course content is structured to help a beginner
understand what the product is, how it is traded and what uses it can be put to.

Equity Derivatives: A Beginner’s Module: This module has been prepared with a view to equip
candidates with basic but essential information and concepts pertaining to the equity derivatives
markets.

Investment Analysis and Portfolio Management: Investment Analysis and Portfolio Management is
a growing field in the area of finance. This module aims at creating a better understanding of the
various concepts/principles related to investment analysis and portfolio management.

Interest Rate Derivatives: A Beginner’s Module: This module attempts to explain the fundamental
concepts of the product in a simple, easy-to-understand way. Interest rate risk management is

163
becoming increasingly important not just for the financial sector, but for the household sectors
as well. Interest rate derivative products are the primary instruments available to manage such
risks. This module aims at creating a better understanding of the concepts underlying the money
market and giving insights into the motives of and operations related to the trading of interest
rate derivatives.

Commercial Banking in India: A Beginner’s Module: For the first time, the NSE introduced a new
module relating to the banking sector. The module aims at familiarizing you about the fundamentals
of banking as well as the policies and practices followed in the Indian banking system. The module
would be a very useful resource for those who are contemplating a career as a banker and even to
those who are already in the field of banking or finance.

NSE Certified Market Professional (NCMP)


NCFM has gained extreme prominence among all the candidates and has led them to take more
and more NCFM tests in various arenas. To further help the candidates demonstrate relative
accomplishments in NCFM tests, a new certification called NCMP (NSE Certified Market Professional)
was introduced in August 2009. NSE Certified Market Professional (NCMP) certificate is issued to
those candidates who have cleared NCFM modules in the following hierarchy.
• NCMP Level 1 : 3 – 4 modules
• NCMP Level 2 : 5 – 6 modules
• NCMP Level 3 : 7 – 8 modules
• NCMP Level 4 : 9 or more modules

CBSE – NSE joint certification in Financial markets


CBSE and NSE introduced a joint certification in Financial Markets for std. XI and XII. The course,
titled ‘Financial Markets Management’ had been introduced by CBSE during 2007-2008. This was
the first such exercise to introduce financial literacy in schools. The new course comprises of
various subjects, such as Languages, Economics, Business Studies, Accounting for Business etc.
Besides these, two financial market related subjects, ‘Introduction to Financial Markets – I’ and
‘Introduction to Financial Markets – II” are taught in Std. XI and XII respectively. Students opting
for the course are required to take the NCFM on-line tests in ‘Financial Markets: A Beginners
Module’ in Std. XI and both “Capital Markets (Dealers) Module and Derivatives Markets (Dealers)
Module”, in Std. XII. This joint initiative has completed three years and till 2009-10, 93 schools
have opted for CBSE-NSE certification and 1,664 candidates have successfully completed the CBSE
– NSE joint certification in Financial markets.

NSE’s Certified Capital Market Professionals (NCCMP)


NSE Certified Capital Market Professional (NCCMP) is a course launched as a joint-cooperation
between National Stock Exchange of India Limited and reputed Educational Institutes across the
country to impart knowledge and awareness about the securities market and thereby upgrade the
skills and proficiency of the participants (students) of the course. The NCCMP course covers the
topics such as Introduction to Financial Markets, Derivatives, trading system, Macro Economics,
Fundamental Analysis, Technical Analysis, Market Operations, Currency Futures, Discussions on
Financial Newspapers / Journals and Practical Training.

It is a 100 hours program (5 – 6 months) comprising theory and practical training in capital markets.
As of June 2010, NSE has tied up with the following colleges/ universities for NCCMP.

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Sr. No. Name of Institute/College/University Location

1 The St. Xavier’s College Kolkata


2 The Loyola Institute of Vocational Education Chennai
3 Rajagiri Centre For Business Studies Cochin
4 PSG Institute of Management, PSG College of Technology Coimbatore
5 Karunya University Coimbatore
6 SCSVMV University Kanchipuram
7 Institute of Finance & International Management Bangalore
8 Manipal Universal Learning Pvt. Ltd. Bangalore
9 CMS College of Engineering Namakkal
10 Marwadi Education Foundation’s Group of Institutions Rajkot
11 Knowledge Academy Ahmedabad
12 Stratadigm Education & Training Pvt Ltd Hyderabad
13 Siva Sivani Institute of Management Hyderabad
14 Badruka Institute of Foreign Trade Hyderabad
15 Shaheed Sukhdev College of Business Studies, University of Delhi Delhi
16 Guru Nanak Institute of Management Delhi
17 Hubli Education Trust-Institute of Management Studies Hubli
18 MAEER’s MIT School of Business (MIT-SoB) Pune
19 Sydenham College of Commerce and Economics Mumbai

