Fact Book2008

NATIONAL STOCK EXCHANGE OF INDIA LIMITEDJune 2008

iC O N T E N T S

SECTION 1 NATIONAL STOCK EXCHANGE OF INDIA

Genesis ......................................................................................................... 3

Ownership And Management ..................................................................... 3

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

Achievements / Milestones .......................................................................... 6

Facts And Figures ...................................................................................... 11

Technology ................................................................................................ 11

Application Systems .................................................................................. 12

NSE Family ............................................................................................... 14

NSCCL .............................................................................................. 14

NSDL ................................................................................................. 15

NSE Infotech Services Ltd .................................................................... 15

NSE.IT ............................................................................................... 15

IISL .................................................................................................... 16

NCDEX ............................................................................................. 16

NCCL ................................................................................................ 16

PXI ..................................................................................................... 16

SECTION 2 MEMBERSHIP ADMINISTRATION

Eligibility Criteria ...................................................................................... 21

Trading Membership ................................................................................. 21

Clearing Membership ................................................................................ 22

Growth And Distribution Of Members .................................................... 22

Transaction Charges .................................................................................. 23

SECTION 3 LISTING OF SECURITIES

Bene ts Of Listing On NSE ...................................................................... 31

Listing Criteria ........................................................................................... 32

Listing Agreement ..................................................................................... 32

Compliance By Listed Companies ............................................................. 32

Disclosures By Listed Companies .............................................................. 32

De-Listing .................................................................................................. 33

CM Segment .............................................................................................. 34

Listing Fees ................................................................................................ 34

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Shareholding Pattern ................................................................................. 35

WDM Segment .......................................................................................... 35

Funds Mobilisation On The Exchange ...................................................... 36

Initial Public Offerings (IPOs) .................................................................. 36

FPOs .................................................................................................. 36

Rights Issues ........................................................................................ 37

Preferential Allotment / Private Placement ........................................ 37

QIPs ................................................................................................... 37

SECTION 4 CAPITAL MARKET SEGMENT

NEAT System ........................................................................................... 59

Market Performance .................................................................................. 59

Trading Volume ................................................................................. 59

Liquidity ............................................................................................ 60

Distribution of Turnover .................................................................... 61

Market Capitalisation ......................................................................... 61

Sectoral Distribution ........................................................................... 61

Trading Records during 2007-08 ......................................................... 62

Internet Trading ................................................................................. 62

FII Turnover on NSE .......................................................................... 62

On-line IPOs ...................................................................................... 62

Indices ........................................................................................................ 63

Volatility Index .................................................................................. 63

Mutual Funds And Exchange Traded Funds ............................................. 64

Transaction Charges .................................................................................. 64

Clearing & Settlement ............................................................................... 65

Settlement Agencies ............................................................................. 66

Settlement Cycles ................................................................................ 67

Settlement Statistics ............................................................................. 67

Risk Management System .......................................................................... 67

Capital Adequacy ............................................................................... 68

Margin Requirements .......................................................................... 68

Categorisation of newly listed securities ............................................... 68

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Value at Risk Margin .......................................................................... 69

Extreme Loss Margin ........................................................................... 69

Mark to Market Margin ....................................................................... 69

Index-based Circuit Filters ................................................................... 70

Settlement Guarantee Fund ................................................................. 71

Surveillance, Investigation & Inspection ................................................... 71

Surveillance & Investigation ............................................................... 71

Inspection ........................................................................................... 71

SECTION 5 WHOLESALE DEBT MARKET SEGMENT

Trading Mechanism ..................................................................................103

Market Performance .................................................................................104

Turnover ...........................................................................................104

Market Capitalisation ........................................................................106

Transaction Charges .................................................................................106

Settlement .................................................................................................106

Constituent SGL Facility ..........................................................................107

FIMMDA-NSE MIBID/MIBOR ..............................................................107

Zero Coupon Yield Curve ........................................................................108

NSE-VAR System .....................................................................................109

GOI-bond Index .......................................................................................110

SECTION 6 FUTURES & OPTIONS SEGMENT

Trading Mechanism ..................................................................................136

Contract Speci cation ..............................................................................137

Selection Criteria For Stocks And Index Eligibility For Trading ............138

Trading Value & Contract Traded ...........................................................140

Product wise turnover on F&O Segment .............................................141

Futures and Options on Benchmark Indices ........................................142

Sectorwise Stock Futures & Options Turnover ....................................143

Participant wise turnover on F&O Segment .......................................143

FII Turnover on NSE .........................................................................144

Memberwise turnover on the Exchange ...............................................144

High Volume Members .......................................................................144

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Internet Trading ................................................................................145

Traded Value Records ........................................................................145

Top 20 Futures And Option Contracts ....................................................145

Number Of Trades ..................................................................................146

Charges .....................................................................................................146

Clearing And Settlement ..........................................................................147

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

Clearing Mechanism ..........................................................................148

Settlement Mechanism ........................................................................148

Risk Management System .........................................................................150

NSE- SPAN .......................................................................................151

Margins .............................................................................................152

Position Limits ..................................................................................153

SECTION 7 INVESTOR GRIEVANCES, ARBITRATION

Investor Grievances ..................................................................................185

Arbitration ................................................................................................186

SECTION 8 KNOWLEGDE INITIATIVE

NSES Certi cation in Financial Markets ................................................191

NCFM Online Payment System ..............................................................192

NCFM Tests conducted in other languages .............................................192

CBSE- NSE Certi cation in Financial Markets ........................................192

NSE Research Initiative ............................................................................193

vC O N T E N T S

TABLES

SECTION 1

1-1 Board of Directors ............................................................ 17

1-2 Executive Committees ...................................................... 18

SECTION 2

2-1 (a) Eligibility Criteria for Membership ................................. 24

2-1 (b) Requirements for Professional Clearing Membership ...................................................................... 25

2-2 Growth and Distribution of Members ............................. 25

SECTION 3

3-1 Listing Criteria for Companies on CM Segment of NSE ............................................................... 38

3-2 Companies Listed/ Permitted to Trade/Available for Trading on the CM Segment ...................................... 40

3-3 Share holding Pattern at the end of March 2008 of Companies Listed on NSE .............................................. 43

3-4 Eligibility Criteria for Securities on WDM Segment ....... 44

3-5 Securities Available for Trading on WDM Segment (as on March 31) ............................................................... 45

