SSIO – II
Established in 1992, NSE entered the Indian Exchange market as the country’s first demutualised exchange (nearly a century after the BSE) and disrupted the market. NSE was the first to adopt technology, making online trading with electronic settlement possible. NSE’s early entry into the Equity derivatives segment helped them garner a dominant market share in the segment (as liquidity is king).
Exchanges are amongst the rare ‘growing annuities’, and sticky ‘liquidity’ renders the industry quasi-monopolistic, where ‘winner takes all’. This has been proven globally with most developed markets following a 80:20 rule and NSE dominating (90% market share) the Indian Exchange space. Liquidity in NSE’s cash & derivative segment has acted as a virtuous circle with NSE now holding a 93% market share in cash equities, and 100% share in derivatives. NSE has had the highest turnover, and average daily turnover every year since 1995, and ranks among the Top 10 exchanges globally.