stk exchange

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STOCK EXCHANGE By SANNEL SUNNY

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CONTENT Meaning and working of stock exchange Functions of stock Exchange Different stock exchanges -NSE and BSE Guidelines for Listing Safeguards and Right of Investors Difference between NSE and BSE Regional S tock Exchanges of India

What is meant by Stock Exchange?:

What is meant by Stock Exchange? A stock exchange is simply a market that is designed for the sale and purchase of securities of corporations and municipalities. This means that a stock exchange sells and buys stocks, shares, and other such securities. In addition, the stock exchange sometimes buys and sells certificates representing commodities of trade .

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Stock exchanges were completely open. Anyone who wished to buy or sell could do so at a stock exchange. Today, professionals who have a seat at the exchange are the people who trade at the exchange . Stock markets affect the entire economy and encourage investment. In the United States, larger cities including Boston, New York, Philadelphia, Denver, Chicago, Los Angeles, and San Francisco all have stock exchanges. Major cities across the world also have exchanges of their own . Not all stocks are listed on exchanges. Some are sold on the so-called over-the-counter market, which means that they are sold and bought directly by brokers. This method of buying became especially important during the early 1980s.

Working of stock exchange:

Working of stock exchange The buying and selling of stocks at the exchange is done on an area which is called the floor. All over the floor are positions which are called posts. Each post has the names of the stocks traded at that specific post . If a broker wants to buy shares of a specific company they will go to the section of the post that has that stock. T he broker sees at the price of the stock what the broker is authorized to pay, a professional called the specialist may receive an order.

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The specialist will often act as between the seller and buyer. What the specialist does is to enter the information from the broker into a book. If the stock reaches the required price, the specialist will sell or buy the stock according to the orders given to them by the broker. The transaction is then reported to the investor . If a broker approaches a post and sees that the price of the stock is what they are authorized to pay, the broker can complete the transaction themselves.

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As soon as a transaction occurs, the broker makes a memorandum and reports it to the brokerage office by telephone instantly. At the post, an exchange employee jots down on a special card the details of the transaction including the stock symbol, the number of shares, and the price of the stocks. The employee then puts the card into an optical reader. The reader puts this information into a computer and transmits the information of the buy or sell of the stock to the market . This means that information about the transaction is added to the stock market and the transaction is counted on the many stock market tickers and information display devices that investors rely on all over the world.

Functions of Stock Exchange Market:

Functions of Stock Exchange Market Provides a market for the trading of securities to individuals and organizations seeking to invest their saving or excess funds through the purchase of securities To provide liquidity to the investors. The investor can   recuperate the money invested when needed. For it, he has to go to the stock exchange market to sell the securities previously acquired. This function of the stock market is done on the secondary market . To guarantee the legal and economic security of the agreed contracts. To provide official information about the quantities that are negotiated and of the quoted prices.

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Functions done by the stock exchange market in favor of the investor: It permits him the access to the profitable activities of the big companies. It offers liquidity to the security investments, through a place in which to sell or buy securities. It permits for the investor to have a political power in the companies in which he invests its savings due that the acquisition of ordinary shares gives him the right (among other things) to vote in the general shareholders meetings of the company in question. It offers the possibility of diversifying   your portfolio by enlarging the field of strategy of investments due to alternative options, as could be the derived market, the money market, etc

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Function done by the stock exchange market in favor of the companies: It supplies them with the obtaining of long-term funds that permits the company to make profitable activities or to do determine projects that otherwise wouldn’t be possible to develop for lack of financing. Also, this funding signifies a less cost than if obtained at other channels. The securities quoted at the stock exchange market usually have more fiscal purpose advantages for the companies. It offers to the company’s free publicity, which in other way would suppose considerable expenses. The institution is objecting of attention of the media (television, radio, etc.) in case any important change in its owners (the share holders).

Different Stock Exchanges in India :

Different Stock Exchanges in Indi a National Stock Exchange (NSE) of India It is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around 7,262,507 crore ( US$1,575.96 billion) (October 2010) and was expected to become the biggest stock exchange in India in terms of market capitalization by 2009 end , although this has not yet occurred. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalisation.

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NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities . There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have taken a stake in the NSE . [ As of 2006, the NSE VSAT terminals , 2799 in total, cover more than 1500 cities across India. In October 2007, the equity market capitalization of the companies listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities. It is the second fastest growing stock exchange in the world with a recorded growth of 16.6 %.

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In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM ) segment in June 1994 . Listing on NSE provides qualifying companies with the broadest access to investors, the greatest market depth and liquidity, cost-effective access to capital, the highest visibility, the fairest pricing, and investor benefits. NSE introduced for the first time in India, fully automated screen based trading. It uses a modern, fully computerised trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest . The NSE trading system called 'National Exchange for Automated Trading' (NEAT) is a fully automated screen based trading system, which adopts the principle of an order driven market . Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in India.

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Initial Public Offerings (IPO) A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is the largest source of funds with long or indefinite maturity for the company.

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(b) Bombay Stock Exchange (BSE) of India It was originally named as “The Native Sha re & Stock Brokers’ Association”, was established in 1875. This makes BSE the oldest stock exchange in the Asian economic region. It is also the biggest South Asian stock exchange in terms of market capitalization (NSE is the second largest!), and the 11th largest on a global level (August 2009). When the government passed the Securities Contracts (Regulation) Act in 1956, the BSE was the first stock exchange in India to be recognized under the Act. Originally mooted as an AOP (Association of Persons), BSE was demutualised and corporatized in  2005, and now functions as a company.