3-6 Initial Public Offerings (IPOs) during 2007-08 ................. 46

3-7 FPOs during 2007-08 ........................................................ 50

3-8 Rights Issues during 2007-08 ............................................. 50

3-9 Preferential Allotments by NSE Listed Companies during 2007-08 .................................................................. 51

3-10 Amount raised through QIP during 2007-08 ................... 56

SECTION 4

4-1 Business Growth of CM Segment .................................... 72

4-2 Percentage Share of Top N Securities /Members in Turnover ...................................................................... 75

4-3 50 Most Active Securities during 2007-08 in Terms of Trading Value ................................................... 76

4-4 Top 50 Companies by Market Capitalisation as on March 31, 2008 ........................................................ 78

4-5 Industry Wise Classi cation of Top 50 Companies by Trading Volume and Market Capitalisation ............... 80

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4-6 NSEs Most Active Trading days during the year 2007-08 ................................................................ 81

4-7 Individual Securities Single day Trading Records ............ 81

4-8 FII turnover on derivative Market Segment of Exchange ........................................................ 81

4-9 Market Capitalisation of Securities in the CM Segment ..................................................................... 82

4-10 Composition of S&P CNX Nifty Index as on March 31, 2008 ................................................................. 84

4-11 Composition of CNX NIFTY Junior Index - as on March 31, 2008 ........................................................ 85

4-12 Industry-wise Weightages of S&P CNX NIFTY Securities as on 31st March, 2008 ..................................... 87

4-13 S&P CNX NIFTY Index ................................................. 87

4-14 CNX NIFTY Junior Index .............................................. 90

4-15 Performance of NSE Indices during the year 2007-08 ................................................................ 93

4-16 Details of Mutual Funds and Exchange Traded Funds Listed on NSE ....................................................... 93

(a) List of Mutual Funds (MFs) and Exchange Traded Funds (ETFs) ................................................................... 93

(b) No of Trades and Trading Value ...................................... 94

4-17 Settlement Cycle and Process in CM Segment & Settlement Process ........................................................ 94

4-18 Settlement Statistics in CM Segment ................................ 96

SECTION 5

5-1 Business Growth of WDM Segment ...............................111

5-2 WDM Transactions in Government Securities ...............116

5-3 Security-wise and Participant wise Distribution of WDM Trades ..............................................................119

5-4 Share of Top N Securities/Trading Members/ Participants in Turnover in WDM Segment ...................122

5-5 Market Capitalisation of WDM Securities ......................123

5-6 FIMMDA NSE-MIBID/MIBOR Rates ...........................128

5-7 1 day Value-at-Risk (99%) for Government of India Securities Traded as on March 31, 2008 ...........................131

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SECTION 6

6-1 List of Securities on which Futures & Options available at NSE along with their market lot (as on 20th June 2008) .....................................................156

6-2 Contract Speci cation for Index Futures and Options ........................................................163

6-3 Contract Speci cation for Stock Futures and Options ........................................................166

6-4 Business Growth of Futures & Options Market Segment ...............................................................167

6-5 Sector-wise Trading Value of Top 5 companies in the F&O Segment (2007-08) ........................................172

6-6 Participant wise Trading Value in the F&O Segment (2007-08) ..................................................174

6-7 FII Gross turnover on derivative Market Segment of Exchange .......................................................175

6-8 (a) Number of Members in different turnover brackets during 2007-08 ...................................................176

(b) No. of members in different Turnover Brackets in Futures and Options Segment for 2007-08 .....................177

(c) Segment wise Contribution of Top N Members to turnover on Futures and Options segment .....................176

6-9 Top 20 Futures contracts according to number of contracts 2007-08 .........................................................178

6-10 Top 20 Option contracts according to no. of contracts traded 2007-08 .................................................179

6-11 Number of trades in the Futures & Options Segment 2007-08 ..............................................................179

6-12 Settlement Statistics in F&O Segment ............................180

SECTION 7

7-1 Receipt and Disposal of Investor Grievance ....................187

7-2 Status Report of Arbitration Matters ..............................187

SECTION 8

8-1 NCFM Modules ..............................................................194

8-2 Studies under the NSE Research Initiative ......................195

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CHARTS

SECTION 1

1-1 Market Segment Indications - Trading Volume ................. 5

1-2 Market Segment Indicators - Market Capitalisation ........... 6

SECTION 3

3-1 No. of Companies Listed ................................................. 37

SECTION 4

4-1 Business Growth of Capital Market Segment .................. 75

4-2 Movement of Sectoral Indices : 2007-08 ........................... 92

SECTION 5

5-1 Business Growth of WDM Segment ...............................104

5-2 (a) Security-wise Distribution of WDM Trades (2007-08) ....105

(b) Participant-wise distribution of WDM trades (2007-08) .....................................................105

5-3 Overnight MIBID/MIBOR Rates, 2006-07 - from 3 April 2007 to 31st March 2008 ............................108

5-4 Zero Coupon Yield Curve, 2007-08 ................................109

SECTION 6

6-1 Business Growth of F&O Segment .................................140

6-2 Product wise Number of Contracts Traded during 2007-08 .....................................................141

6-3 Product wise trading volumes during 2007-08 .................142

6-4 Participant wise F&O Turnover during 2007-08 ............144

National Stock Exchange of India 1

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31National Stock Exchange of IndiaGenesis

NSE was given recognition as a stock exchange in April 1993 and 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.

Ownership and Management

The NSE is owned by a set of leading nancial institutions, banks, insurance companies and other nancial intermediaries. 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 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.

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), Certi cate of Deposits (CDs), Warrants, Mutual Funds (MFs) units, Exchange Traded Funds (ETFs), Derivatives like Index Futures, Index Options, Stock Futures, Stock Options. The Exchange provides trading in 3 different segments viz., Wholesale Debt Market (WDM) segment, Capital Market (CM) segment and the Futures & Options (F&O) segment

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 nancial instruments, NSE has also launched various products e.g. FIMMDA-NSE MIBID/MIBOR

4owing to the market need. A reference rate is said to be an accurate measure of the market price. In the xed 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 Inter-Bank 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. Keeping in mind the requirements of the banking industry, FIs, MFs, insurance companies, who have substantial investments in sovereign papers, 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 de ned bond index to measure the returns in the bond market. NSE constructed such an index the, NSE Government Securities Index. This index provides a benchmark for portfolio management by various investment managers and gilt funds.

