NATIONAL STOCK EXCHANGE

INTRODUCTION TO INDIAN MARKETS

THERE ARE TWO TYPES OF MARKETS IN INDIA
1. MONEY MARKET
Money market is a market for debt securities that pay off in the short term usually less than one year, for example
the market for 90-days treasury bills. This market encompasses the trading and issuance of short term non equity
debt instruments including treasury bills, commercial papers, bankers acceptance, certificates of deposits, etc.
In other word we can also say that the Money Market is basically concerned with the issue and trading of securities
with short term maturities or quasi-money instruments. The Instruments traded in the money-market are Treasury
Bills, Certificates of Deposits (CDs), Commercial Paper (CPs), Bills of Exchange and other such instruments of
short-term maturities (i.e. not exceeding 1 year with regard to the original maturity)
2. CAPITAL MARKET
Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both
equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as
organized markets like stock exchanges.
Capital market can be divided into Primary and Secondary Markets.
i.

PRIMARY MARKET
In the primary market, securities are offered to public for subscription for the purpose of raising capital or
fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are
traded amongst investors. Secondary market could be either auction or dealer market. While stock exchange
is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market.
In addition to the traditional sources of capital from family and friends, startup firms are created and
nurtured by Venture Capital Funds and Private Equity Funds. According to the Indian Venture Capital
Association Yearbook (2003), investments of $881 million were injected into 80 companies in 2002, and
investments of $470 million were injected into 56 companies in 2003. The firms which received these
investments were drawn from a wide range of industries, including finance, consumer goods and health

ii.

SECONDARY MARKET
Secondary Market refers to a market where securities are traded after being initially offered to the public in
the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary
market. Secondary market comprises of equity markets and the debt markets.
For the general investor, the secondary market provides an efficient platform for trading of his securities. For
the management of the company, Secondary equity markets serve as a monitoring and control conduitby
facilitating value-enhancing control activities, enabling implementation of incentive-based management
contracts, and aggregating information (via price discovery) that guides management decisions.

NSE - A NEW IDEOLOGY

 GENESIS
Capital market reforms in India have outstripped the process of liberalization in most other sectors of the economy.
However, the creation of an independent capital market regulator was the initiation of this reform process. After the
formation of the Securities Market regulator, the Securities and Exchange Board of India (SEBI), attention were
drawn towards the inefficiencies of the bourses and the need was felt for better regulation, discipline and
accountability.
A Committee recommended the creation of a 2nd stock exchange in Mumbai called the "National Stock Exchange".
The Committee suggested the formation of an exchange which would provide investors across the country a single,
screen based trading platform, operated through a VSAT network. It was on this recommendation that setting up of
NSE as a technology driven exchange was conceptualized. NSE has set up its trading system as a nation-wide, fully
automated screen based trading system. It has written for itself the mandate to create a world-class exchange and use
it as an instrument of change for the industry as a whole through competitive pressure.
NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in
June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market
Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for
various derivative instruments

NSE WAS SET UP WITH THE OBJECTIVES OF:

Establishing a nationwide trading facility for all types of securities;

Ensuring equal access to investors all over the country through an appropriate communication network;
Providing a fair, efficient and transparent securities market using electronic trading system;
Enabling shorter settlement cycles and book entry settlements; and
Meeting international benchmarks and standards.

The broad objective for which the exchange was set up has made it to play a leading role in enlarging the scope of
market reforms in securities market in India. During last one decade it has been playing the role of a catalytic agent
in reforming the markets in terms of market microstructure and in evolving the best market practices keeping in mind
the investors.
The Exchange is set up on a demutualised model wherein the ownership, management and trading rights are in the
hands of three different sets of people. This Uploaded for www.projectsparadise.com Projects, Thesis, Dissertation
has completely eliminated any conflict of interest. This has helped NSE to aggressively pursue policies and practices
within a public interest framework.
NSE's nationwide, automated trading system has helped in shifting the trading platform from the trading hall in the
premises of the exchange to the computer terminals at the premises of the trading members located at different
geographical locations in the country and subsequently to the personal computers in the homes of investors and even
to hand held portable devices for the mobile investors. It has been encouraging corporatization of membership in
securities market.
It has also proved to be instrumental in ushering in scrip less trading and providing settlement guarantee for all
trades executed on the Exchange. Settlement risks have also been eliminated with NSE's innovative endeavors in the
area of clearing and settlement viz., establishment of the clearing corporation (NSCCL), setting up a settlement
guarantee fund (SGF), reduction of settlement cycle, implementing on-line, real-time risk management systems,
dematerialization and electronic transfer of securities to name few of them.

 PURPOSE
Committed to improve the financial well-being of people.

VISION
To continue to be a leader, establish global presence, facilitate the financial well being of people.

