NSE Claims It Has Become the World's Largest Derivatives Exchange
Moneylife Digital Team 21 January 2020
National Stock Exchange of India Ltd (NSE) claims that it has emerged as the world's largest derivatives exchange in 2019 by number of contracts traded surpassing the CME Group, based on the statistics published by Futures Industry Association (FIA), a derivatives trade body.
The Exchange is also ranked 3rd in the world in the cash equities segment by number of trades as per the statistics published by the World Federation of Exchanges (WFE), NSE says. Ironically, while the Exchange has become world’s largest derivative exchange, a chunk of NSE's profits is impounded by the market regulator, due to ongoing litigations in the co-location or algo trading scam. But more about it later.
In a release, Vikram Limaye, managing director (MD) and chief executive (CEO) of NSE says, "Market development is critical for financing the growth of India and for achieving the aspiration of becoming a $5 trillion economy by 2024-25. Robust capital markets are not only critical for financing the country's growth potential but also for creating employment opportunities for our youth." 
Over the last five years, NSE says its cash equities segment has grown by more than 90% to about Rs34,264 crore in 2019 from a daily average turnover of about Rs17,572 crore in 2015. "During the same period, equity derivatives daily average turnover has increased by 70% to Rs88,772 crore in 2019 from about Rs52,371 crore in 2015. Derivatives to cash market turnover ratio consistently remained around times. Further, during this period, NSE witnessed about 60% delivery percentage of trades executed in the cash market," the release says.
Growth in volumes of both cash equities and derivatives is on the back of deepening of equity markets in India. NSE says it witnessed more than 1.2 crore new investor registrations in the cash equities segment over the past five years out which close to 87 lakh registrations were in the past three years alone. 
NSE says, "It is also observed that a third of the new investors have come from tier 3 and tier 4 cities and towns. Another heartening feature is adoption of digital tools by investors with about 26% of total trading activity in the cash equities segment coming through mobile and internet trading."
Last year, in a hard hitting order, Securities and Exchange Board of India (SEBI) had said, "NSE has committed a fraudulent and unfair trade practice as contemplated under the SEBI (PFUTP) Regulations. It is established beyond doubt that NSE has not exercised the requisite due diligence while putting in place the tick-by-tick (TBT) architecture."
The regulator had also asked the exchange to disgorge an amount of Rs624.89 crore along with interest calculated at the rate of 12% per annum to the Investor Protection and Education Fund (IPEF). SEBI estimated that NSE earned a profit of Rs624.89 crore during 2010-11 to 2013-14 from its co-location operation. (Read: NSE Co-location Scam: SEBI Orders Disgorgement of Profits from NSE and Salaries of former MDs, Ravi Narain and Chitra Ramkrishna)
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