Saw this query online, posting it here so @nithin can answer.
I have been using Zerodha to trade in Indian Equities for a few months now. Last week I bought a few shares of a company which is listed on both BSE and NSE. Though I bought the shares on NSE, the statement I recieved in my email showed that the shares have been purchased on BSE. I checked my holdings, where it also showed that the shares have been purchased on BSE. I thought I might have accidentally placed an order in BSE rather than NSE. Even after mailing the Zerodha helpline, we did not recieve any satisfactory justification for the issue. The two exchanges are different in terms of liquidity as well as the volumes traded for which reason I, like many, prefer to trade on NSE. Though it’s not that big an issue as mostly the price of the traded stocks is same on both the exchanges but today Bajaj Finance closed at different prices on BSE and NSE and there was a significant difference.
latest update: SEBI has now mandated that brokers show the exchange where the price is better. Check this circular.
Say you are buying Bajaj scooter, does it matter which showroom you buy it from? You would go and buy it from wherever the price is lesser right? Similarly, say you are selling this back to the showroom, does it matter which showroom you sell it at? You will sell where the price is higher right?
Stocks work the same way, it doesn’t matter which exchange you buy it from, once it is in your demat account, it loses the tag of the exchange. Your holdings on Kite uses the last traded price to show the value of the holding. Until now we were showing the value based on LTP of NSE by default. But we had cases where our customers were losing out on money by selling without seeing where the price was higher, check the examples here. Customers lost quite a bit recently when there was corporate action on Alok, there was a huge price differential between the exchanges, but many of our customers ended up selling on the exchange where the price was lower. Many of them complained to us later saying we should have alerted them.
So what we have started doing now is that on the holdings page, we show the LTP based on the exchange where the price is higher. This way, helping you make a little more money. But that said, you can sell the stock on whichever exchange you want by adding the stock from that exchange on the watchlist and placing a sell CNC order. It is preferable to sell it on NSE if you are trading large quantities as the liquidity is much higher, so if you have Rs 50lks in value of any stock, we default it to NSE LTP.
Coming to the question on the huge price difference. The closing price on the stock exchanges is the average price of the last 30 mins and not the last traded price of the day. Check this link. Most websites show you the last traded price of the day. So if you want to see the correct closing price for a stock for a day, please look at it on the exchange website, it gets updated at around 4 pm.
Yesterday closing on NSE is 3025.8 and on BSE is 3027.8. Since BSE is more, it is showing BSE LTP on your holdings page.
Post corporate action or after IPO, if stocks list on both the exchange at different prices for some reason, and if they keep hitting upper/lower circuit (like in Alok) everyday, the difference in listing price between exchanges will exist until one of them goes out of the circuit.
So for example say a stock listed (after corp action or IPO) on NSE at Rs 100 and on BSE at Rs 110. This price difference because at listing there is still no clarity on what the ideal price should be. After this say stock moves up 10% which is the circuit, NSE will hit at circuit at 110 and BSE at 112. This will keep happening until the exchange where the price is higher stops hitting circuit and where the price is lower catches up.
Due to this recent changes, sometimes, I’m not able to sell a stock directly from the Holdings. I generally trade from NSE. But since the stock shows BSE in Holdings, the order gets rejected while selling saying this segment is not activated. How to fix that? If the ‘showroom’ doesn’t matter why Kite is not allowing to return my ‘vehicle’?
@nithin there are multiple issues with BSE: 1. 20 depth data is not available, 2. Quantity of orders is usually very small in BSE which eventually result in lower sell prices.
Customer should have choice to keep default exchange as per their wish. Pls make necessary changes where customer can opt for exchange of their choice.
And for scooter I would also consider who’s giving me scooter early and giving me option to choose color of my choice So it does matter from which showroom I buy it!!
Btw, now BSE is asking all brokers to do this (SEBI instruction) Check this.
As per the provision of aforementioned SEBI Circulars and Clause B (1) of the Code of Conduct as specified in Schedule II of Regulation 9(f) of SEBI (Stock Brokers) Regulations, 1992 stipulates that the broker should execute transactions for its clients at the best available market price .