VALUES

NSE is committed to the following core values :

Integrity
Customer focussed culture
Trust, respect and care for the individual
Passion for excellence
Teamwork

HISTORY & MILESTONES

 AWARDS & RECOGNITION

KEY FACTS & FIGURES

OWNERSHIP AND MANAGEMENT OF NSE

NSE is owned by a set of leading financial institutions, banks, insurance companies and other financial
intermediaries. It is managed by a team of professional managers and 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 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 dayto-day affairs of the Exchange. The ECs
have constituted several committees, like Committee on Trade Related Issues (COTI), Committee on Settlement
Issues (COSI) etc., comprising mostly of trading members, to receive inputs from the market participants and
implement suggestions which are in the best interest of the investors and the market
The day-to-day management of the Exchange is delegated to the Managing Director and CEO 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

 MARKET SEGMENTS AND PRODUCTS

NSE provides an electronic trading platform for of all types of securities for investors under one roof - Equity,
Corporate Debt, Central and State Government Securities, TBills, Commercial Paper, Certificate of Deposits (CDs),
Warrants, Mutual Funds units, Exchange Traded Funds, Derivatives like Index Futures, Index Options, Stock
Futures, Stock Options, Futures on Interest Rates etc., which makes it one of the few exchanges in the world
providing trading facility for all types of securities on a single exchange.
The Exchange provides trading in 3 different segments viz.

Wholesale debt market (WDM)

Capital market (CM) segment and
The futures & options (F&O) segment.

WHOLESALE DEBT MARKET

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, PSU Bonds, Corporate Debentures, CPs, CDs etc.
However, along with these financial instruments, NSE has also launched various products (e.g. FIMMDA-NSE
MIBID/MIBOR) owing to the market need. A reference rate is said to be an accurate measure of the market price. In
the fixed income market, it is the interest rate that the market respects and closely matches. In response to this, NSE
started computing and disseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai InterBank
Offer Rate (MIBOR). Owing to the robust methodology of computation of these rates and its extensive use, this
product has become very popular among the market participants.
THE CAPITAL MARKET SEGMENT
The Capital Market 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
2004-05 was nearly Rs. 4,506 crs.
FUTURES & OPTIONS SEGMENT
Futures & Options segment of NSE provides trading in derivatives instruments like Index Futures, Index Options,
Stock Options, Stock Futures and Futures on interest rates. Though only four years into its operations, the futures
and options segment of NSE has made a mark for itself globally. In the Futures and Options segment, trading in
Nifty and CNX IT index and 53 single stocks are available. W.e.f. May 27 2005, futures and options would be
available on 118 single stocks. The average daily turnover in the F&O Segment of the Exchange during 2004-05 was
nearly Rs. 10,067 crs.

 THE ORGANISATION
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on
Establishment of New Stock Exchanges. It recommended promotion of a National Stock Exchange by financial
institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and
was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

The National Stock Exchange (NSE) operates a nation-wide, electronic market, offering trading in Capital Market,
Derivatives Market and Currency Derivatives segments including equities, equities based derivatives, Currency
futures and options, equity based ETFs, Gold ETF and Retail Government Securities. Today NSE network stretches
to more than 1,500 locations in the country and supports more than 2, 30,000 terminals.

With more than 10 asset classes in offering, NSE has taken many initiatives to strengthen the securities industry and
provides several new products like Mini Nifty, Long Dated Options and Mutual Fund Service System. Responding to
market needs, NSE has introduced services like DMA, FIX capabilities, co-location facility and mobile trading to
cater to the evolving need of the market and various categories of market participants.

NSE has made its global presence felt with cross-listing arrangements, including license agreements covering
benchmark indexes for U.S. and Indian equities with CME Group and has also signed a Memorandum of
Understanding (MOU) with Singapore Exchange (SGX) to cooperate in the development of a market for India-linked
products and services to be listed on SGX. 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 is committed to operate a market ecosystem which is transparent and at the same time offers high levels of
safety, integrity and corporate governance, providing ever growing trading & investment opportunities for investors.

OUR GROUP
NSCCL
National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned subsidiary of NSE, was incorporated in
August 1995 and commenced clearing operations in April 1996. It was the first clearing corporation in the country to
provide notation/settlement guarantee that revolutionized the entire concept of settlement system in India. It was set
up to bring and 9 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 or deferments from this cycle.
It aggregates trades over a trading period T, nets the positions to determine the liabilities of members and ensures
movement of funds and securities to meet respective liabilities. It also operates a Subsidiary General Ledger (SGL)
for settling trades in government securities for its constituents. It has been managing clearing and settlement
functions since its inception without a single failure or clubbing of settlements. It assumes the counter-party risk of
each member and guarantees financial settlement. It has tied up with 10 Clearing Banks viz., Canara Bank, HDFC
Bank, IndusInd Bank, ICICI Bank, UTI Bank, Bank of India, IDBI Bank and Standard Chartered Bank for funds
settlement while it has direct connectivity with depositories for settlement of securities. It has also initiated a
working capital facility in association with the clearing banks that helps clearing members to meet their working
capital requirements. Any clearing bank interested in utilizing this facility has to enter into an agreement with
NSCCL and with the clearing member. NSCCL has also introduced the facility of direct payout to clients account on
both the depositories.
It ascertains from each clearing member, the beneficiary account details of their respective clients who are due to
receive pay out of securities. It has provided its members with a front-end for creating the file through which the
information is provided to NSCCL. Based on the information received from members, it sends payout instructions to
the depositories, so that the client receives the pay out of securities directly to their accounts on the pay-out day.
NSCCL currently settles trades under T+2 rolling settlement. It has the credit of continuously upgrading the clearing
and settlement procedures and has also brought Indian financial markets in line with international markets.
It has put in place online real-time monitoring and surveillance system to keep track of the trading and clearing
members outstanding positions and each member is allowed to trade/operate within the pre-set limits fixed
according to the funds available with the Exchange on behalf of the member. The online surveillance mechanism also
generates various alerts/reports on any price/volume movements of securities not in line with the normal
trends/patterns.

