Evolution & Development of Stock Exchanges in INDIA

Financial Institutions & Markets
1 Presentation Report
Evolution & Development of Stock Exchanges in INDIA
PROJECT SUBMITTED BY:
GROUP-II
Abhisek Mitra
Ayodhya Nath Paikaray
Bhabani Shankar Chayani
Bighnaraj Sahu
Bijay Kumar Mangaraj
Bijay Kumar Mudali
1
Xavier Institute Of Management, Bhubaneswar

Concept of Stock Exchange:
The Securities Contracts (Regulation) Act, 1956, has defined Stock Exchange as an “
association, organisation or body of individuals, whether incorporated or not, established for
the purpose of assisting, regulating & controlling business of buying , selling & dealing in
Securities”.
Features:
A stock exchange is a mutual organization which provides "trading" facilities for stock brokers
and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the
issue and redemption of securities as well as other financial instruments and capital events
including the payment of income and dividends. The securities traded on a stock exchange
include: shares issued by companies, unit trusts, derivatives, pooled investment products and
bonds. To be able to trade a security on a certain stock exchange, it has to be listed there.
Usually there is a central location at least for recordkeeping, but trade is less and less linked to
such a physical place, as modern markets are electronic networks, which gives them
advantages of speed and cost of transactions. Trade on an exchange is by members only. The
initial offering of stocks and bonds to investors is done in the primary market and subsequent
trading is done in the secondary market. A stock exchange is often the most important
component of a stock market. Supply and demand in stock markets is driven by various factors
which, as in all free markets, affect the price of stocks.
In general, different stock exchanges have different listing criteria. Once listed the Stock
exchanges provide the necessary infrastructure for secondary trading of securities issued by
the various companies to the public at large thereby ensuring liquidity in their stock and
enhancing investor confidence.
In return the companies are required to provide
– Periodic listing fees to the exchange and
– The company is also required to provide the exchange on a regular basis,

information about the following :
• Quarterly and annual financial statements
• Date of the upcoming board meetings and decisions taken in previous

board meetings
• Information about dates of their AGM, decisions regarding dividends,

rights issue, bonus issue, mergers, details of changes in the board of
directors etc.
This is to ensure that all price sensitive information is communicated to the exchange first,
which in turn makes it available to the public so that everybody gets access to this information
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almost at the same time. This helps in minimizing the possibility of asymmetry in information
among investors, to bring about fairness in the markets.
Role of Stock exchange:

• Raising capital for businesses- The Stock Exchange provides companies with the
facility to raise capital for expansion through selling shares to the investing public.
• Mobilizing savings for investment- When people draw their savings and invest in
shares, it leads to a more rational allocation of resources because funds, which
could have been consumed, or kept in idle deposits with banks, are mobilized and
redirected to promote business activity with benefits for several economic sectors
such as agriculture, commerce and industry, resulting in stronger economic growth
and higher productivity levels of firms.
• Facilitate company growth- Companies view acquisitions as an opportunity to

expand product lines, increase distribution channels, hedge against volatility,
increase its market share, or acquire other necessary business assets. A takeover
bid or a merger agreement through the stock market is one of the simplest and most
common ways for a company to grow by acquisition or fusion.
• Redistribution of wealth- Both casual and professional stock investors, through

dividends and stock price increases that may result in capital gains, will share in the
wealth of profitable businesses.
• Corporate governance- By having a wide and varied scope of owners, companies

generally tend to improve on their management standards and efficiency in order to
satisfy the demands of these shareholders and the more stringent rules for public
corporations imposed by public stock exchanges and the government.
Consequently, it is alleged that public companies (companies that are owned by
shareholders who are members of the general public and trade shares on public
exchanges) tend to have better management records than privately-held companies
(those companies where shares are not publicly traded, often owned by the
company founders and/or their families and heirs, or otherwise by a small group of
investors).
• Creates investment opportunities for small investors- As opposed to other

businesses that require huge capital outlay, investing in shares is open to both the
large and small stock investors because a person buys the number of shares they
can afford. Therefore the Stock Exchange provides the opportunity for small
investors to own shares of the same companies as large investors.

