Today date is '08-Aug-2018'. When I am looking for Previous Closing price of RELIANCE security from NSE and BSE exchanges, It differs one and each other.

BSE says Previous closing price of RELIANCE is, 1,191.50 INR,
NSE* says Previous closing price of RELIANCE is, 1,192.60 INR

Which Exchange Price is much appropriate? Which Price Should I take for my many Reports like Unrealized and Relaized Gain?


As a "Retail Investor"

According to the question Can I buy a share from one stock exchange and sell it to another stock exchange? on Quora, to be able to buy shares on one exchange and sell on another you need to have a Demat account with a broker who is a member of both exchanges.

If this is the case, it seems appropriate to take the most favourable price when evaluating unrealised gains as – when you come to sell – you will be able to sell on the exchange offering the best price1,2.

If you don't have the ability to trade across the two exchanges, then you should use the price from the exchange where you bought (and therefore will have to sell) the shares.

Note: the above applies to unrealised gains – the potential gain (or loss) you would make if you did sell. For realised gains (actual gain/loss), you would use whatever price you actually sold your shares at.

Disclaimer for Portfolio Managers

The original answer (above) was written from the point-of-view of a "retail investor". The assumption being that the "unrealised gains" figure is little more than a "nice to have" figure to see whether, and by how much, your investments are in potential profit (while being fully aware that nothing really matters until you actually sell).

Comments from the OP to the original answer seem to suggest that they are looking at things from more of a commercial "portfolio manager"'s point-of-view, e.g.:

Many portfolios nowadays pay management fee based on whether Performance (and, or Performance History) is above or below a particular agreed upon tiers.

[...] cherry picking the highest closing prices of the two exchanges leads to unpleasantness.

Are there guidelines from the market regulator on how portfolio values should be presented to investors when same securities are traded at multiple exchanges leading to multiple closing prices?

From that point-of-view, the main answer is probably too simplistic. Yes, there very probably are regulations about how potential gains are to be reported and about "cherry-picking" prices from different exchanges. Contracts with clients (and the fees they pay) may well hinge on fractional percentage points. This answer is not aimed at such an audience.

1 I've no idea whether "cross-exchange trading" attracts higher brokerage fees or not: if it does, then you will have to factor that into any calculation of unrealised gain.

2 In practice, any price difference between the two exchanges is likely to be short-lived. As soon as one or both exchanges open, the gap is likely to disappear as market forces bring the prices back into line.

  • 1
    +1. FYI. One can trade on BSE or NSE ... Both are stock exchanges and connected to CSDL and NSDL depositories. Depositories are connected and clear amongst each other. Most large brokers are connected to both exchange. There is no additional charge due to this. There were funds that focused on this arbitrage... However they are not doing well.
    – Dheer
    Aug 8 '18 at 16:42
  • For Realized Gains, it is simple in that we have to take the price at which the closing trade was executed. For Unrealized Gains, I believe it is easier said than done that I should take the price of the exchange where I buy (or, short sell) the shares from. There are times when we do not even know through which exchange an opening trade, long or short, got executed, at least for a while. Also, when more than one lot for a security exists in portfolios that were executed in more than one exchange, keeping track of at what exchange a lot was executed becomes an issue. Aug 9 '18 at 14:16
  • Moreover, when portfolios' values are presented showing individual lots, if lots got executed in multiple exchanges, for the same security different lots would show different closing prices! Aug 9 '18 at 14:17
  • Unrealized Gains is a major component of portfolios' values, and, they drive the Performance and Performance History calculations. Many portfolios nowadays pay management fee based on whether Performance (and, or Performance History) is above or below a particular agreed upon tiers. Even one basis point at times makes the difference between fees being paid at a higher, or, lower previously agreed upon tier. Also, when portfolio values are presented to investors, cherry picking the highest closing prices of the two exchanges leads to unpleasantness. Aug 9 '18 at 14:17
  • Comparing the performance of multiple portfolio managers, from the statements received from the multiple portfolio managers also becomes problematic. Aug 9 '18 at 14:17

Unrealized gains is a national number. Use any. The difference is not great.

Realized gains the price is what you sold for and not the closing price.


If you're tracking unrealized gains, does it then feed into a system of accounting that is supposed to produce IFRS-compliant statements (which is required for any major organization operating in India now, based on my research)?

If so then IFRS 13-24 applies: "Fair value measurement assumes a transaction taking place in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market for the asset or liability"

Does trading occur principally on BSE or NSE for Reliance (look for market volumes from both exchanges for the day and see if one is substantially larger than the other in terms of volume, like one having 10X of the other's - a close to 50-50-ish split leaves you in same quandary).

If not, then as long as you can satisfy the over-arching requirement of IFRS 13 that either of the prices are the "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date" then technically both prices are appropriate.

Since you're talking about an asset on the balance sheet, then you'd want to use whichever price is that at which you could easiest and in the most orderly fashion sell your price. This is likely the highest bid.

TL:DR; I suspect the prices in the paper are the last price. Those can be unusable for valuation sometimes. See if you can get the bid and ask for Reliance. Then price at the highest bid and you'd be fine, unless if the lower bid is at the bigger exchange then use that. If can't get bid-ask breakdown, then use the last price of the bigger exchange (if one bigger by like 10x in terms of trading volumes). If not, theoretically you can use either but might have to make a disclosure unless if your company trades in a lot of securities and already has made a blanket disclosure via policies and memorandum - check that. Some companies will make that policy public in the notes to their financial statements and just follow what that says.

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