IISL
India Index Services and Products Limited (IISL), a joint venture of NSE and Credit Rating Information Services
of India Limited (CRISIL), was set up in May 1998 to provide indices and index services. It has a consulting and
licensing agreement with Standard and Poor's (S&P), the world's leading provider of invest able equity indices, for
co-branding equity indices. IISL pools the index development efforts of NSE and CRISIL into a coordinated whole.
It is India's first specialized company which focuses upon the index as a core product. It provides a broad range of
products and professional index services. It maintains over 70 equity indices comprising broadbased benchmark
indices, sectoral indices and customized indices. Many investment and risk management products based on IISL
indices have been developed in the recent past. These include index based derivatives on NSE, a number of index
funds and India's first exchange traded fund.

NSDL
Prior to trading in a dematerialized environment, settlement of trades required moving the securities physically from
the seller to the ultimate buyer, through the seller's broker and buyer's broker, which involved lot of time and the risk
of delay somewhere along the chain.

Further, the system of transfer of ownership was grossly inefficient as every transfer involved physical movement of
paper to the issuer for registration, with the change of ownership being evidenced by an endorsement on the security
certificate. In many cases, the process of transfer took much longer than stipulated in the then regulations. Theft,
forgery, mutilation of certificates and other irregularities were rampant. All these added to the costs and delays in
settlement and restricted liquidity
To obviate these problems and 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 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 the total delivery based settlement

NSE.IT
NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated in October 1999 to provide thrust to
NSEs technology edge, concomitant with its overall goal of harnessing latest technology for optimum business use.
It provides the securities industry with technology that ensures transparency and efficiency in the trading, clearing
and risk management systems. Additionally, NSE.IT provides consultancy services in the areas of data warehousing,
internet and business continuity plans.
Amongst various products launched by NSE.IT are NEAT XS, a Computer-ToComputer Link (CTCL) order routing
system, NEAT iXS, an internet trading system and Promos, professional brokers back office system. NSE.IT also
offers an elearning ortal, invarsitywww.finvarsity.com) dedicated to the finance sector.
The site is powered by Enlitor - a learning management system developed by NSE.IT jointly with an e-learning
partner. New initiatives include payment gateways, products for derivatives segments and Enterprise Management
Services

NCDEX
NSE joined hand with other financial institutions in India viz., ICICI Bank, NABARD, LIC, PNB, CRISIL, Canara
Bank and IFFCO to promote the NCDEX which provide a platform for market participants to trade in wide spectrum
of commodity derivatives. Currently NCDEX facilitates trading of 37 agro based commodities, 1 base metal and 2
precious metal

 CORPORATE STRUCTURE
NSE is one of the first de-mutualised stock exchanges in the country, where the ownership and management of the
Exchange is completely divorced from the right to trade on it. Though the impetus for its establishment came from
policy makers in the country, it has been set up as a public limited company, owned by the leading institutional
investors in the country.

From day one, NSE has adopted the form of a demutualised exchange - the ownership, management and trading is in
the hands of three different sets of people. NSE is owned by a set of leading financial institutions, banks, insurance
companies and other financial intermediaries and is managed by professionals, who do not directly or indirectly trade
on the Exchange. This has completely eliminated any conflict of interest and helped NSE in aggressively pursuing
policies and practices within a public interest framework.
The NSE model however, does not preclude, but in fact accommodates involvement, support and contribution of
trading members in a variety of ways. Its Board comprises of senior executives from promoter institutions, eminent
professionals in the fields of law, economics, accountancy, finance, taxation, etc, public representatives, nominees of
SEBI and one full time executive of the Exchange.

While the Board deals with broad policy issues, decisions relating to market operations are delegated by the Board to
various committees constituted by it. Such committees includes representatives from trading members, professionals,
the public and the management.The day-to-day management of the Exchange is delegated to the Managing Director
who is supported by a team of professional staff.

 BOARD OF DIRECTORS

MANDATORY COMMITTEES

 NSE ADVISORY COMMITTEE

As on 29th dec 2014

NSE TRADING TECHNOLOGY

National Stock Exchange of India is one of the leading exchanges in the world on several key parameters. Number of
contracts traded relate directly to the technology and liquidity of the exchange. NSE ranks* in top 3 globally for
Stock Futures and Index Futures and Options. Technology at the exchange remains backstage to fulfill the demand
for capacity, reliability and performance ensuring the competitive edge of NSE as Indias number one exchange
platform.