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 ef ciency. 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 2007-08 was nearly Rs. 14,148 crore. (US $ 3,540 million).

Futures & Options segment of NSE provides trading in derivatives instruments like Index Futures, Index Options, Stock Options, Stock Futures. Though only eight 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 S&P CNX Nifty Index, CNX IT index, Bank Nifty Index, CNX Nifty Junior, CNX 100 index, Nifty Midcap 50 index and single stocks are available. The average daily turnover in the F&O Segment of the Exchange during 2007-08 was nearly Rs. 52,153 cr. (US $ 13,048 millions).

The statistical details of these segments are presented in the tables and charts below :

Market Segments Selected IndicatorsAt end of March 2008

Segments No. of Members No. of Securities/Contracts Available

CM 1,069 1,236 a

WDM 62 3,566

F&O 942 23,466 b

Total 1,075 c 28,268

5a Excludes suspended securities.

b 3 Nifty index Futures, 3 CNX IT Futures, 3 Bank Nifty Futures, 3 CNX 100 futures, 3 Nifty Junior index futures, 3 Nifty Midcap50 futures, 3 Mini Nifty Futures, 681 stock futures, 520 Nifty index options, 124 CNX IT options, 296 Bank Nifty options, 146 CNX 100 options, 312 Nifty Junior index options , 112 Nifty Midcap50 options, 142 Mini Nifty Options, 21,094 stock option and 18 interest rate futures contracts.

c Do not add up to total because of multiple membership.

Trading Value

(Rs. cr)

Segment/Year 2004-05 2005-06 2006-07 2007-08

CM 1,140,072 1,569,558 1,945,287 3,551,038

F&O 2,547,053 4,824,250 7,356,271 13,090,478

WDM 887,294 475,523 219,106 282,317

Total 4,574,418 6,869,332 9,520,664 16,923,833

Market Segments Indicators- Trading Volume

6Market Capitalisation (As at end March)

(Rs. cr)

Segment/Year Mar-05 Mar-06 Mar-07 Mar-08

CM 1,585,585 2,813,201 3,367,350 4,858,122

WDM 1,461,734 1,567,574 1,784,801 2,123,346

Total 3,047,319 4,380,775 5,152,151 6,981,468

Market Segment Indicators- Market Capitalisation

Achievements/Milestones

Month/Year Event

November 1992 IncorporationApril 1993 Recognition as a stock exchange.June 1994 WDM segment goes live.November 1994 CM segment goes live through VSAT.March 1995 Establishment of Investor Grievance Cell.April 1995 Establishment of NSCCL, the rst Clearing Corporation.July 1995 Establishment of Investor Protection Fund.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.

Contd...

7Month/Year Event

June 1996 Establishment of Settlement Guarantee Fund.November 1996 Setting up of National Securities Depository Ltd., first

depository in India, co-promoted by NSE.November 1996 Best IT Usage award by Computer Society of India.December 1996 Commencement of trading/settlement in dematerialised

securities.December 1996 Dataquest award for Top IT User.December 1996 Launch of CNX Nifty Junior.November 1997 Best IT Usage award by Computer Society of India.May 1998 Promotion of joint venture, India Index Services & Products

Limited (IISL) (along with CRISIL) for index services.May 1998 Launch of NSEs Web-site : www.nseindia.com.July 1998 Launch of NSEs Certification Programme in Financial

Markets. (NCFM) August 1998 CYBER CORPORATE OF THE YEAR 1998 award.April 1999 CHIP Web Award by CHIP magazine.October 1999 Setting up of NSE.IT Ltd.January 2000 Launch of NSE Research Initiative.February 2000 Internet Trading in CM segment.June 2000 Commencement of Derivatives Trading (in Index Futures).September 2000 Launch of Zero Coupon Yield Curve.June 2001 Commencement of Trading in Index OptionsJuly 2001 Commencement of Trading in Options on Individual

SecuritiesNovember 2001 Commencement of Trading in Futures on Individual

SecuritiesDecember 2001 Launch of NSE VAR for Government SecuritiesJanuary 2002 Launch of Exchange Traded Funds (ETFs). May 2002 NSE wins the Wharton-Infosys business Transformation

Award in the organization-wide transformation categoryOctober 2002 Launch of Government Securities IndexJanuary 2003 Launch of Retail Debt of Government SecuritiesJune 2003 Launch of Exchange Traded Interest Rate derivatives on

Notional 91 day T-bills and Notional 10 year bondsAugust 2003 Launch of Futures and Options on CNX IT Index June 2004 Launch of STP InteroperabilityAugust 2004 Launch of NSE electronic interface for listed companies

Contd...

Contd...

8Month/Year Event

March 2005 India Innovation Award by EMPI Business School, New Delhi

June 2005 Launch of Futures & Options on BANK Nifty IndexAugust 2006 Setting up of NSE Infotech Services Ltd. December 2006 Derivative Exchange of the Year, by Asia Risk magazineJanuary 2007 Launch of NSE CNBC TV 18 media centreMarch 2007 NSE, CRISIL announce launch of India Bond Watch.comMarch 2007 Launch of Gold BeES- Exchange Traded Fund (ETF).(First

Gold ETF)June 2007 Launch of Futures & Options on CNX 100 and CNX Nifty

Junior contracts.October 2007 Launch of Futures & Options on Nifty Midcap 50January 2008 Launch of Mini Nifty derivative contractsMarch 2008 Launch of long term option contracts on S&P CNX Nifty

Index.April 2008 Launch of Securities Lending & Borrowing SchemeApril 2008 Launch of - India VIX - The Volatility IndexJune 2008 Setting up of Power Exchange India Ltd.

Developments during the year.

New Products in the F & O Segment

Based on the evolving needs of the market and the investors, NSE introduced futures and options trading on Nifty Midcap 50 index in October 2007. It is a gateway for investors to invest in the medium capitalised segment of the stock market which is being increasingly perceived as an attractive investment strategy with high growth potential. Mini Nifty derivative were available for trading from 01st January 2008. It provides an opportunity and easier access for small investors to invest in derivatives. Index is the most actively traded index based derivative product in India. The long term options contract which was introduced in March 2008 has expected to deepen this market further.

