Market Trends of India Capital Industry Exchange Ecosystem
Equity Derivatives Occupied with Major Share in the Secondary Capital Market
The main stock exchanges in India are the National Stock ExchangeNSE and the Bombay Stock ExchangeBSE. These platforms make it easier for domestic and international companies to trade stock, derivatives, bonds or other financial instruments. Overseeing these markets is the Securities and Exchange Board of India (SEBI), the country's key regulatory authority. SEBI's role encompasses policy formulation, regulation enforcement, and safeguarding investor interests. The NSE and BSE host a diverse array of listings, spanning public sector enterprises (PSEs), private firms, and multinational corporations. These entities often raise capital through avenues like initial public offerings (IPOs) and subsequent equity issuances, channelling the funds towards business expansion, projects, and operations. India's capital markets draw participation from various investor segments, including retail investors, institutional players like mutual funds, insurance firms, pension funds, and foreign institutional investors (FIIs). Notably, the stock market has witnessed a surge in retail investor engagement, buoyed by initiatives like dematerialization of securities and electronic trading platforms.
Co- Location Trading have Major share in the Equity Derivatives Segment of NSE
In co-location, a system popular with traders using sophisticated trading programs, stock exchanges allow market participants to set up a server on exchange premises. The intention is to allow them to maintain their servers closest to the exchange servers. In India, the main exchange servers are in Mumbai, but the brokerages using them are spread across the country. Based on modes of trading at the exchange platform, it is observed that, during 2021-22, fifty percent of trading in the equity derivatives segment of the NSE was through the co-location route, followed by non-algo trading, direct market access, internet-based trading, mobile trading, and algo trading. The co-location is mainly used only by institutional investors and brokers for their proprietary traders. Retail investors have a negligible presence here.