CORE TRADING SYSTEM

NSEs trading system, called National Exchange for Automated Trading (NEAT), is a state of-the-art client server
based application. It has uptime record of over 99% with latency is in single digit millisecond level for all orders
entered into the NEAT system. NSE has been continuously undertaking capacity enhancement measures so as to
effectively meet the requirements of increased users and associated trading loads.
The core trading applications of NSE run on fault tolerant servers sourced from Stratus Technologies. Earlier
generation of trading system was highly dependent on the growth of microprocessor industry for improved
scalability. This was creating speed breakers in the growth demanded by Indian market participants. Some time back
NSE re-architected the trading system to achieve unlimited scalability. The system now has a multi layer architecture
is designed for unlimited scalability at every layer. Each layer of Trading system can be scaled up by adding more
hardware to the layer. The re-architecting of the system has eased out meeting the ever growing capacity needs of
Trading. This application extensively uses in-memory database technology to provide for performance needs
expected from a Matching system. The matching engine response time can be measured in single digit millisecond
for the thousands of transactions processed by the system every second. To complement the matching engine speed,
Market Data is generated and distributed at a very high refresh frequency. Using the Multicasting the market data
access is accessible to all trading members almost simultaneously.
NSE provides its customers a feature packed Trader Work Station (TWS) two Front-ends, NEAT & NEAT PLUS for
all the market segments. NEATPLUS TWS is a unified frontend for multiple market segments. Apart from
distributing its own front end NSE also publishes the protocol that can be used by Independent Software Vendors as
well as Sell Side firms to develop their own in-house systems.

DMA, ALGORITHMIC TRADING AND CO-LOCATION FACILITY

Direct Market Access and Algorithmic trading was allowed in India in April 2008. DMA opened up faster access to
Indian markets for financial institutions across the world. Now a significant movement is going on all across the
world, to consume the liquidity in a better way, and increase capacities everywhere in the markets. Better algorithms
with mathematically proven strategies that consume liquidity, and faster systems with very low latency are the need
of the day. Since laws of physics have to be obeyed, members systems have to come closer to the exchange trading
systems to meet the requirements of lower latencies and faster execution. Co-location at exchange premises is the
mechanism used by exchanges to achieve these objectives.
NSE is also the exchange which has been in forefront of implementing Co-location services and Tick-by-Tick market
data product among several other firsts. High frequency and automated trading had taken off in India with launch of
NSEs Co-location services in Jan of 2010. The service allows renting rack space with low latency connectivity to
the exchange with the mandatory power supply, cooling and security requirements of the industry. The facility
features include dual UPS power source and 100% DG capacity, multiple precision air conditioning units with N+1
redundancy, standard 42 U rack with 6KVA power and a 1Gbps network port which will provide order and market
data connectivity. Basic IT services namely Help Desk (24X7), Hardware Checks, Incident Management (Level 1),
On-site coordination, Daily reports, Named resource (SPOC) for the account and Power ON/OFF / Boot on request
are also provided.
A significant order flow of the exchange is now passing through the Co-location facility especially for Algorithmic
Trading and Direct Market Access(DMA). To complement the High Frequency Trading, Tick By Tick Market Data
feed generating broadcast for every transaction is provided by the exchange. More recently Thomson Reuterss
Elektron data solution was enabled at the co-location center to deliver high-speed connectivity for the NSE's data.
Compatible with Financial Information Exchange (FIX Protocol), the Industry-Standard Messaging Protocol, for
Equity, Derivatives and Currency market is achieved through NSEs own connectivity software called as TAP
(Trading Access Point).

 NOW APPLICATION SERVICE PROVISIONING

NSE on Web (NOW) - A New Initiative for Members was taken up for providing a low cost and low time to market
deployment option for our members. NOW is a near zero cost cloud paradigm based trading option. NOW cloud
provides connectivity to NSEs Equity, Derivatives, Currency Derivatives and Mutual funds segments and also with
other trading venues. The major benefits of using NOW are almost zero Time to Market, Infrastructure Cost,
Maintenance Cost, System Audit, Connectivity requirement, Upgrades and versioning overheads. The entire member
community be it the newest member or a veteran have been using NOW successfully for various needs from basic
trading to business continuity trading.

RISK MANAGEMENT

Risk containment measures at NSE include capital adequacy requirements of members, monitoring of member
performance and track record, stringent margin requirements, position limits based on capital, online monitoring of
member positions and automatic disablement from trading when limits are breached. The margins for the member is
calculated first for his clients and then grossed across clients to arrive at the member's margin. The methodology
applied is based on the Value-at-Risk (VaR) Methodology. The equity segment uses this for the its risk management
whereas for derivative products Standard Portfolio Analysis of Risk (SPAN) is used. SPAN is a highly
sophisticated, value-at-risk methodology that calculates performance bond/margin requirements by analyzing the
"what-if's" of virtually any market scenario.
The risk management system computes positions and margins on a real time basis. The risk computation process
consists of various stages starting with the initialization process in terms of receiving masters information, deposits
of members and receiving on-line data loads from the trading system, computing the open positions and monitoring
the violations on a real time basis. The risk parameters are computed 5 times a day based on the intra-day volatility.
Final Margins are calculated using the end of day risk parameters calculated on end of day volatility.
NSE introduced Cross Margining in 2008 to enhance liquidity. Cross margining is available across Cash and F&O
segment. The positions of clients in both the Cash and F&O segments to the extent they offset each other. The cross
margin benefit is calculated in real time taking to account the clients positions across both segment. The benefit is
then grossed across all clients and passed on to the member.

NSEs Global Ranking for Some parameters*

Single Stock Futures - 3rd
Stock Index Options - 1st
Stock Index Futures - 6th

*Source : WFE (Rankings done for the period Jan-Dec 2013). Ranking is based on no. of contracts traded.

