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 The need of capital varies from industry to

industry. In fact it is more often influenced

by the competitors prevailing in the market.
Investors always want to have liquid money
as much as possible. To have capital or
money in hand there must be a place where
they can exchange. Stock exchange is a place
where securities of different companies can
be purchased and sold.
They help in regulating and controlling the
business of buying and selling securities.
According to Hartely Withers, “ A Stock Exchange
is something like a vast warehouse where
securities are taken away from the shelves and
sold across the countries at a fixed price in a
catalogue which is called the official list.
 The trading in an exchange is strictly
regulated and rules are prescribed for
various transactions.
 The securities of trusts, corporations,
governments, etc. are allowed to be dealt at
stock exchange.
 It is a place where securities are purchased
and sold.
 Provides liquidity.
 Evaluation of prices.
 Helpful in raising new capital.
 Safety.
 Mobilizing of savings into proper areas.
 Memorandum( summary used as a means of
communication or to outline the terms of an
agreement in its draft stage) and Articles of
Association (it is a document that contains
the purpose of the company as well as the
duties and responsibilities of its members
defined and recorded clearly.)
 Copies of all prospectus.
 Copies of balance sheets, audited accounts,
agreements with brokers, underwriters, etc.
 Details of shares and debentures issued and
shares forfeited.
 Details of issue of bonuses and dividends
 History of the company in brief.
 An agreements with managing directors.
 An undertaking regarding compliance with the
provisions of the Companies Act, 1956 and
Securities Contracts(Regulation) Act, 1956 as
well as rules made therein.
A list of the highest ten holders of each class
or kinds of securities of the company.
 Selection of a brokers.
 Placing an order.
 Making the contract.
 Contract note.
 Settlement.
 In India Stock Exchange was not known
before 1840. One of the earliest stock
exchange is Bombay stock Exchange which
came in 1887. The Calcutta Stock Exchange
was found in 1908. In Madras it was founded
in the year 1920, but due to paucity of
business it was closed in year 1923. It again
came back in the year 1937 with the same
However different stock exchange was
opened at different places in India such as in
Ahmadabad, Kanpur, Hyderabad, Delhi,
Indore and Bangalore. Under 1956, the
Securities Contract (Regulation) Act was
passed to regulate the stock exchange and
have a centralized control over them. Only 8
stock exchanges have been so far recognized
. They are:
 The Stock Exchange, Bombay.
 The Calcutta Stock Exchange Association,
 The Ahmadabad Share and Stock Brokers’
Association, Ahmadabad.
 The Madras Stock Exchange Ltd., Madras.
 The Delhi Stock Exchange Association Ltd.
 The Hyderabad Stock Exchange Ltd.,
 The Stock Exchange, Indore.
 The Stock Exchange, Bangalore.
The administration of the affairs of a stock
exchange is entrusted to a Committee of
Management that functions like a Board of
Directors of a company.
To understand these terms we will take
example of London Stock Exchange. Where
both Jobbers and Brokers are totally
different in terms of services they provide.
Individual has to choose between those. No
member can change over from a broker to a
jobber or from a jobber to a broker during a
Since in stock exchange you need a broker to
carry out the activity. So they act as an
intermediary for clients on their behalf.
Brokers who do transactions on the behalf of
their customers go and deal with these
jobbers who sit inside the house. Thus a
broker is a commission agent who brings
together his outside client and the inside
jobber who is a dealer in securities.