Securities Lending and Borrowing

SEBI issued a SLB scheme on December 20, 2007. The salient features of the scheme are as under:

To begin with, the SLB would be operated through Clearing Corporation/Clearing House of stock exchanges having nation-wide terminals who will be registered as Approved Intermediaries (AIs) under the SLS, 1997.

Contd...

9 The SLB would take place on an automated, screen based, order-matching platform which will be provided by the AIs. This platform would be independent of the other trading platforms.

To begin with, the securities traded in derivatives segment would be eligible for lending & borrowing under the scheme.

All categories of investors including retail, institutional etc. will be permitted to borrow and lend securities. The borrowers and lenders would access the platform for lending/borrowing set up by the AIs through the clearing members (CMs) who are authorized by the AIs in this regard.

The tenure of lending/borrowing would be xed as standardised contracts. To start with, contracts with tenure of 7 trading days may be introduced.

The settlement cycle for SLB transactions would be on T+1 basis. The settlement of lending and borrowing transactions would be independent of normal market settlement.

The settlement of the lending and borrowing transactions should be done on a gross basis at the level of the clients i.e. no netting of transactions at any level will be permitted.

NSCCL, as an Approved Intermediary (AI) launched the Securities Lending & Borrowing Scheme from April 21, 2008. Lending & Borrowing is carried on an automated screen based platform where the order matching is done on basis of price time priority. The borrowing has a xed tenure of seven days with the rst leg settlement on T+1 day and reverse leg settlement on T+8 day.

Direct Market Acess

During April 2008, Securities & Exchange Board of India (SEBI) allowed the direct market access (DMA) facility to the institutional investors. DMA allows brokers to offer clients direct access to the exchange trading system through the brokers infrastructure without manual intervention by the broker. DMA facility give clients direct control over orders, help in faster execution of orders, reduce the risk of errors from manual order entry and lend greater transparency and liquidity. DMA also leads to lower impact cost for large orders, better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools/algorithms for trading.

Volatility Index

The India VIX, the volatility Index was launched on 08th April, 2008 . A Volatility Index re ects the markets expectation of volatility over the near term. The index captures the implied volatility embedded in option prices. Volatility is often described as the rate and magnitude of changes in prices and, in, nance often referred to as risk.

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Volatility Index is a measure, of the amount by which an underlying Index is expected to uctuate, in the near term, (calculated as annualised volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options. Market volatility keeps changing as new information ows into the market. It would be imperative for market participants to have an index designed to track market volatility. The India VIX is a simple but useful tool in determining the overall volatility of the market.

Cross Margining

Many trading members undertake transactions on both the cash and derivative segments of an Exchange. They keep separate deposits with the exchange for taking positions in two different segments. In order to improve the ef ciency of the use of the margin capital by market participants and as in initial step towards cross margining across cash and derivatives markets SEBI allowed Cross Margining bene t in May 2008.

For Cross margining the stock positions of the institutions in capital market segment after con rmation by the custodian on T+1 day shall be compared with the stock futures position of the same institution in derivative segment based on the CP code of the institution at the end of the day. The position shall be considered for cross margining only if the position in the capital market segment off set the position in the derivative segment.

SEBI has allowed the following to start with: a. Cross margin is available for institutional trades. b. Cross margin is available to positions in cash market having corresponding off-setting positions in the stock futures market. c. For positions in the cash market which have corresponding offsetting positions in the stock futures, VaR margin is not be levied on the cash market position to the extent of the off-setting stock futures market position. d. Extreme Loss margin and Market to Market margin shall continue to be levied on the entire cash market position. e. The near-month stock futures positions are not considered for cross-margin bene t three days prior to expiry (the last Thursday of every month) and there will be no change in the margins on the F & O positions.

Power Exchange India Limited

Power Exchange India Limited (PXI) a joint venture of National Stock Exchange of India Ltd (NSE) and National Commodity & Derivatives Exchange Ltd (NCDEX) has been set up in response to the guidelines issued by Central Electricity Regulatory Commission (CERC). PXI would be operating as a National Level electricity exchange covering the entire Indian electricity market. It will provide a common electronic platform for trading of electricity. It is proposed that the initial trading would be done on a day-ahead basis with voluntary participation. New contracts would be introduced after taking feedback form the market and obtaining approval from CERC.

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Facts And Figures

The growth in the stock market activity across the different market segments and products is visible from records reached as at the end of March 2008 as sited in the table below :

Stock Market Records

Sr.

No.

Parameter Date Magnitude

Capital Market Segment

1 Record number of trades January 03, 2008 6,812,991

2 Record daily turnover (quantity) September 26, 2007 11,353 lakhs

3 Record daily turnover (value) November 01, 2007 Rs.28,476.07 cr.

(US $ 7,124.36 mn.)

4 Record market capitalisation January 07, 2008 Rs.6,745,724.00 cr.

(US $ 1,687,696.77 mn.)

5 Record value of S&P CNX Nifty Index January 08, 2008 6357.10

6 Record value of CNX Nifty Junior Index January 04, 2008 13209.35

Clearing & Settlement

Record Pay-in/Pay-out (Rolling Settlement):

1 Funds Pay-in/Pay-out October 23,2007 * Rs.4,567.70 cr.

(US $ 1,142.78 mn.)

2 Securities Pay-in/Pay-out (Value) December 31,2007 * Rs.9,195.56 cr.

(US $ 2,300.62 mn.)

3 Securities Pay-in/Pay-out (Qty) October 01,2007 * 2,788.30 lakhs

* Settlement Date

Derivatives (F&O segment)

1 Record number of trades October 18,2007 1,420,967

2 Record daily turnover (value) October 18,2007 Rs. 110,563 cr.

(US $ 27,661.50 mn.)

Wholesale Debt Market Segment

1 Record daily turnover (value) August 25,2003 Rs.13,911.57 cr.

(US $ 3,179.79 mn.)

Technology

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 organisation to retain its

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competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact that technology will continue to rede ne the shape of the securities industry, NSE stresses on innovation and sustained investment in technology to remain ahead of competition. NSE is the rst exchange in the world to use satellite communication technology for trading. It uses satellite communication technology to energise participation from about 2,956 VSATs from nearly 245 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 99.7%. For all trades entered into NEAT system, there is uniform response time of less than 1.5 seconds. 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 bre 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 2 mbps high-speed link to keep both the sites all the time synchronized with each other.

Application Systems

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 of ce applications.

