Recent Development in Stock Exchange
The structure of stock market in India has
undergone a vast change due to the liberalization process initiated by the
Government. A number of new structures have been added to the existing
structure of the Indian stock exchange. A brief description of these structures
in the Indian stock market system is presented below:
National stock market system was advocated by the - High Powered Group on the
Establishment of New Stock Exchanges headed by Shri.M.J.Pherwani (popularly
known as Pherwani Committee). At present the National Stock Market in India
comprises the following:
1. National Stock Exchange of India Limited (NSE)
2. Stock Holding Corporation of India Limited
(SHCIL)
3. National Clearing and Depository System (NCDS)
4. Securities Trading Corporation of India (STCI)
5. National Securities Depositary Limited (NSDL)
NSE was incorporated in November, 1992. It is a
country wide, screen based, online and order driven trading system. It uses
satellite link to spread trading throughout the country thereby connecting
members scattered all over the India. Through computer network, member‘s orders
for buying and selling within prescribed price are matched by central computer
with each other and instantly communicate to the trading member. NSE has two
segments, i.e., Debt segment and Capital segment. It has ushered in
transparent, screen based and user friendly trading of global standards. It has
revolutionised stock trading in India.
The Stock Holding Corporation of India Ltd (SHCIL)
is committed to speed up trading, clearance and settlement services for
securities and monetary instruments. SHCIL came into being in 1986. SHCIL is
the first depository participant registered with SEBI and acts as an agent of
the National Securities Depository. It started its actual operations in 1988.
It has its head office in Bombay, and its branch network covers Kolkatta, Delhi
and Chennai.
This system was created chiefly to help overcome
the problem of settlement and clearance of transactions consequent to enormous
workload on the clearing agencies and share transfer agencies. The problems
mainly arose out of systematic risk like counter party risk, credit risk, bad
deliveries, long delayed delivery, counterfeit scrips, and forged scrips.
The Reserve Bank of India set up Securities Trading
Corporation of India Limited (STCI) in May 1994, under the provisions of the
Indian Companies Act, 1956, jointly with public sector banks and All-India
financial institutions. The main objective of establishing the Corporation was
to foster the development of an active secondary market for Government
securities and bonds issued by public sector undertakings. It had an authorized
and paid-up capital of Rs. 500 crores of which, RBI contributed 50.18 percent.
The RBI in December 1997 divested part of its equity in STCI in favor of the
Bank of India, an existing shareholder of the Company.
The Government of India enacted the Depositories
Act in August 1996, paving the way for setting up o f depositories in India.
Thus, pioneering the concept of depositories and ushering in an era of
paperless settlement of securities. National Securities Depository Ltd (NSDL)
was inaugurated as the first depository in India on November 8, 1996. Trading
in dematerialized securities on the National Stock Exchange (NSE) commenced in
December 26, 1996. The Bombay Stock Exchange, (BSE) also extended the facility
of trading in dematerialized securities from December 29, 1997.
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