Author(s): Harsh Raj Pathak, Garima Sisodia, Sonali Narbariya, N. Akbar Jan and A. K. Subramani
Purpose: In the light of the globalization of capital markets and the new opportunities arising for stock market evolution in recent years, the main objective of this paper is to empirically compare two time periods (Pre and Post colocation) involving market innovation for Indias two major stock exchanges National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The study also aims to find if the relative attractiveness of NSE with respect to BSE has changed due to financial market innovation. Design/technique/Methodology: The unmatched two-sample t-test with unequal variance was used to compare listing and trading competition variables of NSE and BSE over two time periods (Pre and Post colocation). Further, Analysis of Variance (ANOVA) was applied to check the robustness of the results. For this purpose, the studys period was bifurcated into three periods (i.e. Pre colocation, during scam, and Post colocation). Results: The results of the t-test and ANOVA suggest a significant difference between the distinct periods of the study in both the listing as trading variables. Hence, there is a considerable difference in the attractiveness of both NSE and BSE throughout the study. Originality/Value: The Indian Stock Market has witnessed a paradigm shift in technology. This shift in the intensity of Algorithmic Trading can be attributed to the innovation of colocation facility. Therefore, based on extant literature and collection of factual information, this study is amongst the earliest to empirically highlight the difference of attractiveness between NSE and BSE in pre and post colocation. Implications: The study is helpful for regulators to understand the competition between NSE and BSE because regulator (SEBI) continually strives to operate in a fair market environment. The trading attractiveness of NSE is less than BSE in the post colocation. Policymakers and financial advisors can use this information to make their suggestions accordingly.