In the front end, there are 6 applications: (i) 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 Open Strata Link (OSL). The application has been benchmarked to support 15,000 users and handle more than 15 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. (ii) 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

13

the trading member. (iii) 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. (iv) 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. 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. (v) NEAT MF system is an interface with the trading members of the CM segment for order collection of designated Mutual Funds units (vi) Surveillance system offers the users a facility to comprehensively monitor the trading activity and analyse the trade data online and of ine.

In the back of ce, the following important application systems are operative : (a) NCSS (Nationwide Clearing and Settlement System) 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 thirteen 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. (b) 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. (c) OPMS the online position monitoring system that keeps track of all trades executed for a trading member vis--vis its capital adequacy, (d) 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 real time information on initial margin value, mark to market pro t 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 (e) Data warehousing that is the central repository of all data in CM as well as F&O segment of the Exchange, (f) Listing system that 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 and (g) Membership system that keeps track of all required details of the Trading Members of the Exchange.

14

NSE Family

NSCCL

National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned subsidiary of NSE, was set up in August 1995. It was the rst clearing corporation in the country to provide novation/settlement guarantee that revolutionized the entire concept of settlement system in India. It commenced clearing operations in April 1996. It has been set up to bring and sustain con dence 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-de ned 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 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 nancial settlement. It also undertakes settlement of transactions on other stock exchanges like the Over the Counter Exchange of India. It operates Mutual Fund Service System to clear and settle purchase and redemption of mutual fund units for individual investors. It has tied up with 13 Clearing Banks viz., Canara Bank, Citi bank N.A, HSBC Ltd., HDFC Bank, IndusInd Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank Lt,. Bank of India, IDBI Bank, Standard Chartered Bank, State Bank of India and Union Bank of India 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 bene ciary 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 le 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 nancial 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

15

pre-set limits xed 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 trends/patterns.

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 sellers broker and buyers broker, which involved lot of time and the risk of delay somewhere along the chain. Further, the system of transfer of ownership was grossly inef cient 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 certi cate. In many cases, the process of transfer took much longer than stipulated in the then regulations. Theft, forgery, mutilation of certi cates and other irregularities were rampant. All these added to the costs and delays in settlement, restricted liquidity. To obviate these problems, NSE to promote dematerialization of securities joined hands with UTI and IDBI to set up the rst 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 its group companies exclusively.

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 ef ciency 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-To-Computer Link (CTCL) order routing system, NEAT iXS, an internet trading system and Probos, professional brokers back office system. NSE.IT also offers an e-learning portal, finvarsity (www. nvarsity.com) dedicated to the nance sector. The site is powered by Enlitor - a

16

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.

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 Poors (S&P), the worlds leading provider of investible equity indices, for co-branding equity indices. IISL is Indias rst 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, Indias rst exchange traded fund, a number of index funds, and Licensing of the Index for various structured products

NCDEX

NSE joined hand with other nancial 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. Currently NCDEX facilitates trading of 48 agro based commodities, 2 precious metal, 6 base metal, 3 energy products and 3 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.

PXI

A National Level Power Exchange by the name of Power Exchange India Limited (PXI) has been set up through a Joint Venture by Indias two leading Exchanges, National Stock Exchange of India Ltd (NSE) and National Commodity & Derivatives Exchange Ltd (NCDEX). PXI 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.

17

Table 1-1 : Board of Directors*

1 Mr. S. B. Mathur Chairman

2 Mr. Ravi NarainNational Stock Exchange of India Ltd.

MD & CEO

3 Ms. Chitra RamkrishnaNational Stock Exchange of India Ltd.

Deputy Managing Director

4 Mr. C. AchuthanFormer Presiding Of cer, Securities Appellate Tribunal

Director

5 Mr. Anjan BaruaChief General Manager ( Global Markets), State Bank of India

Director

6 Rear Admiral Madan Mohan Chopra AVSM (Retd.) Director

7 Mr. A. P. Kurian Chairman, Association of Mutual Funds in India

Director

8 Dr. Rajiv B. LallManaging Director & CEO, Infrastructure Development Finance Company Limited

Director

9 Mr. Lawrence LeibowitzGroup EVP and Head of US Markets & Global TechnologyNYSE Euronext

Director

10 Mr. Anand G. MahindraVice Chairman & Managing Director, Mahindra & Mahindra Ltd.

Director

11 Mr. Y. H. MalegamChairman Emeritus, M/s. S.B. Billimoria & Co. Chartered Accountants

Director

12 Prof. (Dr.) K. R. S. MurthyProfessor & Former Director, Indian Institute of Management, Bangalore

Director

13 Dr. R. H. PatilChairman, The Clearing Corporation of India Limited

Director

14 Ms. Bhagyam RamaniGeneral Manager, General Insurance Corporation of India

Director

15 Dr. V. A. Sastry Director

16 Mr. Onkar Nath SinghEx-Chairman & Mananging DirectorIndustrial Investment Bank of India Ltd.

Director

17 Mr. Justice B.N.Srikrishna (Retd.)Former Judge, Supreme Court of India

Director

18 Mr. T. S. VijayanChairmanLife Insurance Corporation of India

Director

* As of July 15, 2008.