• Government capital-raising for development projects - Governments at various

levels may decide to borrow money in order to finance infrastructure projects such
as sewage and water treatment works or housing estates by selling bonds. These
bonds can be raised through the Stock Exchange whereby members of the public
buy them, thus loaning money to the government. Also the Government can go for
equity disinvestment in the PSU companies to raise money (through primary
markets) & subsequently the Stock Exchange provides liquidity options to the buyer,
who buys the share of such companies in the primary market.
• Barometer of the economy- At the stock exchange, share prices rise and fall
depending, largely, on market forces. Share prices tend to rise or remain stable
when companies and the economy in general show signs of stability and growth. An
economic recession, depression, or financial crisis could eventually lead to a stock
market crash. Therefore the movement of share prices and in general of the stock
indexes can be an indicator of the general trend in the economy.
Evolution of Indian Stock Exchange:
The origin of the stock market relates back to the year 1494, when the Amsterdam Stock
Exchange was set up. In India it dates back to the 18th century, an era when the East India
Company was a dominant Institution in India.
• "The Bombay Stock Exchange" (BSE) was founded in the year 1875.
• "The Ahmedabad Shares and Stock Association" was formed in the year 1894.
• The Calcutta Stock Exchange Association was formed by about 150 brokers on 15th
June 1908.
• In the year 1920, one stock exchange was established in Northern India and one in
Madras called "The Madras Stock Exchange". "The Madras Stock Exchange
Association Pvt. Ltd." was established in the year 1941. On 29th April 1959, it was
reorganized as a company limited by guarantee under the name and style of "Madras
Stock Exchange" (MSE).
• The Lahore Stock Exchange was formed in the year 1934. However in the year 1936
after the Punjab Stock Exchange Ltd. came into existence, the Lahore Stock Exchange
merged with it.
• In Calcutta, a second Stock Exchange by name "The Bengal Share & Stock Exchange
Ltd." was established in the year 1937 and likewise once again in the year 1938,
Bombay also witnessed a rival Stock Exchange formed in the name of "Indian Stock
Exchange Ltd."
• The U.P. Stock Exchange was formed in Kanpur and the Nagpur Stock Exchange Ltd.
in Nagpur in the year 1940.
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• The Hyderabad Stock Exchange Ltd. was incorporated in the year 1944.
• Two stock exchanges which came into being in Delhi by the name "The Delhi Stock &
Share Brokers Association Ltd." and "The Delhi Stocks & Shares Exchange Association
Ltd." were amalgamated into "The Delhi Stock Exchange Association Ltd." in the year
1947.
• Subsequently the Bangalore Stock Exchange was registered in the year 1957 and
recognized in the year 1963.
• The third stock exchange in the state of Gujarat the "Vadodara Stock Exchange Ltd."
was incorporated in 1990.
• The Over the Counter Exchange of India (OTCEI) broadly based on the lines of
NASDAQ (National Association of Securities Dealers Automated Quotation) of the USA
was promoted and approved on August 1989.
• The National Stock Exchange of India Ltd. was incorporated in November 1992.
Today there are 23 Stock Exchanges in India, including the 3 Stock Exchanges in Mumbai -
Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Over the Counter
Exchange of India (OTCEI).

History of Capital Markets in India:

The history of the capital market in India dates back to the eighteenth century when East India
Company securities were traded in the country. Until the end of the nineteenth century,
securities trading was unorganized and the main trading centres were Bombay and Calcutta.
Of the two, Bombay was the chief trading centre wherein bank shares were the major trading
stock. During the American Civil War (1860-61), Bombay was an important source of supply
for cotton. Hence, trading activities flourished during the period, resulting in a boom in share
prices. This boom, the first in the history of the Indian capital market, lasted for a half a
decade. The bubble burst on July 1, 1865, when there was tremendous slump in share prices.
Trading was at that time limited to a dozen brokers; their trading place was under a banyan
tree in front of the Town Hall in Bombay. These stockbrokers organized an informal
association in 1875-Native Shares and Stock Brokers Association, Bombay. The stock
exchanges in Calcutta and Ahmedabad, also industrial and trading centres, came up later. The
Bombay Stock Exchange was recognized in May 1927 under the Bombay Securities Contracts
Control Act, 1925.
The capital market was not well organized and developed during the British rule because the
British government was not interested in the economic growth of the country. As a result, many
foreign companies depended on the London capital market for funds rather than on the Indian
capital market.
In the post-independence period also, the size of the capital market remained small. During the
first and second five-year plans, the government's emphasis was on the development of the
agricultural sector and public sector undertakings. The public sector undertakings were
healthier than the private undertakings in terms of paid-up capital but their shares were not
listed on the stock exchanges. Moreover, the Controller of Capital Issues (CCI) closely
supervised and controlled the timing, composition, interest rates, pricing, allotment, and
floatation costs of new issues. These strict regulations demotivated many companies from
going public for almost four and a half decades.
In the 1950s, Century Textiles, Tata Steel, Bombay Dyeing, National Rayon, and Kohinoor
Mills were the favorite scrips of speculators. As speculation became rampant, the stock market
came to be known as 'Satta Bazaar'. Despite speculation, non-payment or defaults were not
very frequent. The government enacted the Securities Contracts (Regulation) Act in 1956,
which was also characterized by the establishment of a network for the development of
financial institutions and state financial corporations.
The 1960s was characterized by wars and droughts in the country which led to bearish trends.
These trends were aggravated by the ban in 1969 on forward trading and 'badla', technically
called 'contracts for clearing.' 'Badla' provided a mechanism for carrying forward positions as

