NSE (National Stock Exchange) had been looking to upgrade its existing clearing & settlement systems for a while. Now, instead of doing that on its own, India’s top stock market exchange has gone into a technology and strategy based agreement with the top US exchange Nasdaq.
Under this agreement, the US exchange will be providing a real-time clearing, settlement technology to along with a risk management system to the National Stock Exchange.
The current system was being provided by NSE’s subsidiary NSCCL which will now be replaced by the one provided by Nasdaq. The complete system transition will take an approximate timeline of 2 to 3 years. With this movement, all the asset classes will be cleared within a single system.
At the same time, Nasdaq will be utilizing the capability of NSEIT capability in future implementations and project augmentation at a global level.
Both the exchanges signed an agreement to go beyond and look to work together in opportunities such as listings, corporate and market services to go along with data and innovations in products, processes and technology. This is definitely a first in the history of the National Stock Exchange in India.
A detailed MoU (Memorandum of Understanding) was signed on the above-mentioned areas.
The Nasdaq spokesperson said that such risk management and clearance systems are operated in over 100 marketplaces and their respective exchanges through Nasdaq – however, this one has been exclusively designed and customized for the needs of the Indian Stock market. This system will not be made available to other exchanges.
With this upgrade, the clearing system will have better efficiency, reduced risks in post-trade situations.
At the same time, there was no discussion done around the point of Nasdaq picking up an equity stake in NSE.
With such developments, not just NSE – it brings a sense of evolution in the overall Indian Stock market space.
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