INVESTING IN NSE

 Getting Started
Thank you for your interest in investing in India.
India welcomes foreign investment from following classes of investors:

Foreign Portfolio Investors (FPIs)

Non Resident Indians (NRIs) / Persons of Indian Origin (PIO)

As per SEBI (Foreign Portfolio Investors) Regulations 2014 promulgated and implemented w.e.f. June 1, 2014,

The onus of registration has moved from SEBI to Designated Depository Participants (DDP)

Access to investment in India is rationalised & harmonised

KYC requirements harmonised in line with FPI regulations

Registration as FPI available under the following three categories based on the perceived risk
Category I

Category II

Govt. and Govt. related

foreign investors such as
Foreign Central Banks,
Governmental Agencies,
Sovereign Wealth Funds,
International /

Multilateral
Organizations/ Agencies

Appropriately regulated
broad based funds such as
Mutual Funds, Investment Trusts,
Insurance / Reinsurance
Companies, Other Broad Based
Funds etc .
Appropriately regulated
entities such as Banks, Asset
Mgmt. Cos, Investment
Managers/ Advisors, Portfolio
Managers etc.
Broad based funds whose
investment manager is
appropriately regulated
University Funds and
Pension Funds
University related
Endowments already registered
with SEBI as FII/Sub Account

Category III

All other Foreign

Investors investing in
India under PIS route,
not eligible under
Category I and II such as
Endowments, Charitable
Societies / Trust,
Foundations ,Corporate
Bodies, Trusts,
Individuals, Family
Offices, etc.

In the interests of investor convenience, we have invited KPMG to provide an overview of the FPI - Regulatory and
Tax regime.
While every effort has been taken to make this overview relevant, we encourage you to take independent legal and
tax advice before investing in India. Rules and regulations change, and while it is our intention to keep this overview
updated, NSE and KPMG do not warrant the completeness and accuracy of this information.

REGULATIONS IN INDIA
Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and Exchange Board
of India and The Reserve Bank of India.
The Ministry of Finance regulates through the Department of Economic Affairs - Capital Markets Division. The
division is responsible for formulating the policies related to the orderly growth and development of the securities
markets (i.e. share, debt and derivatives) as well as protecting the interest of the investors. In particular, it is
responsible for

institutional reforms in the securities markets,

building regulatory and market institutions,

strengthening investor protection mechanism, and

providing efficient legislative framework for securities markets.

The Division administers legislations and rules made under the

Depositories Act, 1996,

Securities Contracts (Regulation) Act, 1956 and

Securities and Exchange Board of India Act, 1992.

The Regulators

SECURITIES & EXCHANGE BOARD OF INDIA (SEBI)

The Securities and Exchange Board of India (SEBI) is the regulatory authority established under the SEBI Act 1992
and is the principal regulator for Stock Exchanges in India. SEBIs primary functions include protecting investor
interests, promoting and regulating the Indian securities markets. All financial intermediaries permitted by their
respective regulators to participate in the Indian securities markets are governed by SEBI regulations, whether
domestic or foreign. Foreign Portfolio Investors are required to register with DDPs in order to participate in the
Indian securities markets.

RESERVE BANK OF INDIA (RBI)

The Reserve Bank of India (RBI) is governed by the Reserve Bank of India Act, 1934. The RBI is responsible for
implementing monetary and credit policies, issuing currency notes, being banker to the government, regulator of the
banking system, manager of foreign exchange, and regulator of payment & settlement systems while continuously
working towards the development of Indian financial markets. The RBI regulates financial markets and systems
through different legislations. It regulates the foreign exchange markets through the Foreign Exchange Management
Act, 1999.
More Information

NATIONAL STOCK EXCHANGE (NSE) RULES AND REGULATIONS

In the role of a securities market participant, NSE is required to set out and implement rules and regulations to
govern the securities market. These rules and regulations extend to member registration, securities listing, transaction
monitoring, compliance by members to SEBI / RBI regulations, investor protection etc. NSE has a set of Rules and
Regulations specifically applicable to each of its trading segments. NSE as an entity regulated by SEBI undergoes
regular inspections by them to ensure compliance.

 OPENING AN ACCOUNT

For investing in India you would need to be registered as an FPI with SEBI, the regulator. The requirements for
registration and commencement of trading are detailed as under:

Appoint a Legal Representative & Choose a DDP

Appoint a legal representative in India to fill out the forms required by the regulatory authorities.
The role of legal representative can be played by any financial institution authorized by the
Reserve Bank of India.
Choose at DDP to get registered as FPI. The following is the link of List of DDPs:

1
Appoint a Tax advisor
A tax advisor will help you comply with all Tax obligations that will arise from your activities in
India.
2
Appoint a Domestic Custodian
Appoint a domestic custodian and before making any investments in India, enter into an agreement
with the domestic custodian providing for custodial services in respect of securities.
Domestic Custodian means any entity registered with SEBI to carry on the activity of providing
custodial services in respect of securities.
3
Appoint a designated Bank
Once you are granted registration as an FPI, you will need to appoint a Designated Bank. The
Designated Bank will open and maintain a foreign currency account and/or a Non Resident Special
Rupee Account for you.
Designated Bank means any bank in India which has been authorized by the Reserve Bank of
India to act as a banker to FPIs.
4
Appoint a trading member
A Trading member will execute trades for the FPI. An FPI can have multiple TMs.
5
Appoint a clearing member
Clearing member does the confirmation of trades. Clearing through single clearing member. CM
CP Agreement executed with the CM to get CP Code. CP code facility (can use existing CP code)
or signing of agreement.
6
Appointment of a Compliance Officer
Every FPI is required to appoint a compliance officer who shall be responsible for monitoring the
compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. issued by
the Board or the Central Government.
7

HOW TO CONNECT TO NSE

THROUGH YOUR MEMBER (CTCL)
NSE provides a fully automated screen based trading system, called the National Exchange for Automated Trading
(NEAT) system. NSE offers a facility to its trading members by which members can use their own trading front-end
software in order to trade on the NSE trading system. This facility called Computer-to-Computer Link (CTCL)
facility is available only to trading members of NSE.