well as borrowing funds. Financial institutions such as LIC and GIC helped to revive the
sentiment by emerging as the most important group of investors. The first mutual fund of India,
the Unit Trust of India (UTI) came into existence in 1964.
In the 1970s, badla trading was resumed under the disguised form of 'hand-delivery contracts-
A group.' This revived the market. However, the capital market received another severe
setback on July 6, 1974, when the government enforced the Dividend Restriction Ordinance,
restricting the payment of dividend by companies to 12 per cent of the face value or one-third
of the profits of the companies (that can be distributed as computed under section 369 of the
Companies Act), whichever was lower. This led to a slump in market capitalization at the BSE
by about 20 per cent overnight and the stock market did not open for nearly a fortnight. Later
came a buoyancy in the stock markets when the multinational companies (MNCs) were forced
to dilute their majority stocks in their Indian ventures in favour of the Indian public under FERA,
1973. Several MNCs opted out of India. One hundred and twenty-three MNCs offered shares,
which were lower than their intrinsic worth. It was the spate of FERA issues that gave a real
fillip to the Indian stock markets. For the first time, many investors got an opportunity to invest
in the stocks of such MNCs as Colgate, and Hindustan Liver Limited. Then, in 1977, a little-
known entrepreneur, Dhirubhai Ambani, tapped the capital market with Reliance Textiles,
which is the base on which today’s entire Reliance empire is based on.
The 1980s witnessed an explosive growth of the securities market in India, with millions of
investors suddenly discovering lucrative opportunities. Many investors jumped into the stock
markets for the first time. The government's liberalization process initiated during the mid-
1980s, spurred this growth. Participation by small investors, speculation, defaults, ban on
badla, and resumption of badla continued. Convertible debentures emerged as a popular
instrument of resource mobilization in the primary market. The introduction of public sector
bonds and the successful mega issues of Reliance Petrochemicals and Larsen and Toubro
gave a new lease of life to the primary market. This, in turn, enlarged volumes in the
secondary market. The decade of the 1980s was characterized by an increase in the number
of stock exchanges, listed companies, paid up-capital, and market capitalization.
The 1990s will go down as the most important decade in the history of the capital market of
India. Liberalisation and globalization were the new terms coined and marketed during this
decade. The Capital Issues (Control) Act, 1947 was cancelled in May 1992. The decade was
characterized by a new industrial policy, emergence of SEBI as a regulator of capital market,
advent of foreign institutional investors, euro-issues, free pricing, new trading practices, new
stock exchanges, entry of new players such as private sector mutual funds and private sector
banks, and primary market boom and bust.
Major capital market scams took place in the 1990s. These shook the capital market and drove
away small investors from the market. The securities scam of March 1992 involving Harshad
Mehta, a broker as well as bankers was on of the biggest scams in the history of the capital
market. In the subsequent years owing to free pricing, many unscrupulous promoters, who