18

Table 1-2 : Executive Committees

I CM & WDM SEGMENTS

1 Mr. Ravi Narain MD & CEO, National Stock Exchange of India Ltd.

Chairman

2 Mr. Ashok Kumar Agarwal Chairman, Globe Capital Market Ltd. Trading Member

3 Mr. D. C. Anjaria Director, International Financial Solutions Pvt. Ltd.

Public Representative

4 Mr. Vimal Bhandari Country Manager India AEGON International NV

Public Representative

5 Mr. C. J. George Managing Director, Geojit Financial Services Ltd.

Trading Member

6 Mr. Y. H. Malegam Chairman Emeritus, S.B.Billimoria & Co. Chartered Accountants

Public Representative

7 Ms. Chitra Ramkrishna Deputy Managing Director, National Stock Exchange of India Ltd

Other Nominees

8 Mr. Rashesh Shah Director, Edelweiss Securities Pvt. Ltd. Trading Member

9 Mr. Ramesh Kumar Somani Whole-time Director, Eureka Stock & Share Broking Services Ltd

Trading Member

10 Mr. P. M. Venkatasubramanian Ex-Managing Director, GIC Other Nominees

11 Mr. Gagan Rai Managing Director & CEO, National Securities Depository Limited

Other Nominees

II F&O MARKET SEGMENT

1 Mr. Ravi Narain MD & CEO, National Stock Exchange of India Ltd.

Chairman

2 Mr. D.C.Anjaria Director, International Finance Solutions Pvt. Ltd.

Public Representative

3 Prof. V. Ravi Anshuman Indian Institute of Management Bangalore

Public Representative

4 Mr. Sunil Godhwani Managing Director, Religare Securities Ltd.

Trading Member

5 Mr. Shailesh Haribhakti Chairman Haribhakti Group Public Representative

6 Mr. Ketan Marwadi Managing Director, Marwadi Shares and Finance Limited

Trading Member

7 Mr. M. Raghavendra Ex-General Manager, General Insurance Corporation of India

Other Nominees

8 Ms. Chitra Ramkrishna Deputy Managing Director, National Stock Exchange of India Ltd

Other Nominees

9 Ms. T. S. Jagadharini Vice President, National Stock Exchange of India Limited

Other Nominees

* As of July 15, 2008.

Membership Administration 2

20

21

2Membership AdministrationThe 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 ful lling 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 re ects a conscious effort by the Exchange to ensure quality broking services which enables to build and sustain con dence in the Exchanges 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, noti cations, 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.

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 graduates and must possess at least two years experience in securities markets. The applicant for trading membership/any of its partners/

22

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. For the F&O segment, at least two dealers should also have passed SEBI-approved certi cation test for derivatives. In case of corporate applicant, the minimum paid up capital should be Rs. 30 lakh and the dominant promoter/shareholder group should hold at least 51% (40% in case of listed companies) of paid-up equity capital of such corporate entity. The net worth required for trading members on CM & F&O Segment is 100 lakh, however, a net worth of Rs. 300 lakh is required for members clearing for self as well as for other trading members.

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 are presented in Tables 2-1A and 2-1B.

Growth and Distribution of Members

As at end March 2008, the Exchange had 1,075 members. A large majority (91.72 %) of them were corporate members, and the remaining, individuals and rms. There were 1,069, 63 and 942 members in the CM, WDM and F&O segments respectively. The growth of membership on NSE is presented in Table 2-2. The distribution of trading members on the Exchange as at end March 2008 is presented below:

Distribution of Trading Members (as on March 31, 2008)

CMSegment

WDMSegment

CM & WDM

Segment

CM, WDM & F&O Segment

CM & F&O

Segment

Total

Corporates 97 6 8 48 827 986

Individuals 10 0 0 0 34 44

Firms 12 0 0 0 33 45

Total 119 6 8 48 894 1,075

23

A total of 21,083 (1,359 corporates, 1,467 partnership rms and 18,257 individuals) sub-brokers were affiliated to 505 trading members of the Exchange on March 31, 2008.

Transaction Charges

In addition to annual fees, members are required to pay transaction charges on trades undertaken by them. They pay transaction charges at the rate of Rs. 3.5 for every Rs. 1 lakh of turnover in the CM segment. The transaction charges payable to the exchange by the trading member for the trades executed by him on the F&O segment are xed at the rate of Rs. 2 per lakh of turnover (0.002%) subject to a minimum of Rs. 1,00,000 per year. However, for the transactions in the options sub-segment the transaction charges will be levied on the premium value at the rate of 0.05% (each side) instead of on the strike price as levied earlier. The Exchange has waived the transaction charges for Wholesale Debt Market Segment of the Exchange for the period April 1, 2007 to March 31, 2008.

24

Tab

le 2

-1A

: El

igib

ility

Cri

teri

a fo

r M

embe

rhip

(All

valu

es in

Rs.

lakh

)

Par

ticu

lars

CM

and

F&

O S

egm

ent

CM

and

WD

M S

egm

ent

WD

M S

egm

ent

CM

, WD

M a

nd F

&O

Seg

men

t

Con

stitu

tion

Indi

vidu

als/

Firm

s/C

orpo

rate

s C

orpo

rate

sC

orpo

rate

sC

orpo

rate

s

Paid

-up

capi

tal

(in c

ase

of c

orpo

rate

s)30

3030

30

Net

Wor

th

100*

200

200

200*

Inte

rest

Fre

e Se

curi

ty D

epos

it

(IFSD

)12

5**

250

150

275*

*

Col

late

ral S

ecur

ity D

epos

it (C

SD)

25**

25N

il25

**

Ann

ual S

ubsc

ript

ion

12

12

Educ

atio

nIn

divi

dual

trad

ing m

embe

r/ tw

o pa

rtne

rs/t

wo

dire

ctor

s sho

uld

be g

radu

ates

. Dea

lers

shou

ld

also

hav

e pa

ssed

SEB

I app

rove

d ce

rti

catio

n te

st fo

r der

ivat

ives

and

Cap

ital M

arke

t (Ba

sic

or D

eale

rs) M

odul

e of

NC

FM.

At

leas

t tw

o di

rect

ors

shou

ld b

e gr

adua

tes.

At

leas

t tw

o di

rect

ors

shou

ld

be g

radu

ates

.

At

leas

t tw

o di

rect

ors

shou

ld b

e gr

adua

tes.

Dea

lers

sho

uld

also

hav

e pa

ssed

SE

BI

appr

oved

cer

tifi

cati

on

test

for

deri

vativ

es a

nd C

apita

l Mar

ket

(Bas

ic o

r D

eale

rs) M

odul

e of

NC

FM.

Expe

rien

ce---

------

------

------

--Tw

o ye

ars

expe

rien

ce in

secu

ritie

s mar

ket--

------

------

------

---

Tra

ck R

ecor

dT

he A

pplic

ant/

Part

ners

/Dir

ecto

rs s

houl

d no

t be

def

ault

ers

on a

ny s

tock

exc

hang

e.

The

y m

ust

not

be d

ebar

red

by S

EB

I fo

r be

ing

asso

ciat

ed w

ith

capi

tal

mar

ket

as

inte

rmed

iari

es T

hey

mus

t be

enga

ged

sole

ly

in th

e bu

sines

s of

sec

uriti

es a

nd m

ust n

ot b

e en

gage

d in

any

fund

-bas

ed a

ctiv

ity.

*

No

addi

tiona

l net

wor

th is

requ

ired

for s

elf-c

lear

ing

mem

bers

in th

e F&

O se

gmen

t. H

owev

er, a

net

wor

th o

f Rs.