THROUGH DMA MEMBER

Direct Market Access (DMA) facility through Computer to Computer Link (CTCL) allows members to provide
direct trading terminals to Institutional clients through available modes of connectivity, thereby providing
Institutional clients faster access to markets. To facilitate faster access, trading members providing DMA facilities
opt for Co-Location facilities provided by the exchange, to facilitate low latency and fast execution.

ABOUT NSE CO-LOCATION

NSE provides state- of-the-art facilities which is ISO 20000 certified. It provides Dual UPS power source and 100%
DG Capacity which ensures uninterrupted power, multiple precision air-conditioning units, with N+1 redundancy
ensuring optimal temperature at all times and seamless connectivity to order and market data.

CURRENCY DERIVATIVES & NSE BOND FUTURES

FPIs can participate as a client only.

Trading through single or multiple TMs.
KYC formalities to be done with the TM.
Trading and Exchange risk management procedures are similar to Equity F&O segment.
Colocation and DMA facilities available to FPIs.
They can have a single clearing member.
CMCP Agreement executed with the CM to get CP Code.
New FPIs will need to register as a client with their Trading Member(s) of choice and request for a CP code
through their Custodian.

Corporate Bonds

Simplified Registration process for FPIs

Submit Annexure 4 document and mention their custodian
An email ID and password will be generated
They can login and report deals
Auto trade confirmation facility
Facility to buyer reporting, if seller is FPIs
Option to brokers for seamless transfer of trades to CBRICS

UPDATES & ANNOUNCEMENTS

LAUNCH OF CLEARING SETTLEMENT AND RISK MANAGEMENT MODULE

Clearing, Settlement and Risk Management are vital functions of a Clearing Corporation. With a view to provide a
comprehensive knowledge about operational guidelines/procedures of Clearing, Settlement, Collateral Management
and Risk Management in a Clearing Corporation, a new module namely Clearing Settlement and Risk Management
is launched under NSEs Certification in Financial Markets (NCFM).

LAUNCH OF NSES CAPITAL MARKET APTITUDE TEST (NCMAT)

The growth of the capital markets in India has been quite phenomenal. Far reaching reforms during the last few
decades have transformed the Indian capital markets into a transparent, liquid and vibrant market place. Major
impetus has been placed on reforming the stock exchanges and improving investor protection.
The primary markets have also seen innovations in terms of online IPOs, book building ASBA etc. Number of
broking firms, mutual funds, merchant bankers, research outfits etc. have come into existence to cater to the needs of
the issuers and investors in the capital markets. This has also thrown open opportunities for young professionals in
the markets. Certified professionals with an aptitude for the capital markets are sought after by employers.
In order to assess the aptitude, knowledge and skills in the capital markets, NSEs Capital Market Aptitude Test
(NCMAT) is being launched. The test would be useful for candidates who wish to assess their abilities and skills in
the area of capital markets and investments.

LAUNCH OF VENTURE CAPITAL AND PRIVATE EQUITY MODULE

In recent years, the relevance of small and medium enterprises (SMEs) for economic development has become
particularly noteworthy. However, often these firms are more financially constrained than larger firms. In such
scenarios, venture capital and private equity play a vital role in constituting a valuable resource for a firms' growth,
especially for more innovative SMEs, so that they can support economic development and innovation in the
economy. Private equity is considered to be one of the elements of a good entrepreneurial eco-system. In the last
couple of decades, it has emerged as a serious source of finance for start-ups, growing companies and takeover
transactions.

With a view to provide a comprehensive and in depth knowledge about venture capital and private equity, a new
module namely 'Venture Capital and Private Equity Module' is being launched under NSE's Certification in Financial
Markets (NCFM).

LAUNCH OF TREASURY MANAGEMENT MODULE

Treasury management has always been an important function in any organization, more significantly in banking and
finance companies. The Treasury function has always been vital in making sure that the business has sufficient
liquidity to meet its obligations, whilst managing payments, receipts and financial risks effectively.
With the ever increasing pace of change to regulation, compliance and technology in the financial sector, Treasury
has increasingly become a strategic business partner across all areas of the business, adding value to the operating
divisions of a company.
With a view to provide a comprehensive and in depth knowledge about treasury management, a new module namely
Treasury Management Module is being launched under NSEs Certification in Financial Markets (NCFM).