NSE – Manipal Education Training Programs


NSE has collaborated with Manipal Education to impart training relating to the stock markets with
the objective of improving the participants’ understanding of how the stock markets function.
These programs are designed to cater to people interested in a career in stock markets and other
related financial services and also to those who simply wish to learn about the functioning of the
market.

Various programs offered under this training are given below:

S. No. Program Duration Program Contents

1 Basics of stock markets 1 day □ Capital markets : An overview


□ National Stock Exchange (NSE)
□ Membership at NSE, Listing & Depository
□ Client – Broker relationship
□ Stock market index
□ Trading, Clearing & Settlement
□ Investor services cell

2 Derivatives – Trading, 2 days □ Introduction to Derivatives


Clearing & Settlement □ Introduction to Futures and Options
□ Applications of Futures and Options
□ Trading, Clearing & Settlement

3 Capital Markets – Trading, 2 days □ Introduction to Capital Markets


Clearing & Settlement □ Trade management
□ Clearing and Settlement
□ Client management
□ Risk management

Contd...

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Contd...

S. No. Program Duration Program Contents

4 Fundamental Analysis 2 days □ Economic analysis & Industry analysis


□ Company analysis
□ Interpretation of financial Statements
□ Ratio analysis & Funds flow analysis
□ Time value of money & Equity valuation
□ Economic Value Add (EVA)

5 Technical Analysis 4 days □ Basics of technical analysis


□ Construction of charts
□ Reversal and Continuation Pattern
□ Moving Averages & Momentum oscillators

NSE Research Initiative


In order to improve market efficiency and to set international benchmarks in the securities industry,
NSE launched the NSE Research Initiative in January 2000 with a view to develop an information
base and a better insight into the working of securities market in India. The studies completed/
under progress under the initiative is presented in Table 9-2. The completed research papers and
the paper under progress are provided on the NSE website www.nseindia.com.

Investor Awareness and Education Programmes


NSE has been carrying out investor awareness seminars on a regular basis in various parts of
the country. During the seminars, the investors are educated about their rights and obligations,
new financial products, investment avenues and certification programmes. Various informative
booklets and material are also distributed at the seminars. Besides covering the investors, the
Exchange also reaches out to a larger number of persons across the country as a part of a Financial
Literacy campaign. The purpose is to educate the masses about investing, various investment
avenues, benefits of investing in equities and upgrade the financial literacy and awareness among
the masses.

The higher secondary schools and colleges is also one of the focus areas in this exercise since an
early education on investing helps the individual to take proper decision while investing in future.
Further, this also helps in increasing the overall equity investor base in the country over a period
of time with more people being acquainted with the benefits of investing in the equity markets.

During 2009-10, there were 949 investor awareness and education programmes conducted by
NSE.

Visit to NSE
With the objective of creating awareness about the securities market among the students
fraternity, NSE has been organizing ‘Visit to NSE’ programs. Under this program, students from
various schools/ colleges / universities visit NSE to attend sessions on stock exchange structure,
its operations, products traded on it etc. This program is conducted in the Mumbai office as well
as regional offices located at Delhi, Kolkatta and Chenai. 41 colleges have visited the Exchange
since August 2009.