raised money from the capital market, proved to be fly-by-night operators. This led to an
erosion in the investors' confidence. The M S Shoes case, one such scam which took place in
March 1995, put a break on new issue activity.
The 1991-92 securities scam revealed the inadequacies of and inefficiencies in the financial
system. It was the scam, which prompted a reform of the equity market. The Indian stock
market witnessed a sea change in terms of technology and market prices. Technology brought
radical changes in the trading mechanism. The Bombay Stock Exchange was subject to
nationwide competition by two new stock exchanges-the National Stock Exchange, set up in
1994, and Over the Counter Exchange of India, set up in 1992. The National Securities
Clearing Corporation (NSCCL) and National Securities Depository Limited (NSDL) were set up
in April 1995 and November 1996 respectively. These institutions improved clearing and
settlement and brought about dematerialized trading. The Securities Contracts (Regulation)
Act, 1956 was amended in 1995-96 for introduction of options trading. Moreover, rolling
settlement was introduced in January 1998 for the dematerialized segment of all companies.
With automation and geographical spread, stock market participation increased.
In the late 1990s, the Information Technology (IT) scrips were dominant on the Indian bourses.
These scrips included Infosys, Wipro, and Satyam. They were a part of the favourite scrips of
the period, also known as 'New Economy' scrips, alongwith telecommunications and media
scrips.
The Indian capital market entered the twenty-first century with the Ketan Parekh scam. As a
result of this scam, badla was discontinued from July 2001 and rolling settlement was
introduced in all scrips. Trading of futures commenced from June 2000, and Internet trading
was permitted in February 2000. On July 2, 2001, the Unit Trust of India announced
suspension of the sale and repurchase of its flagship US-64 scheme due to heavy redemption
leading to panic on the bourses. Then, the government's decision to privatize oil PSUs in 2003
fuelled stock prices. One big divestment of international telephony major VSNL took place in
early February 2002. Foreign institutional investors have emerged as major players on the
Indian bourses since then. NSE has an upper hand over its rival BSE in terms of volumes not
only in the equity markets but also in the derivatives market.
It has been a long journey for the Indian capital market. Now the capital market is organized,
fairly integrated, mature, more global and modernized. The Indian equity market is one of the
best in the world in terms of technology. Advances in computer and communications
technology, coming together on Internet are shattering geographic boundaries and enlarging
the investor class. Internet trading has become a global phenomenon. The Indian stock
markets are now getting integrated with global markets.

Bombay Stock Exchange (BSE)

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now
spanning three centuries in its 134 years of existence. What is now popularly known as BSE
was established as "The Native Share & Stock Brokers' Association" in 1875.
BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)
from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's
pivotal and pre-eminent role in the development of the Indian capital market is widely
recognized. It migrated from the open outcry system to an online screen-based order driven
trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised
and demutualised entity incorporated under the provisions of the Companies Act, 1956,
pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the
Securities and Exchange Board of India (SEBI). With demutualisation, BSE has two of world's
best exchanges, Deutsche Börse and Singapore Exchange, as its strategic partners.
Over the past 134 years, BSE has facilitated the growth of the Indian corporate sector by
providing it with an efficient access to resources. There is perhaps no major corporate in India
which has not sourced BSE's services in raising resources from the capital market.
Today, BSE is the world's number 1 exchange in terms of the number of listed companies and
the world's 5th in transaction numbers. The market capitalization as on December 31, 2007
stood at USD 1.79 trillion. An investor can choose from more than 4,700 listed companies,
which for easy reference, are classified into A, B, S, T and Z groups.
The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and
is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is
constructed on a 'free-float' methodology, and is sensitive to market sentiments and market
realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices. BSE
has entered into an index cooperation agreement with Deutsche Börse. This agreement has
made SENSEX and other BSE indices available to investors in Europe and America.
Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its iSharesÂ®
brand, has created the 'iSharesÂ® BSE SENSEX India Tracker' which tracks the SENSEX.
The ETF enables investors in Hong Kong to take an exposure to the Indian equity market.
The first Exchange Traded Fund (ETF) on SENSEX, called "SPIcE" is listed on BSE. It brings
to the investors a trading tool that can be easily used for the purposes of investment, trading,
hedging and arbitrage. SPIcE allows small investors to take a long-term view of the market.
BSE provides an efficient and transparent market for trading in equity, debt instruments and
derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of
India. BSE has always been at par with the international standards. The systems and
processes are designed to safeguard market integrity and enhance transparency in operations.