300

lakh

is re

quir

ed fo

r mem

bers

cle

arin

g fo

r sel

f as w

ell

as fo

r ot

her

trad

ing

mem

bers

.

**

Add

ition

al R

s. 25

lakh

is r

equi

red

for

clea

ring

mem

bers

hip

(sel

f-cle

arin

g m

embe

r/m

embe

rs c

lear

ing

for

self

as w

ell a

s fo

r ot

hers

) in

the

F&O

seg

men

t. In

add

ition

, a

mem

ber

clea

ring

for

othe

rs is

req

uire

d to

bri

ng in

IFSD

of R

s. 2

lakh

and

CSD

of R

s. 8

lakh

per

trad

ing

mem

ber

he u

nder

take

s to

clea

r in

the

F&O

segm

ent.

25

Contd...

Table 2-1B : Requirements for Professional Clearing Memberhip

(All values in Rs. 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 Rs. 2 lakh

and CSD of Rs. 8 lakh per trading member whose trades he undertakes to clear in the F&O segment and IFSD of Rs. 6 lakh and CSD of Rs. 17.5 lakh (Rs. 9 lakh and Rs. 25 lakh respectively for corporate Members) per trading member in the CM segment.

Table 2-2 : Growth and Distribution of Members

Trading Members

Month/Year(end of period)

CM Segment WDM Segment

F&O Segment

Total * Professional Clearing Member

Mar-95 348 88 353

Mar-96 890 104 895

Mar-97 1,013 111 1,019

Mar-98 964 108 970

Mar-99 918 99 924

Mar-00 883 94 892

Mar-01 973 90 340 980 13

Mar-02 928 88 484 936 13

Apr-02 927 89 502 935 13

May-02 926 88 501 934 13

Jun-02 920 86 449 928 13

Jul-02 918 85 521 926 13

Aug-02 914 84 532 921 13

Sep-02 912 84 532 919 13

Oct-02 907 82 540 914 13

26

Table 2-2 : Growth and Distribution of Members

Trading Members

Month/Year(end of period)

CM Segment WDM Segment

F&O Segment

Total * Professional Clearing Member

Nov-02 899 82 539 906 13

Dec-02 894 81 544 901 14

Jan-03 891 81 546 899 13

Feb-03 889 79 551 897 13

Mar-03 887 78 553 895 13

Apr-03 882 77 561 890 13

May-03 874 77 566 882 13

Jun-03 870 77 568 879 13

Jul-03 863 75 568 872 13

Aug-03 859 75 568 869 13

Sep-03 860 75 574 871 14

Oct-03 860 75 578 871 14

Nov-03 857 75 579 868 14

Dec-03 860 75 583 871 14

Jan-04 861 76 584 872 14

Feb-04 861 76 588 872 16

Mar-04 862 78 589 874 16

Apr-04 860 75 595 872 16

May-04 860 75 599 872 17

Jun-04 863 75 614 874 17

Jul-04 865 75 621 876 17

Aug-04 866 75 621 877 17

Sep-04 866 74 620 876 17

Oct-04 869 76 625 880 17

Nov-04 868 74 628 879 17

Dec-04 867 74 634 878 17

Jan-05 872 74 646 883 17

Feb-05 876 75 652 886 16

Mar-05 881 75 661 891 17

Apr-05 884 75 667 894 17

May-05 886 75 676 896 17

Jun-05 885 75 679 895 17

Jul-05 883 74 679 893 16

Aug-05 887 71 695 896 17

Contd...

Contd...

27

Table 2-2 : Growth and Distribution of Members

Trading Members

Month/Year(end of period)

CM Segment WDM Segment

F&O Segment

Total * Professional Clearing Member

Sep-05 892 70 702 899 17

Oct-05 900 70 704 907 17

Nov-05 902 70 706 909 17

Dec-05 903 70 716 910 17

Jan-06 915 70 731 922 17

Feb-06 920 68 753 927 19

Mar-06 933 68 767 940 19

Apr-06 937 68 776 944 17

May-06 937 68 776 944 17

Jun-06 950 68 789 957 18

Jul-06 950 68 789 957 18

Aug-06 964 68 804 971 19

Sep-06 966 68 806 973 19

Oct-06 965 66 805 972 19

Nov-06 972 66 811 979 19

Dec-06 978 64 819 985 19

Jan-07 991 64 832 998 19

Feb-07 995 63 836 1,002 19

Mar-07 1,002 63 845 1,009 19

Apr-07 1,003 62 849 1,009 19

May-07 1,005 62 851 1,011 19

Jun-07 1,008 62 859 1,014 19

Jul-07 1,018 62 884 1,024 19

Aug-07 1,014 62 871 1,020 19

Sep-07 1,016 62 877 1,022 19

Oct-07 1,018 62 884 1,024 19

Nov-07 1,018 62 884 1,024 19

Dec-07 1,025 62 892 1,031 19

Jan-08 1,033 62 901 1,039 19

Feb-08 1,051 62 919 1,057 19

Mar-08 1,069 62 942 1,075 19

-- Not Applicable

* Do not add up to total because of multiple membership.

Note: Number of SEBI registered members excluding surrendered, dafaulter and expelled members.

Contd...

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Listing of Securities 3

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3Listing of SecuritiesThe stocks, bonds and other securities issued by issuers require listing for providing liquidity to investors. 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 satis es 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.

Bene ts of Listing on NSE

The bene ts of listing on NSE are as enumerated below:

NSE provides a trading platform that extends across the length and breadth of the country. Listing on NSE thus, enables issuers to reach and service investors across the country.

NSE being the largest stock exchange in terms of trading volumes, the securities trade at low impact cost and are highly liquid. This in turn reduces the cost of trading to the investor.

The trading system of NSE provides unparallel level of trade and post-trade information. The best 5 buy and sell orders are displayed on the trading system and the total number of securities available for buying and selling is also displayed. This helps the investor to know the depth of the market. Further, corporate announcements, results, corporate actions etc are also available on the trading system, thus reducing scope for price manipulation or misuse.

The facility of making initial public offers (IPOs), using NSEs network and software, results in signi cant reduction in cost and time of issues.

NSEs web-site www.nseindia.com provides a link to the web-sites of the companies that are listed on NSE, so that visitors interested in any company can visit that companys web-site from the NSE site.

