What is NSE vs BSE? - Features, Difference, Which is Better?

Introduction To Exchanges: BSE and NSE

Stock exchanges play an important role in the country’s financial markets. It provides a platform to investors and traders to buy and sell listed securities. A strong exchange reflects a stable economy, attracts foreign investment and builds transparency among all market participants.

The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the two prominent exchanges in India.

Bombay Stock Exchange (BSE)

BSE was established in 1875, which is India’s oldest stock exchange. It played a key role in shaping India's financial markets before and after independence.

BSE was founded by the Native Share and Stock Brokers Association. Initially, the trading was conducted on open floors inside the BSE building, where brokers gather to buy and sell shares on behalf of investors.

In 1986, BSE introduced its benchmark index named SENSEX. It is India’s first equity index, which tracks the performance of India’s top 30 listed companies across different sectors. Over the years, as the electronic trading system came into picture, BSE completely shifted to electronic trading, making buy/sell faster and more transparent.

Features of BSE

Some of the key features of BSE are:

• Largest number of listed companies: BSE has over 5600+ listed companies, making it one of the largest exchanges in the world.
• Electronic trading: Currently, BSE operates in a fully electronic trading system.
• Product offering: It offers equities, derivatives, debt instruments and mutual funds.

National Stock Exchange (NSE)

NSE was established in 1992, following recommendations from the Pherwani committee to modernise India's capital market. NSE got SEBI’s recognition in 1993 and began operations in 1994.

NSE is one of India's leading exchanges, known for its fully electronic trading systems. NSE introduced a fully automated, screen-based trading system, eliminating the need for physical trading.

On 22 April 1996, NSE introduced the benchmark index NIFTY50, which tracks the top 50 listed companies across different sectors. Over time, NSE expanded its offerings, which included derivatives, commodity and currency derivatives.

Features of NSE

• Fully electronic trading platform: NSE was the first exchange in India to adopt dematerialisation.
• High Liquidity: NSE has la arge trading volume, which provides high liquidity for shares traded.
• Short settlement cycles: The settlement process reduces risk and delays.
• Wide market access: It supports over 3,000 VSAT terminals.

NSE vs BSE: Differences

NSE and BSE both provide platforms for trading securities; they differ in several aspects like trading volume, number of listed companies and more. Here are the differences.

NSE or BSE - Which is Better?

NSE and BSE are both equally important exchanges for the functioning of financial markets. NSE has developed a robust system for derivative trading, which attracts high liquidity from traders. Whereas, BSE still has a long way to go in derivatives to reachthe NSE level trading volume.

On the other hand, BSE has 5600+ listed companies compared to NSE, which has 2700 companies. Therefore, investors looking for a wide range of companies to invest inthe BSE are better. However, traders who prefer to trade derivatives can go with NSE.