Stock exchange

 Name – Nandini Vishwanath Banshetty

 Class – M.com (part-1) Div.- B
 Roll – 90.
 Subject- Financial Analysis and Control.
 Content

 Stock exchanges in India

 Meaning and Definition
 Functions Of Stock Exchange
 Organisation of Stock exchanges in India
 Role and growth of stock market in India
 Major stock exchanges in India
 Trading Mechanism
 Settlement Cycle and Trading Hours
 Introduction

 Financial market plays a noteworthy role in an economy’s growth and enlargement.

 The major portion of the financial market can be represented by the stock market, which is
also to be identified as a secondary market.
 Secondary market provides a place where already issued securities of
Corporate and government organizations are traded.
 Securities market provides a place of buying and selling securities in an efficient and
effective manner this helps an economy in the creation of capital and smooth flow of
money.
Meaning and Definition

 ‘As an association,organisatio or body of individuals, whether incorporated or not,

established for the purpose of assisting, regulating and controlling business in
buying, selling and dealing in securities.’
 It is a place where securities are purchased and sold
 A stock exchange is an association of persons whether incorporated or not.
 Both genuine investors and speculative buy and sell shares.
 The trading is strictly regulated by rules and regulations.
Functions Of Stock Exchange

 Ensure Liquidity of Capital

 Regular Market for Securities
 Evaluation of Securities
 Mobilising of Surplus Savings
 Helpful in Raising Capital
 Listing of Securities
 Safety in Dealings
 Platform For Public Debt
 Clearing house Facility
Organisation of Stock exchanges in India

 The stock exchanges are the exclusive centre for trading of securities.
At present, there are 23 operative stock exchange in India. Most of the stock exchanges in the country
are incorporated as Association of persons’ of section 25 companies under the Companies Act. These are
organised as ‘mutual’ and are considered beneficial in terms of tax benefit and matters of compliance.
The trading members, who provide brooking services also own, Control and manage the stock
exchanges. They elect their representative to regulate the functioning of the exchange, including their
own activities.
Until recently, the area of operation/jurisdiction of an exchange was specified at the time of its
recognition, which in effect precluded competition among the exchanges.
 Role and growth of stock market in India

 The stock market is an important part of the Financial health of corporate and represent of a country.
 The stock market helps in the growth of the industry and trade of the country that eventually affects the
economy of the country to a great extent .That is the reason that the government, industry and even the central
banks of the country keep a close watch on the happenings of the stock market. The stock market is important
from both the industry’s point of view as well as the investor’s point of view.
 To meet out the financial requirement of a business, they are required to raise funds either by financial
institution’s in term of the loan, or by issuing shares to the general public through stock market which is the
primary source of finance for the companies. For issuing share companies should get registered themselves in
stock exchange and then flow of money in an economy with the help of stock exchange.
 There are two major stock exchange in India, one is NSE and another is BSE which are the barometer of
security markets in India. stock market helps in creating financial liquidity in the financial liquidity in the
financial market and provide safety and protection against default risk, as there is primarily regulated by SEBI
and other authorities.
 Major stock exchanges in India – BSE

 Bombay stock exchange

 Bombay stock exchange was established in 1875 as a voluntary non –
profit making association at Mumbai. It is Asia’s oldest stock exchange
and is a major stock exchange in India.
 The BSE is the world’s 10th largest stock exchange with an overall
market Capitalization of more than $4.9 trillion on as of April 2018.
 At the last count, the BSE had more than 5,000 listed firms.
 National Stock Exchange

 The national stock Exchange of India of India Limited (NSE) is located in

Mumbai.
 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 of the country. Vikram Limaye is manging Director & Chief Executive
officer of NSE .
 Trading Mechanism

 Trading at both the exchanges takes place through an open electronic limit order
book in which order matching is done by the trading computer .
 There are no market maker or Specialists and the entire process is order- driven,
which means that market order placed by investors are automatically matched
with the best limit orders. As a result, buyers and sellers remain anonymous.
 The advantage of an order- driven market is that it brings more transparency by
displaying all buy and sell order in the trading system.
 All orders in the trading system need to be placed through brokers many of which
provide online trading facility to retail customers institutional investors can also
take advantage of the direct market access option in which they use trading
terminal provided by `broker for the placing order directly into stock market
trading system.
 Settlement Cycle and Trading Hours

 Equity spot market follow a T+2 rolling system. This means that
any trade taking place on Monday get settled by Wednesday.
 All trading on stock exchange take place between 9.55 am and
3.30 pm Indian standard Time (+5.5 hours GTM) ,Monday
through Friday.
 Delivery of shares must be made in dematerialized form, and each
exchange has its own clearing house , which assumes all
settlement risk by serving as a central counterparty.