BSE or NSE?

I had written in my earlier post that these two exchanges pretty much make up for all securities trades in India. One of the queries I had received was, what's really different between the two exchanges? Why should a company choose either BSE or NSE or both?

Here you go..

A stock exchange is what brings the willing buyers and sellers together. The act of "listing" is like a formal admission of a security to be traded on an exchange. Each of these exchanges have their own listing requirements. For example, NSE stipulates things like minimum paid up capital, minimum number of shares that needs to be held with public, company's track record etc. A stock can be "admitted" into NSE only if it fulfills these criteria. Similarly BSE has its own set of criteria and so do the bunch of regional stock exchanges in India.

Now, a company looks at various aspects before it makes its listing decision on a particular stock exchange. Does this exchange have enough trading platforms across the country? How much trading volumes happen in the exchange? What is the technical capability of the exchange? What MIS support does it offer? Remember, a company evaluates these aspects primarily to ensure liquidity of its shares and to provide ease of transacting for its investors. Without these elements, an investor might not be willing to invest in the company, despite the company's solid credentials.

Once the decision is made, the company pays the listing fees and gets itself listed on these exchanges. Almost all major companies are listed both on the NSE and the BSE.