Difference Between NSE and BSE – Accurate Comparison

Being stock exchanges, NSE and BSE are among the most important financial platforms and intermediaries in India. These are also among the largest stock exchanges not just in India but globally as well.

Despite being in the same nature of business, it would be a grave mistake to assume that both the companies are similar. On the contrary, they are as similar as chalk and cheese. In this article, we are going to discuss the features, history, and differences between NSE and BSE. If you are a trader or investor and simply want to understand about NSE and BSE difference and how it affects you, jump straight to the bottom of this article.

What are NSE and BSE in the stock market?

For the uninitiated, NSE stands for National Stock Exchange and similarly, BSE stands for Bombay Stock Exchange. Please note that it is Bombay and not Mumbai (even after a change of name of the city). There is a lot more to BSE and NSE than just the full forms and we’ll see (read) more of it in the article.

History of BSE and NSE

Most people see BSE and NSE as competitors and this notion is not entirely incorrect. It needs us to go and study the history of BSE. This is where BSE takes a lead in the NSE vs BSE debate. BSE was started in 1875 and it has the distinction of being the oldest stock exchange in Asia. BSE was set up by a group of brokers and naturally, its policies and rules were framed to benefit brokers and not necessarily investors.

On the other hand, NSE is a recent player and was established in 1992 by a slew of financial institutions in order to bring more transparency in financial markets. The fact that BSE was more of a ‘brokers’ club’ opened space for a new entrant and this led to the creation of NSE. The stock exchange started operations in 1994 and has several firsts to its credit as we will see further in the article.

Difference between NSE and BSE – Key Statistics

What is NSE?

As mentioned above, NSE came into being with a mandate of making securities transactions more transparent. The prevailing ecosystem in stock exchanges was quite archaic in almost every aspect. While trading was characterized by an open outcry system, it was not uncommon to see investors losing to the greed of intermediaries like brokers.

NSE changed all of this with its introduction of fully automated and dematerialized electronic trading which matched buyers and sellers. This naturally shrunk the buy-sell spreads and made the process more efficient. This is another key point in NSE and BSE difference i.e. the former started as an electronic trading platform while BSE followed much later.

NSE Clearing Limited (NCL) – a wholly-owned subsidiary of NSE – became the first clearing corporation to introduce settlement guarantees. In March 2022, NSE IFSC became the first international exchange at IFSC to physically settle US stocks.

Currently, NSE conducts transactions in the wholesale debt, equity, and derivative markets.

Major indices of NSE

• Nifty 50
• Nifty 100
• Nifty Next 50
• Nifty Midcap 50
• Nifty Smallcap 250
• Bank Nifty
• India VIX

Market leadership  

• Ranked first globally in the derivatives segment based on the total number of contracts traded during the calendar year 2021
• Ranked second globally in currency futures in the calendar year 2021
• Ranked first globally in currency options in the calendar year 2021

What is BSE?

BSE is not only the oldest stock exchange in India but in Asia too. As of 31 March 2022, there were 5,350 companies listed on the BSE with a market capitalization of INR 2,64,00,000 crore. In its long history of over 100 years, BSE to has a lot of firsts to its name. In 1986, it launched India’s first equity index named BSE Sensex. It also pipped NSE in launching a dedicated platform for SMEs by introducing the BSE SME platform in March 2012 (here is a primer on SME segment).

Fun Fact – It was a stock market analyst and columnist Deepak Mohoni who coined the term Sensex

BSE also has the distinction of being the first stock exchange in India to list itself in 2017.

As we noticed earlier, BSE was more of a traditional player while NSE started with a technology edge. Nevertheless, BSE has subsequently caught up with its rival.

Major indices of BSE

• BSE Sensex
• BSE Auto
• BSE Bankex
• BSE Capital Goods
• BSE Consumer durables
• BSE Fast-moving consumer goods

Market leadership  

• Ranked second globally in currency options in the calendar year 2021
• Ranked fourth globally in currency futures in the calendar year 2021
• BSE SME had a market share of 61% in the SME segment in India in FY2021-22
• BSE StAR MF platform was India’s largest mutual fund distribution Infrastructure with close to 85% of the market share amongst exchange-based platforms

NSE vs BSE – Which one is better?

This is another common question that investors and traders struggle with in NSE vs BSE debate. While placing an order and expecting the order to get executed, it doesn’t really matter to the investor which stock exchange has a richer history.

As noted above, there is a massive difference between NSE and BSE stocks and the latter clearly has an advantage in terms of absolute numbers. If you’re someone who is looking to trade in a stock that is listed on a specific stock exchange, you really have no choice but to trade on that particular exchange only. While BSE has an upper hand in this example, it should be noted that several of the stocks listed exclusively on BSE are illiquid in nature.

Regular traders have also noted the difference between NSE and BSE share prices of the same security. They should also be an important consideration for readers and investors who would like to get the best prices with enough liquidity. NSE clearly trumps its competitor in this case.