NCFM - DELHI TEST CENTRE - CHANGE OF ADDRESS W.E.F. AUGUST 26, 2013
With effect from August 26th, 2013, the NCFM test centre at Delhi is shifting to the following premises:
NSEiT Limited,
2E/22, Third Floor,
Jhandewalan Extension,
Landmark: Jhandewalan Metro Station,
New Delhi - 110055
All candidates are required to take note of the same.
However, all correspondences (forms/payments) etc. may continue to be sent to:
National Stock Exchange of India Ltd.
4th Floor, Jeevan Vihar Building
Parliament Street
New Delhi-110001
(Landmark - Near Patel Chowk, Metro Station)

NCFM - MUMBAI TEST CENTRE - CHANGE OF ADDRESS W.E.F. MARCH 01, 2013
With effect from March 01, 2013, the NCFM test centre at Mumbai is shifting to the following premises:
NSEIT Limited Mumbai,
Trade Globe, Ground Floor,
Andheri-Kurla Road,
Opposite Hotel VITS / Apna Dhaba,
Behind Trade Star, Andheri (E),
Mumbai-400 059.
All candidates are required to take note of the same.

However, all correspondences (forms/payments) etc. may continue to be sent to the Bandra- Kurla Complex address:
NCFM Department
National Stock Exchange of India Ltd.
"Exchange Plaza",
Bandra Kurla Complex,
Bandra (East),
Mumbai-400051.

UPDATION OF EMAIL AND POSTAL ADDRESS OF NCFM CANDIDATES

SBU-Education has started an emailing facility to keep the NCFM candidates informed about the new developments
in the NCFM arena, so that the candidates can take informed decisions. The most recent NSE Newsletter is also
being sent along with this mail. One round of such emails has already been sent on October 06, 2009 to all
candidates who have taken one or more NCFM tests.

It has however, been found that the email addresses given by many candidates are either incorrect or have not been
updated. As a result, several NCFM candidates are missing an opportunity to know about the developments relating
to NCFM tests as well as about the securities market.

Further, SBU-Education has also launched the NCMP certification; these certificates are being sent to the eligible
NCFM candidates by courier at the postal address as per our records.

In view of the above, we urge the NCFM candidates to update their email and postal address by accessing their
online NCFM account and also to be careful while filling in the contact details.

NCFM TEST FEES

Test fees are valid for 180 days from the date of payment. Candidates need to enroll for the test(s) within 180 days
from payment of fees

NCFM ONLINE LOGIN ID FOR CORPORATES

NCFM has launched the online login facility for corporates whereby the corporates will be able to enroll their
candidates online themselves through a corporate login id that will be created for them. Corporates would be
required to make a consolidated payment to NSE which can then be utilized by them for enrolling their candidates
through the corporate login id. The payment can be made by means of a demand draft favouring "National Stock
Exchange of India Limited", payable at the nearest NSE office or through the online netbanking facility through BOI,
AXIS and HDFC Bank(For paying through HDFC Net Banking Interface the corporates would be required to have
Retail HDFC Bank Account.)
Corporates who wish to avail of this facility may fill in the format attached herewith and send the same to us on their
letterhead following which the corporate user id would be created for them.

 DISCLOSURES

FINANCIALS
Statement Of Unaudited Financial Results For The Quarter Ended June 30, 2015

Statement Of Consolidated Audited Financial Results For The Year Ended March 31, 2015

 CORPORATE ACTIONS

Final Dividend - 2014

Final Dividend - 2012

OTHER DISCLOSURES
Corporate Social Responsibility (CSR) Policy
1. CSR Vision

NSE Group has been constantly working to improve the financial wellbeing of people at large through a committed
approach to offer investment products that suits varied needs of people. It has improved access of the financial
market to people across the country, improved safety measures for investors, empowered investors through improved
awareness and education on financial planning, investor protection and investment related issues. Besides this, NSE
Group also has been continuously improvising on the conduct of business in a responsible manner through
conservation of energy, use of renewable sources of energy, eco-friendly infrastructure etc., In order to strengthen its
CSR initiatives, in 2012, a NSE Group CSR Focus Group was formed consisting of employees volunteering to
contribute part of their time to undertake CSR activities internally. The NSE Group CSR Focus Group has since
organised various activities such as organising environment awareness building programs, exposure visits on
environmental issues etc. with the help of NGO partners like BNHS, organising blood donation camps, promoting
social entrepreneurship by facilitating sale of articles produced by different NGOs etc. Besides, different eco-friendly
activities like Wind Power generation, Rain Water Harvesting, Use of Solar Energy, Solid Waste Management
through promoting Vermicomposting out of the waste from NSE Group premises etc., have also been undertaken.

NSE is covered under the purview of Section 135 of the Companies Act 2013. Similarly many of its subsidiaries are
also covered. However, contribution to CSR by some of these Companies as required under the Section 135 will be
negligible. Moreover, there could be efforts duplication if each individual Company undertakes CSR activities on its
own and there would be difficulties in scaling up these activities. Therefore it has been decided by the Boards of the
respective Companies in NSE Group that CSR efforts for the Group be undertaken commonly and the actual spent be
allocated to the respective Companies in proportion to their legal obligations. Therefore a common CSR function for
NSE and its subsidiaries has been created under NSE as a group resource and the actual CSR spent is proportionately
allocated to the respective Companies. However the CSR Committees for these Companies are separate. This
common CSR policy has been prepared and approved by respective CSR Committees and Boards.

