The term stock market can be used to denote individual stock exchanges at various places or one market comprising

all individual stock exchanges in the country. The industrial securities market, particularly the equities market, occupies a disproportionately large space in the discussion in the print and electronic media.

The industry , rich &middle classes tend to be highly preoccupied with this market, and regard it as the barometer of the health of the economy.

Organization and culture

Number

of SEs in India increased from 9 in 1979-80 to 23 at the end of Mar 2003. India has largest num of recognized SEs in the world , and all are regulated by SEBI. All SEs have two parts
NIM(for

fresh or additional capital) SM(the securities issued in NIM are traded on SM)

The role of SM is only indirect as it encourages investors to invest in industrial securities by making them liquid i.e by providing facilities for continuous ,regular ,ready buying and selling of those securities

It

is the premier or apex SE in India , oldest and recognised permanently. It is biggest in size(in terms of fresh capital raised, secondary market turnover and capitalisation and the total listed co; and their paid up capital) The trading in securities has been vogue in India since 1793. BSE was estd in 1857

BSE

introduced BOLT(Bombay Online Trading System) on Jan 19,1995. BSE started both equity and debt trading on BOLT system BSEs business no longer confined to Mumbai ,by the end of 1997,there were 100 cities in which it had set up business.

Apart fro BSE,2 other SEs in Mumbai namely NSEI(National Stock Exch of India Ltd) OTCEI(Over the Counter Exch of India Ltd)

Fully

automated ,electronic ,screen based trading system Sponsored by IDBI ,LIC ,GIC ,Commercial banks ,financial institutions etc

Objectives: a) To provide nation wide equal access and fair ,efficient , completely transparent securities trading sys to investors by using suitable communication network
b) To bring Indian stock market in line with international markets. c) To promote sec market in debt instruments such as govt and corporate bonds.

Whole sale debt market segment(WDMS) Started functioning from 30 June 1994 Caters to banks ,fin inst , other institutional participants and which deals in PSU bonds, TBs, govt sec , call money, CPs, CDs etc

Capital market segment(CMS) Started trading from 3 Nov,1994 Deals in equities, convertible debentures etc Include securities that are traded in other SE s also.

NSEI introduced trading in Repos with effect from 23 jun 1995

Set

up in 1992,headquarters is at Mumbai.

First

SE to introduce screen based automated trading system.

Promoted

by UTI,ICICI,IDBI,IFCI,LIC,GIC, CANBANK as a co; under section 25 of the companies act 1956

Obj of OTCEI: To help co; to raise capital from market at the cheapest costs.
To

cater to the needs of co; which cannot be listed on other official exchanges.
To

eliminate the problems of illiquid securities ,delayed settlements and unfair practices faced by the investors.

The

securities which are traded on OTCEI are divided in to 3 categories.

They are 1) listed 2)permitted 3) initiated
These
They

securities cannot be traded on other SEs

can be bought and sold at any of the OTCEI counters all over India
It

has two players-members and dealers(instead of brokers)

Scheduled

banks ,mutual funds ,banking subsidiaries ,FIs ,merchant bankers , venture capital funds ,NBFCs other than finance and leasing co; having a min net worth of Rs 2.5 crore can become members of OTCEI

It

allows domestic and foreign institutional investors also to trade on it by offering them netting facilities for both intra-custodian and inter custodian transactions.
The

trading on OTCEI is based on rollover concept which means all trading done on any day is settled on the same day itself and netting with the previous or subsequent days transactions is not permitted.

National and Regional exchanges in India

3

SEs has brought certain problems Apart from the SEs in Mumbai , there are 20 other national and regional exchanges located in metropolitan centres and cities in India. The relative position of the BSE has declined over the years In addition to official SEs, currently there are about 40 unofficial exchanges operating as brokers association in India ,which are not recognised by SEBI

8746 brokers 1476 merchant bankers 425 registrar to issues 429 financing and advertising agencies 271 issue stationery printers 117 collecting bankers 2100 underwriters 113 portfolio managers 23 debenture trustees

Only From

those securities are traded which are listed

May 27,1996,the listing requirements are made more stringent in order to broaden the shareholder base of the co; and to avoid large chunk of shares being held by a few individuals close to co; managements.
It

is now stipulated that ,in case of offer for sale , there will have to be at least 10 public shareholders for every Rs 1 lakh if equity offered to the public

For

listing on BSE, the min equity capital of a co; is 10 crore rupees.

The

non manufacturing co; cannot make a public issue unless they have track record of dividend payments for at least 3 years out of 5 preceding years.