Stock Exchanges in India

STOCK EXCHANGES IN INDIA:

It is an organized market for the purchase and sale of industrial and financial security. It is also known as Secondary market or stock market.

FUNCTIONS OF STOCK EXCHANGES

1. Ensure Liquidity of Capital

The stock exchanges provide a place where shares and stocks are converted in to

cash.

2. Continuous Market for securities:

The stock exchanges provide a ready market for securities.

3. Evaluation of securities:

The investors can evaluate the worth of their holdings from the prices quoted at different exchanges for those securities.

4. Mobilizing surplus savings:

Ready market-The investors do not have any difficulty in investing their savings by purchasing shares, bonds etc., from the exchanges.

5. Helpful in raising New capital:

The new concerns raise the capital for the first time and existing concerns increase their capital

6. Safety in Dealings:

Rules governed by Securities contract(Regulation ) Act, 1956

7. Listing of Securities:

Listed securities can purchase in market

8. Platform for public debt:

Stock exchanges for organized markets of government securities

9. Clearing House of Business Information:

The listed companies must provide financial statements, annual reports etc.,

ß          Stock Exchanges in India

1. Bombay stock Exchange (BSE)

¸       It is the oldest stock exchange in Asia

¸       It has established as   The Native share and stock Brokers  in 1875

Features of BSE

¸ Largest stock Exchange in Asia

¸ Fifth largest stock market in the world

¸ More than 6, 000 Indian companies are listed in BSE

¸ It used BOLT ( BSE online Trading system) as the stock trading system in the world

OTCEI

¸ It started in oct 1990

¸ It uses the model as NASDAQ ( National association of security Dealers automated Quotations)

Features of OTCEI

Ringless Trading: Screen based trading

National network: wide network and grater liquidity

Totally computerized: Transparent and quick market

Exclusive List of companies: Exclude other stock exchange companies

Two ways of making a public offer:

Direct offer : offer shares directly to public

Indirect offer: offer shares indirectly to public ie., to sponsors

Fast Transfers: fast settlement called counter receipt

Trading Mechanism: Export and Import Shares. The parties are Investor, counter, settler registered custodian, company and bank

Objectives of OTCEI

¸ To provide a nation wide investor base to small companies

¸ To encourage public issues

¸ To enable small companies to raise capital at low cost

¸ To offer quick settlement and transparent facilities

¸ To provide a single trading platform for investors

Benefits of OTCEI

To Investors:

¸ Easy Accessibility

¸ Improved Liquidity

¸ Transparency

¸ Immediate transfer of shares

¸ Speedy settlement of Trades

Benefits for Issuing companies:

¸ Low cost of Issuing shares

¸ Beneficial for small companies

¸ Benefit on account of the image Market maker

NSE(National Stock Exchange)

NSE was promoted by IDBI, ICICI, IFCI, GIC, LIC, State bank of India, SBI capital markets limited, SHCIL and IL & FS as a joint stock company under the companies Act 1956.

Features of NSE

¸ India  s largest exchange

¸ Equity capital : 25 crores

¸ Head quarters in Mumbai and back office in Chennai

¸ It is a joint stock company and tax paying company

¸ Strict in disclosure and listing norms

Advantages of NSE

¸ Wider accessibility

¸ Screen based trading

¸ Non disclosure of trading members identity

¸ Transparent of transactions

¸ Matching of orders

¸ Effective settlement of corporate benefit

¸ Trading in dematerialized form

¸ SGL ( subsidiary General Ledger) facility in debt market

ISE ( Inter connected Stock Exchange)

¸ It is a national level stock exchange, providing trading, clearing, settlement, risk management and surveillance support to its trading members.

¸       Aims to address small companies

Features of ISE

¸       Accountability

¸       Integrity

¸       Innovation

¸       Knowledge

ß ISE

¸ It has 841 trading members

¸ It has floated ISS ( Interconnected Securities & services limited)

¸ Trading members of ISE can access NSE & BSE by registering themselves as sub brokers of ISS

Features of ISE

¸ Accountability

¸ Integrity

¸ Innovation

¸ Knowledge

Functions of ISE

¸ Create a single integrated national level solution by high cost services

¸ Create markets for listed companies and small capital companies in particular

¸ Optimally utilizing the existing infrastructure

¸ Provide clear settlements

Advantages of ISE

¸ Moderate fees

¸ Easy compliance

¸ Improved visibility

¸ Infrastructure

¸ IPO distribution system- Primary market

¸ Additional facility

¸ Investor Protection

¸ Website

Relationship between NSE & OTCEI

Ringless   No trading floor

Screen based trading- computerized

Transparency-can check the exact price