NSE Group, in order to further its CSR aspiration of helping the underprivileged sections of the population in
improving their quality of life is now embarking upon undertaking to reach out to them. NSE Group further
understands that the economic and social well-being of the community is closely interlinked with their habitats and
the environment. NSE Group therefore endeavours to have a triangulated focus to improve the quality of life of its
identified beneficiaries towards creating inclusive societies, while meeting its social, economic and environmental
responsibilities. NSE Group, to begin with, has identified verticals of CSR focus such as Primary Education, Elder
Care and Sanitation & Safe Drinking Water. These areas of focus have been identified by NSE Group as issues of
huge concern for India. NSE Groups committed projects in these areas for the needy and underprivileged 2 sections
of our population will contribute to the nations larger social development goals. NSE Groups CSR aspirations

should help create a sustainable ecosystem that is intrinsically beneficial for creating healthy and thriving
communities.
Community engagement will be conducted in an ethical manner, with great transparency, dialogue and disclosure
based on the needs and aspirations of the primary beneficiaries.

Besides community engagement, NSE Group will also, as part of its CSR focus, endeavour to meet high standard of
ethical business conduct, continuously adapt better governance standards, commit to fair business practices in its
relationship with customers, employees and suppliers and obey rule of law.

2. CSR Objectives and Goals

To begin with, i) Primary Education, ii) Elder Care, and iii) Sanitation and Safe Drinking Water have been
identified focus areas. The CSR objectives have been identified based on the larger mandate of the Companies
Act 2013 and CSR Rules 2014 and to meet NSE Groups community engagement aspirations. Projects
undertaken under these verticals will not be one-time activities but will only be on a project or programme mode
with a timeline to achieve pre-determined goals. Initially, efforts will be concentrated in one or two of the above
areas and take up the remaining areas in a phased manner depending upon the experience gained.
3.

Community Engagement Strategy

NSE Group will focus on improving the lives of communities from disadvantaged socio-economic backgrounds.
To begin with the geographical focus areas for undertaking CSR activities have been identified as in and around
areas where NSE Group has establishments pursuant to the company law requirement that the company shall
give preference to the local area and areas around it where it operates, for spending the amount earmarked for
CSR activities. Moreover, this will give NSE Group logistical proximity to control and monitor the spend and
assess end user benefits. Once enough experience is gained, more geographical areas where NSE Group has
presence will be added to the geographical focus areas. The primary beneficiaries will be children, adolescents
and the elderly, who will benefit 5 directly from the various interventions. The secondary beneficiaries of the
interventions will be the families of the beneficiaries and the community
4.

Implementation Strategy

The overall governance of CSR activities vests with the CSR Committees and Boards of Directors of the
respective Companies in the NSE Group. The Boards have constituted separate CSR committees for NSE and its
subsidiaries to: (a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall
indicate the activities to be undertaken by the company in which will be in alignment with the Schedule VII of
the Companies Act 2013; (b) Recommend the amount of expenditure to be incurred on the activities referred to
in clause (a); (c) Approve/ ratify individual projects and (d) Monitor the CSR Policy of the company and the
progress of the implemented projects from time to time. The CSR Committee will meet on a quarterly basis or
when required. The individual Group Companies covered under section 135 have adopted the policy and the
implementation strategy

NSE Environmental Policy

National Stock Exchange of India Limited (NSE) is a SEBI recognized stock exchange and is India's largest
securities trading platform. NSE is aware that its business operations and use of natural resources has an impact on
the environment. Being a responsible corporate citizen, it is NSE's vision to continuously reduce its carbon footprint,
enhance environmental protection practices and promote sustainable business operations. This Policy shall apply to
NSE and its subsidiaries, affiliates and group companies at all NSE owned/leased premises.
NSE strives to :

Minimize carbon/Water footprint and ensure sustainable business operations; Minimize pollution of all forms;

Continual improvement in its environmental performance;

Compliance with all local and national environmental legislation, regulations and codes of practice relevant to
the industry sector in which it operates.

Stakeholder- Environment and Society

Responsibility for implementation: All concerned departments of NSE and NSE's subsidiaries.
NSE aims to fulfill its environmental commitment through the following actions:

Ensure compliance with applicable legal and regulatory requirements and company standards relating to
environment protection and sustainability and conduct regular audits to verify such compliance;

Consider and integrate energy and environmental considerations into the design and construction of new/further
infrastructural facilities;

Encourage and implement the use of energy efficient utilities in existing infrastructural facilities;
Give priority to materials, parts and products with lower environmental burden while procuring and using
necessary resources;
Encourage conservation of natural resources, adopt 3-R (reduce, recycle and reuse)
philosophy for all types of wastes to reduce pollution and dispose of wastes, particularly
ewaste in line with regulatory requirements or industry best practices;
Adopt and implement industry best standards in environment protection and
sustainability;
Preserve and enhance biodiversity in and around NSE campuses;
Set, monitor , benchmark and review objectives and targets on an ongoing basis toward
achieving continuous improvement in environmental and climate performance and the
overall environmental management system;
Adopt, implement and maintain a robust E-Waste Policy for disposal of e-waste;
Raise the environmental awareness of employees and stakeholders and encourage
them to take initiatives in environmental protection;
Strive to support various voluntary national and international protocols, conventions and
agreements on environment and proactively engage with governmental and other
agencies in driving future environmental policy and regulation;
Keep liaising for relevant matters with governments, communities, and other interested
parties, and actively support and participate in environmental protection activities;
Communicate the environmental policy to all employees and other stakeholders;
Promote alternative renewable sources of energy to reduce carbon footprint;
To promote environmentally food waste disposable;

Recycling of water to reduce water footprint without compromising on employee safety.