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BSE is the world's number 1 exchange in the world in terms of the number of listed companies (over 4900). I t is in the top ten of global exchanges in terms of the market capitalization of its listed companies (as of December 31, 2009). The companies listed on BSE command a total market capitalization of USD Trillion 1.28 as of Feb, 2010 . BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. It is also the first Exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-Line trading System (BOLT ). The BSE Index, SENSEX, is India's first and most popular Stock Market benchmark index. Exchange traded funds (ETF) on SENSEX, are listed on BSE and in Hong Kong. Futures and options on the index are also traded at BSE.

Guidelines for Listing:

Guidelines for Listing Listing means admission of securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc . The objectives of listing are mainly to : - Provide liquidity to securities -mobilize savings for economic development -protect interest of investors by ensuring full disclosures

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A company intending to have its securities listed on BSE has to comply with the listing requirements prescribed by it. Some of the requirements are as under : Minimum Listing Requirements for New Companies Minimum Listing Requirements for Companies already Listed on other Stock Exchanges Minimum Requirements for Companies Delisted by BSE seeking relisting on BSE Permission to Use the Name of BSE in an Issuer Company's Prospectus Submission of Letter of Application Allotment of Securities Trading Permission Requirement of 1% Security Payment of Listing Fees Compliance with the Listing Agreement Cash Management Services (CMS) - Collection of Listing Fees

Department of Investor Services :

Department of Investor Services Protecting the interest of the investors dealing in securities is one of the main objectives of BSE.Department of Investor ' Services was set up in 1986 . The grievances of investors against listed companies and BSE Trading Members are redressed by BSE. BSE also assists in the arbitration process both, between Trading Members inter-se and between Trading Members and non - Trading Members. The capital market can grow only when investors find it safe for them to invest and they are assured that the rules governing the market are fair and just to all the players . These procedures are duly embodied in the Rules, Bye-laws and Regulations of BSE, which have been duly approved by the Government of India / Securities and Exchange Board of India (SEBI)

Safeguards' for Investors':

Safeguards' for Investors' Selecting a Broker/ Sub - Broker -Deal only with a SEBI registered Broker / Sub - broker after due diligence. Entering into an Agreement - Fill in a Client registration form with the Broker / Sub – broker - Enter into Broker / Sub - broker - Client Agreement. Transacting - Specify to the Broker / Sub - broker, the exchange through which your trade is to be executed and maintain separate account for each exchange. -Obtain a valid Contract Note from the Broker / Sub-broker within 24 hours of the execution of the trade.

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Settlement Ensure delivery of securities /payment of money to the broker immediately upon getting the Contract Note for sale / purchase but in any case, before the prescribed pay-in-day. Member should pay the money or securities to the investor within 24 hours of the payout . Open a demat account. Opt for buying and selling shares in demat form.

Rights of Investors :

Rights of Investors To receive all benefits/ material information declared for the investors by the Company . Prompt services from the Company such as transfers, Sub-divisions and consolidation of holdings in the Company . As an equity holder have a right to subscribe to further issue of capital by the Company . Brokerage not to exceed 2.5% of the contract price. Receipt of the Contract Note from the broker in the specified format showing transaction price, brokerage, Service Tax and STT, separately . Expect delivery of shares purchased/value of shares sold within 24 hours from pay-out. Approach concerned Regional Arbitration Centres of BSE , by confirming geographical jurisdiction .

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Brokerage & Stamp Duty BSE has not prescribed any minimum brokerage, and hence the same is negotiable. Though the maximum brokerage allowed is 2.5% percent of the contract price, the brokerage generally charged by the Members is much lower. The present duty for equity shares transfer is 25paise for every Rs.100 or part thereof, on the amount of consideration while the duty for transfer of debentures varies from state to state, applicable on the basis of the location of the registered office of the concerned issuing company.

Difference between NSE and BSE :

Difference between NSE and BSE NSE Stands for National Stock Exchange . It has more than 2000 stocks from different sectors listed with it. It is fully automated electronic order processing exchange. Nifty is major index of NSE and it comprise of 50 scripts from different sectors. BSE Stand for Bombay Stock Exchange . It is India's Oldest Stock Exchange with listing of over 4000 scripts with it. This not fully automated yet but progress towards full automation is underway. SENSEX is major index of BSE and it comprise of 30 scripts from different sectors. The initial joining fee for a member at BSE is Rs . 90 Lakhs while that for an NSE member is between 100 to 300 Lakh depending on the kind of membership one chooses .

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(c) Regional Stock Exchanges (RSE) of India The Regional Stock Exchanges in India started spreading its business operation from 1894. The first RSE to start its functioning in India was Ahmedabad Stock Exchange (ASE) followed by Calcutta Stock Exchange (CSE) in 1908. The stock exchange in India witnessed a flourishing phase in 1980s with the incorporation of many exchanges under it

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Catalog of Regional Stock Exchanges in India Ahmedabad Stock Exchange Bangalore Stock Exchange Bhubaneshwar Stock Exchange Calcutta Stock Exchange Cochin Stock Exchange Coimbatore Stock Exchange Delhi Stock Exchange Guwahati Stock Exchange Hyderabad Stock Exchange Jaipur Stock Exchange Ludhiana Stock Exchange Madhya Pradesh Stock Exchange Madras Stock Exchange Magadh Stock Exchange Mangalore Stock Exchange Meerut Stock Exchange OTC Exchange Of India Pune Stock Exchange Saurashtra Kutch Stock Exchange Uttar Pradesh Stock Exchange Vadodara Stock Exchange

REFERENCE:

REFERENCE http:// www.nseindia.com http:// www.bseindia.com www.google.coin

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