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Table 9-1 A : NCFM Modules

Sr. Name of Module Fees Test No. of Maximum Pass Certificate


No. (`) Duration Questions Marks Marks Validity
(in (%)
minutes)
(in years)
1 Financial Markets: A Beginners’ 1500 120 60 100 50 5
Module
2 Mutual Funds : A Beginners’ 1500 120 60 100 50 5
Module
3 Currency Derivatives: A Beginner’s 1500 120 60 100 50 5
Module
4 Equity Derivatives: A Beginner’s 1500 120 60 100 50 5
Module
5 Interest Rate Derivatives: A 1500 120 60 100 50 5
Beginner’s Module
6 Commercial Banking in India: A 1500 120 60 100 50 5
Beginner’s Module
7 Securities Market (Basic) Module 1500 105 60 100 60 5
8 Capital Market (Dealers) Module * 1500 105 60 100 50 5
9 Derivatives Market (Dealers) 1500 120 60 100 60 3
Module **
10 FIMMDA-NSE Debt Market (Basic) 1500 120 60 100 60 5
Module
11 Investment Analysis and Portfolio 1500 120 60 100 60 5
Management Module
12 NSDL–Depository Operations 1500 75 60 100 60 # 5
Module
13 Commodities Market Module 1800 120 60 100 50 3
14 Surveillance in Stock Exchanges 1500 120 50 100 60 5
Module
15 Corporate Governance Module 1500 90 100 100 60 5
16 Compliance Officers (Brokers) 1500 120 60 100 60 5
Module
17 Compliance Officers (Corporates) 1500 120 60 100 60 5
Module
18 Information Security Auditors 2250 120 90 100 60 2
Module (Part-1)
Information Security Auditors 2250 120 90 100 60
Module (Part-2)
19 Options Trading Strategies Module 1500 120 60 100 60 5
20 FPSB India Exam 1 to 4*** 2000 120 75 140 60 NA
per
exam
21 Examination 5/Advanced 5000 240 30 100 50 NA
Financial Planning
* Candidates have the option to take the CMDM test in English, Gujarati or Hindi language. The workbook
for the module is presently available in ENGLISH.
** Candidates have the option to take the DMDM test in English, Gujarati or Hindi language. The workbook
for the module is also available in ENGLISH, GUJARATI and HINDI languages.
# Candidates securing 80% or more marks in NSDL-Depository Operations Module ONLY will be certified as
‘Trainers’.
*** Modules of Financial Planning Standards Board India (Certified Financial Planner Certification) i.e. (i)
Risk Analysis & Insurance Planning (ii) Retirement Planning & Employee Benefits (iii) Investment Planning
and (iv) Tax Planning & Estate Planning.
The curriculum for each of the module (except FPSB India Exam 1 to 4 and Examination 5/Advanced
Financial Planning) is available on our website: www.nseindia.com > NCFM > Curriculum & Study
Material.
Contd...

167
Contd...
Table 9-1 B NISM Modules

Sr. Name of Module Fees Test No. of Maximum Pass Certificate


No. (`) Duration Questions Marks Marks Validity
(in (%)
minutes)
(in years)
1 NISM-Series-I: Currency 1000 120 60 100 60 3
Derivatives Certification
Examination
2 NISM-Series-II-A: Registrars to an 1000 120 100 100 50 3
Issue and Share Transfer Agents –
Corporate Certification
Examination
3 NISM-Series-II-B: Registrars to an 1000 120 100 100 50 3
Issue and Share Transfer Agents –
Mutual Fund Certification
Examination
4 NISM-Series-IV: Interest Rate 1000 120 100 100 60 3
Derivatives Certification
Examination
5 NISM-Series-V-A: Mutual Fund 1000 120 100 100 50 3
Distributors Certification
Examination

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Table 9-2: Studies under the NSE Research Initiative

SL. Title of Study


No.
Completed Papers
1 Econometric Estimation of Systematic Risk of S&P CNX Nifty Constituents

2 Stock Market Development and its Impact on the Financing Pattern of the Indian Corporate Sector

3 Efficiency of the Market for Small Stocks


4 Determinants of Financial Performance of Indian Corporate Sector in the Post-Liberalization Era:
An Exploratory Study
5 Should pension funds invest in equities? An analysis of risk-return tradeoff and asset allocation
decisions
6 Changes in liquidity following exposure to foreign shareholders: The effect of foreign listings,
inclusion in country funds and issues of American Depositary Receipts
7 Is the Spread Between E/P Ratio and Interest Rate Informative for Future Movement of Indian
Stock Market?
8 Merger Announcements and Insider Trading Activity in India: An Empirical Investigation

9 Achieving an Individual Investor Friendly System using the power of the Internet

10 Improved Techniques for using Monte Carlo in VaR estimation

11 Short selling and its Regulation in India in International Perspective

12 Empirical investigation of multi-factor asset pricing models using Artificial Neural Network
13 Idiosyncratic Factors in Pricing Sovereign Bonds: An Analysis of the Government of India Bond
Market
14 The Extreme Value Volatility Estimators and Their Empirical Performance in Indian Capital Markets