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).
BSE continues to innovate. In recent times, it has become the first national level stock
exchange to launch its website in Gujarati and Hindi to reach out to a larger number of
investors. It has successfully launched a reporting platform for corporate bonds in India
christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly
named 'BSE Broadcast' which enables information dissemination to the common man on the
street.
In 2006, BSE launched the Directors Database and ICERS (Indian Corporate Electronic
Reporting System) to facilitate information flow and increase transparency in the Indian capital
market. While the Directors Database provides a single-point access to information on the
boards of directors of listed companies, the ICERS facilitates the corporates in sharing with
BSE their corporate announcements.
National Stock Exchange (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges. It recommended promotion of a
National Stock Exchange by financial institutions (FIs) to provide access to investors from all
across the country on an equal footing. Based on the recommendations, NSE was promoted
by leading Financial Institutions at the behest of the Government of India and was incorporated
in November 1992 as a tax-paying company unlike other stock exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956
in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in
June 1994. The Capital Market (Equities) segment commenced operations in November 1994
and operations in Derivatives segment commenced in June 2000.
The following years witnessed rapid development of Indian capital market with introduction of
internet trading, Exchange traded funds (ETF), stock derivatives and the first volatility index -
IndiaVIX in April 2008, by NSE.
August 2008 saw introduction of Currency derivatives in India with the launch of Currency
Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time in India by
NSE on 31st August 2009, exactly after one year of the launch of Currency Futures.
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Development trends in Indian Stock Exchanges…

• Emergence of SEBI
The Securities and Exchange Board of India was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act, 1992
to act as a regulator of the capital market in India.
The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as
“…..to protect the interests of investors in securities and to promote the

development of, and to regulate the securities market and for matters connected
therewith or incidental thereto”
In particular, SEBI has powers for:

- Regulating the business in stock exchanges and any other securities markets
- Registering and regulating the working of stock brokers, sub–brokers etc.
- Promoting and regulating self-regulatory organizations
- Prohibiting fraudulent and unfair trade practices
- Calling for information from, undertaking inspection, conducting inquiries and
audits of the stock exchanges, intermediaries, self –regulatory organizations,
mutual funds and other persons associated with the securities market.
• Changes in the trading process in Stock Exchanges in India
Earlier, stock exchanges in India used to function using an ‘open outcry system’. The
exchanges used to have a physical location (which many regional stock exchanges still
have now) and the brokers buying and selling on behalf of their clients used to
assemble at a place called the floor or trading post of the exchange. During trading
hours, once the investor placed an order with the broker (to buy or sell), the broker used
to contact the ‘dealer’ (or the jobber) to execute the order, who is required to maintain
an inventory in stocks assigned to them. The dealer in turn used to quote a ‘bid’ (to buy)
or ‘ask’ (to sell) price using open outcry, and transaction was executed after deducting
the broker’s commission. This system was called a ‘quote driven ‘system. This process
was time consuming, inefficient and lacked transparency.
To counter this, NSE introduced a nationwide fully automated screen based trading
system (SBTS) where the member brokers can enter the price and the number of
shares he wants to buy (or sell) on behalf of their clients, and the transaction gets
executed as soon as the system finds a matching sale (or buy) order. Buyers and
sellers can find a mutually agreeable price without the intervention of the dealers. There
may be specialists /dealers in this system also, who are assigned one or more
11

securities and they pitch in their buy and sell orders in case there is large imbalance in
the normal flow of buy and sell orders and in the process ‘make the market’.
The SBTS matches orders as per price/time priority i.e it matches the best prices first
(that is highest bid with the lowest ask) and between two orders of same prices it
matches based on time (first come first serve basis). This ensures faster transactions
and one can see full market on screen i.e all the orders against a stock at a particular
point of time and hence also ensures transparency. This system is an order driven
market. The biggest advantage of this system is transparency as it clearly shows the
market orders and what price people are willing to buy at or sell for.
However, the drawback of this system is that, there is no guarantee that the order will
be executed because the system may not find a matching order, but in a quote driven
market as the buyer or seller is directly dealing with one party (i.e the dealer), the
chances of execution of an order are more.
• Extensive use of IT in order to fully automate the transactions.
The 1991-92 securities scam revealed the inadequacies of and inefficiencies in the
financial system. It was the scam, which prompted a reform of the equity market. The
Indian stock market witnessed a sea change in terms of technology and market prices.
Technology brought radical changes in the trading mechanism.
• Establishment of Investor Grievance Cell.
Investor grievance cell was established by BSE in 1986 to address the grievances of
investors against listed companies & members of the exchange. Similar institution was
established by NSE in March 1995.
• Establishment of NSCCL by NSE in 1995, the first Clearing Corporation of India to

facilitate settlement of share market transactions efficiently.
The National Securities Clearing Corporation (NSCCL) was set up in April 1995 by
National Stock Exchange which improved the clearing and settlement of share market
transactions in India. It was the first institution of its kind, which brought about lot of
transparency in the system & reduced the risk of defaults to a great extent.
• Setting up of National Securities Depository Limited, first depository in India, co-

