Stock Market

Dr. Eti Khatri

Stock Exchange
 Stock exchange are an organised marketplace, either
corporation or mutual organisation, where members of the
organisation gather to trade company stocks or other
securities.
History
 Oldest Stock exchange- BSE
 1861-1875-Under banyan tree- place of BSE
 Open out cry
 1875-native share and stock brokers association.
 Voluntary non-profit making organisation
 BSE-1887
 Trading ring-1995-1996
 Now-online trading
 Screen based
 Traders work station-Computer
 Clearing house
Screen Based Trading
System(SBTS)/Online Trading System
 Open Outcry
 Physical trading
 NSE- SBTS
 Executed by trading member
 SBTS enables distance participant
 High speed with trade
 Complete transparent
Features of Stock Exchange
 Trading through member/broker
 Trading in listed securities only
 Open system of quotation
 Completely regulated
 Settlement through the stock exchange
Major Functions of Stock Exchanges
 Enrolment of members
 Make bye laws of stock exchange
 Provide for the listing of securities
 Provide facilities for trading of securities
 Provide clearing services
 Publication of information
 Arbitration
 Investor education and investor protection
Market Mechanism- Buying and selling
Procedure including online trading system

Exchange
Placing An Confirmation
between
order client and
broker

Exchange
Execution of Reporting of Clearing between
an order trade Function broker and
client
National Stock Exchange
 he National Stock Exchange of India Limited (NSE) is
the leading stock exchange of India, located in Mumbai.V
 The NSE was established in 1992 as the first demutualized
electronic exchange in the country.
 NSE was the first exchange in the country to provide a
modern, fully automated screen-based electronic trading
system which offered easy trading facility to the investors
spread across the length and breadth of the country.
 Vikram Limaye is Managing Director & Chief Executive
Officer of NSE.
Promoters of NSE

 The National Stock Exchange was promoted in November

1992, as a limited company by insurance companies,
commercial banks and other financial institutions. Besides,
SBI Capital Markets Limited, Infrastructure Leasing and
Financial Services Ltd and Stock Holding Corporation Ltd.,
were also part of the promoters of NSE.
 The NSE was incorporated with an equity capital of Rs. 25
crores.
 The International Securities Consultancy (ISC) of Hong
Kong has helped in setting up of the NSE.
Salient features of NSE
 Wide coverage
 No fixed location for NSE:
 Confidential trading in NSE:
 Transparency of NSE:
 Effective matching of order in NSE:
 Borrowings made easy in NSE:
 Settlement of transactions:
Listing Requirements in NSE
 A company has to apply for listing securities in the prescribed
form.
 Already listed companies should also apply for further issue
of securities.
 1% of the amount of securities offered for subscription to the
public, should be kept as deposit and 50% of it should be
deposited in cash. And the balance can be in the form of a
bank guarantee.
 For IPOs, minimum paid up capital should be Rs. 20 crores
 The paid up equity capital for existing companies should be
not less than Rs. 10 crores and market capitalization of the
applicant’s equity should be either Rs. 25 crores or Rs. 50
crores.
 In order to accommodate hi-tech companies going public,
the paid up equity capital shall be not less than Rs. 5 crores.
 The capitalization at the time of issue is not less than Rs. 50
crores.
 There should be a 3-year track record for listing in NSE, out
of which atleast dividends should have been paid for one year.