Listed companies are provided with monthly trade statistics for the securities of the company listed on the Exchange.

The listing fee is nominal.

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Listing Criteria

The Exchange has laid down criteria for listing of new issues by companies through IPOs, companies listed on other exchanges in conformity with the Securities Contracts (Regulation) Rules, 1957 and directions of the Central Government and the Securities and Exchange Board of India (SEBI). The criteria include minimum paid-up capital and market capitalisation, company/promoters 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, noti cations, 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 speci es 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 of cer, corporate governance report, investor grievances and various disclosures etc.

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.

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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 at its general meeting, make a public announcement in the manner provided in these guidelines, make an application to the delisting exchange in the form speci ed by the exchange, and comply with such other additional conditions as may be speci ed 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 shall 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.

The table below gives the names of the six companies delisted from the Exchange during 2007-08.

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Sr. No. Name of the Company Date of Delisting

1 Yokogawa India Limited 10-May-07

2 Wartsila India Ltd 19-Jun-07

3 FCI OEN Connectors Limited 17-Sep-07

4 Panasonic AVC Networks India Co. Limited. 14-Dec-07

5 Essar Steel Limited 24-Dec-07

6 iGate Global Solutions Limited 4-Feb-08

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. However, the permitted to trade category has been phased out gradually and no new company is been given the bene t of this category. At the end of March 2008, 1,381 companies were listed while 1,236 companies available for trading. These securities had a market capitalisation of Rs. 48,58,122 crore (US $ 1,215,442 million). The growth of securities available for trading on the CM segment is presented in Table 3-2.

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

(Rs.)

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 Rs. 1 Crore 10,000

b) Above Rs. 1 Crore and upto Rs.5 Crores 15,000

c) Above Rs. 5 Crore and upto Rs.10 Crores 25,000

d) Above Rs. 10 Crore and upto Rs.20 Crores 45,000

e) Above Rs. 20 Crore and upto Rs.30 Crores 70,000

f) Above Rs. 30 Crore and upto Rs.40 Crores 75,000

g) Above Rs. 40 Crore and upto Rs.50 Crores 80,000

Contd...

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Listing Fees in the CM Segment

Sr. No.

Listing Fees Amount

(Rs.)

h) Above Rs. 50 Crores and upto Rs.100 Crores 1,30,000

i) Above Rs. 100 Crore and upto Rs.150 Crores 1,50,000

j) Above Rs. 150 Crore and upto Rs.200 Crores 1,80,000

k) Above Rs. 200 Crore and upto Rs.250 Crores 2,05,000

l) Above Rs. 250 Crore and upto Rs.300 Crores 2,30,000

m) Above Rs. 300 Crore and upto Rs.350 Crores 2,55,000

n) Above Rs. 350 Crore and upto Rs.400 Crores 2,80,000

o) Above Rs. 400 Crore and upto Rs.450 Crores 3,25,000

p) Above Rs. 450 Crore and upto Rs.500 Crores 3,75,000

Companies which have a paid up share, bond and/ or debenture and/or debt capital, etc. of more than Rs.500 crores will have to pay minimum fees of Rs.3,75,000 and an additional listing fees of Rs.2,500 for every increase of Rs.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 Rs.1,000 crores will have to pay minimum fees of Rs.6,30,000 and an additional listing fees of Rs.2,750 for every increase of Rs.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 presents the sector-wise shareholding pattern at end - March 2008 of companies listed on NSE. On an average, the promoters hold more than 56.12% of total shares. Though non-promoter holding is nearly 41.91 %, Indian public held only 13.07% and the institutional holdings by Financial Institutions / Banks / Central Government / State Government / Insurance Companies, FIIs, MFs, VCFs accounted for 19.37 %.

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

Contd...

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for trading in the 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 2008, 3,566 securities with issued capital of Rs.2,103,082 crore (US $ 526,165) and a market capitalisation of Rs.2,123,346 crore (US $ 531,235) were available for trading on the WDM segment.

FUNDS MOBILISATION ON THE EXCHANGE

During the year 2007-08, the resources raised through Public Issues, Rights Issues, QIP and Preferential Allotments is summarized in the table below.

Particulars No. of Issues

Amount Amount

(Rs.cr) (US $ mn)

Public Issues 77 62,483.70 15,632.65

IPOs 74 41,899.13 10,482.64

FPOs 3 20,584.57 5,150.01

Rights Issues 14 13,413.79 3,355.96

QIP 33 24,434.17 6,113.13

Preferential Allotment 174 24,026.97 6,011.25

Total 298 124,358.64 31,112.99

Initial Public Offerings (IPOs)

During the year 2007-08, 74 companies were listed through IPO and the amount mobilized through issuance of IPOs was Rs.41, 899.13 crore (US $ 10,482.64 million). The biggest IPO was that of Reliance Power Limited from the Infrastructure sector whose issue size was Rs.11,563.20 crore (US $ 2,893 million). DLF Limited was the second largest IPO during the year, issue size of which was Rs.9,187.50 crore ( US $ 2,299 million) followed by Power Grid Corporation of India Ltd. with issue size of Rs.2,984.45 crore (US $ 746.67 million). The details of IPOs listed on NSE during 2007-08 is presented in Table 3-6.

FPOs

During the year 2007-08 three companies raised capital through the FPO route raising resources worth Rs. 20,584.57 crore (US $ 5,150.01 million). The details of FPOs listed on NSE during 2007-08 is presented in Table 3-7.

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RIGHTS ISSUES

There were 14 Rights issues during 2007-08, out of which Tata Steel Limited was the largest in terms of issue size of Rs.9,120.85 crore (US $ 2,281.92 million). The details of Rights Issues listed on NSE during 2007-08 is presented in Table 3-8.

PREFERENTIAL ALLOTMENT/PRIVATE PLACEMENT

During 2007-08, there were 174 preferential allotments that raised Rs.24,026.97 crore (US $ 6,011.25 million). The details of Preferential Allotment listed on NSE during 2007-08 are presented in Table 3-9.

QIPs

The amount raised through 33 QIPs during 2007-08, was Rs.24,413.17 crore (US $ 6,113.13 million). GMR Infrastructure raised the highest amount of Rs.3,965.71 (US $ 992.17 million).The details of QIPs are presented in Table 3-10.

Chart 3-1 Number of Companies Listed

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Table 3-1 : Listing Criteria f