15 Equity Market Interlinkages: Transmission of Volatility - A Case Of US and India

16 Institutional Investors and Corporate Governance in India

17 Dividend policy of Indian Corporate Firms : An Analysis of Trends & Determinants

18 Market Microstructure Effects of Transparency of Indian Banks

19 Futures Trading, Information and Spot Price Volatility of NSE-50 Index Futures Contract

20 Measuring productive efficiency of stock exchanges using price adjustment coefficients

21 Do Futures and Options trading increase stock market volatility?


22 Section switching stock market price effect in the Indian capital market and the policy
implications thereof
23 Study of Common Stochastic Trend and Co-integration in the Emerging Markets - A case study India,
Singapore and Taiwan
24 Market Discipline in the Indian Banking Sector: An Empirical Exploration

25 Conditional CAPM and Cross sectional returns - A study on Indian Securities Market

26 Evaluating index fund implementation in India

27 Measuring Volumes in the Indian Financial Markets Some Terminological and Conceptual Issues
28 Corporate Social Responsibility Initiatives by NSE NIFTY Companies - Content, Implementation
Strategies & Impact.
29 Measures for Improving Common Investor Confidence in Indian Primary Market : A Survey
30 Informational Content of Trading Volume And Open Interest – An Empirical Study of Stock Options
Market In India
31 An analysis of the Dynamic Relationships Between South Asian and Developed Equity Markets

32 Corporate Governance and Market reactions

33 Insider Ownership and Corporate Governance

34 Improving Index Fund Implementation in India


Contd...

169
Contd...
SL. Title of Study
No.
35 Seasoned Capital Offerings: Earnings Management and Long-Run Operating Performance of Indian
Firms
36 Volatility Spillovers Across Stock, Call Money And Foreign Exchange Markets

37 Understanding the Microstructure in Indian Markets

38 Price and Volume Effects of S&P CNX Nifty Index Reorganization


39 Lead-Lag relationship between Equities and Stock Index Futures Market and its variation around
Information Release: Empirical Evidence from India
40 On The New Transformation-Based Approach To Measuring Value-At-Risk: An Application To Forex
Market In India
41 Optimal Hedge Ratio and Hedging Effectiveness of Stock Index Futures : Evidence from India

42 Evaluating Corporate Governance Risk: A Fuzzy logic approach


43 Do the S&P CNX Nifty Index and Nifty Futures Really Lead/Lag?Error Correction Model: A
Cointegration Approach
44 Under-Pricing and long run performance of Initial Public Offerings in Indian Stock Market

45 Price & liquidity effects of stock split: An Empirical evidence from Indian stock market

46 Risk Return Dynamics of Derivative Based Investment Strategies.

47 Pricing of Options on Defty

48 Price Limits Are they Worth the Price?

49 Volatility Persistence and the Feedback trading Hypothesis: Evidence from Indian Markets

50 Dynamic Interaction among Mutual Fund Flows, Stock Market Return and Volatility

51 Correlation Dynamics in Equity Markets: Evidence from India

52 Price Discovery and Arbitrage Efficiency of Indian Equity Futures and Cash Markets

53 Do Hetrogeneous beliefs affects trading volume and asset prices.

55 Forecasting Of Indian Stock Market Index Using Artificial Neural Network


56 Global Stock Futures : A Diagnostic Analysis Of a Selected Emerging And Developed Markets With
Special Reference To India
57 Price Behaviour around Block Trades on the National Stock Exchange of India.

58 Does the Stock Market Overreact? An empirical evidence of the Contrarian Returns from the Indian
Markets
59 Dynamic Relationship between Stock Return, Trading Volume and Volatility:Evidence from Indian
Stock Market
60 Stock Market Seasonality: A Study of the Indian Stock Market

61 Determinants and the Stability of Dividends in India

62 Optimal Investment Horizons for S&P CNX Nifty and its Components

63 Examining Association between S&P CNX Nifty and selected Asian and US Stock Markets

Papers Under Progress

1 Some Preliminary Examination of Predictive Ability of India VIX

2 Forecasting Volatility using High Frequency Data

3 Imbalance created because of structured products in India equity market


4 Efficiency of Indian Stock Market: A study of NSE

170

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