promoted by NSE in Nov 96’.
The National Securities Depository Limited (NSDL) was set up in November 1996, co-
promoted by NSE. This institution brought about dematerialized trading, which again
bought about lot of transparency in the system & the risk of fraudulent activities
involving fake share certificates was eradicated.
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• Moving to rolling settlement in all share market transactions & further reducing
the settlement period to T+2 days.
Rolling settlement was first introduced in January 1998 for only the dematerialized
segment of all companies. The Indian capital market entered the twenty-first century
with the Ketan Parekh scam. As a result of this scam, rolling settlement was introduced
in all scrips from July 2001.
• Commencement of Internet Trading in Feb 2000.
Internet trading was permitted in India from February 2000.
• Commencement of Derivatives Trading from the year 2000.
Trading of futures in India commenced from June 2000 in NSE. First, it started with
Index futures. Subsequently, trading in Index Options started in June 2001 & trading in
Options on Individual Securities started in July 2001. Trading in Futures on Individual
Securities commenced from November 2001.
• Demutualisation of stock exchanges in INDIA.
Demutualisation refers to the legal structure of an exchange whereby the ownership, the
management and the trading rights at the exchange are segregated from one another.
However, in a mutual exchange, the three functions of ownership, management and
trading are concentrated into a single Group. Here, the broker members of the
exchange are both the owners and the traders on the exchange and they further
manage the exchange as well. This at times can lead to conflicts of interest in decision
making.
• Launch of Exchange Traded Funds (ETFs), Volatility Index Trading (India VIX),
Currency derivatives trading, interest rate futures & stock lending & borrowing
scheme.
New initiatives in the stock exchanges in India includes:
- The launching of various exchange traded funds of close-ended mutual funds (to
provide liquidity options to the investors of such funds),
- Launching of Volatility Index Trading,
- Launching of interest rate futures &
- Launching of stock lending & borrowing scheme.
Conclusion:
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The Stock Exchange comes close enough to a perfectly competitive market allowing the
forces of demand and supply a reasonable degree of freedom to operate as compared
to other markets specially the commodity markets. This segment of the factor market
can be considered as a perfect or a nearly perfect market. Apart from providing a
mechanism for transacting business in stock and shares it generates genuine potential
for a new entrepreneur to take up initiative in the private sector enterprises and allows
the expansion of investing community by offering gainful development of their otherwise
sluggish or shy capital. The Stock Exchange must assume the responsibility of
protecting the rights of investors specially the small investors in the Joint Stock
Companies.
It has been a long journey for the Indian capital market. Now the capital market is
organized, fairly integrated, mature, more global and modernized. The Indian equity
market is one of the best in the world in terms of technology. Advances in computer and
communications technology, coming together on Internet are shattering geographic
boundaries and enlarging the investor class. Internet trading has become a global
phenomenon. The Indian stock markets are now getting integrated with global markets.
As we can see that the stock exchange is now seen increasingly for what it really is,
namely an essential financial infrastructure for any economy. It is this view of the
exchange as infrastructure that motivated the Indian government to encourage the
establishment of the National Stock Exchange of India at Mumbai, which in a few short
years completely revolutionized the Indian capital market. The transparency of the price
discovery process which results, especially in technology driven stock exchanges
encourages participation in economic activity and enhances the efficient utilization of
resources. In addition, the stock market is increasingly perceived as an electronic
marketplace for buyers and sellers of securities to transact their business, under the full
view of observers.
References:
Bhole L.M., Mahakud J, (5th Edition ), “Financial Institutions and Markets” , TMH, New Delhi
Demiguc Kunt, A and R Levine, (1999), Bank-based and Market-based Financial Systems:
Cross Country Comparison, World Bank Policy Research Working Paper No. 2143.
Allen, Franklin and Douglas Gale, (2000), Comparing Financial Systems, Cambridge, MA;
MITT Press.
Reserve Bank Of India . Report on Currency and finance, 1999-2000 and 2000-01
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Robinson, R I and Wrightsman, D, (1981), Financial Markets, Mc-Graw Hill, London.
www.bseindia.com
www.nseindia.com
www.sebi.org
www.religaresecurities.com
www.kotaksecurities.com
www.karvy.com
www.financewise.com
www.optionxpress.com
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