Stock Exchange

• A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

History• 1875 - BSE is Asia's first stock exchange.• 12th century France the courretiers de change - Debt of

Agriculture – First Brokers.• 13th Century - 1309 Family Van der Beurze had a building

in Antwerp - Where people trade.• 13th Century - 1351 Venetian bankers began to trade in

government securities. • 14 Century – Bankers in Pisa and Florence also began trading

in government securities.• 16th – Century – 1602 Dutch East India Company (Joint Stock

Company) started to trade to raise fund - Amsterdam Exchange

• Dutch people were pioneer in short selling but it was banned in 1610

Function & Purpose

• To Raise Fund.• Liquidity – Easy to Sell & Buy rather than investing

like Real Estate and so on..– Companies are also trading its own share for

Operational (Liquidity) Expense Needs.• Operating as Clearing House – Buy & Sell – Investor Safety.• Economy Growth – Promote Production of Products, Services & Employment Opportunities.

Investment Strategies or Tools to Analysis the Performance of Stock

• Fundamental Analysis– Financial Statements like Balance Sheet, Trial

Balance and so on…• Technical Analysis– Using of Charts and Quantitative Techniques like

Trend Line….• Index Method– Buying weighted Stock of Entire Stock Market..• Eg: BSE – Top 30 Blue Chip Companies…

Leveraged strategies• Short Selling

– The trader borrows stock then sells it on the market, hoping for the price to fall.

• Margin Buying– The trader borrows money (at interest from Brokers) to buy a

stock based on collateral from other stocks the trader owns outright.

– Eg: Regulation of US – for Investing $1000 – 50% can be borrowed on the basis of Stock. If price falls lower than the Margin Value the brokers will sold the share to the safety of borrowed money.

• Derivatives– It may be used to control large blocks of stocks for a much smaller

amount of money than would be required by outright purchase or sales.

Stock Exchange Crashes

• Wall Street Crash of 1929• the stock market crash of 1973–74• The Black Monday of 1987• The Dot-com bubble of 2000• Stock Market Crash of 2008.

Circuit Breakers

• In 1990 - The New York Stock Exchange and the Chicago Mercantile Exchange - Circuit Breakers for Dow Index.

• Halts the Trade.• If Dow index Points declines a prescribed

number of points for a prescribed amount of time. –

New York Stock Exchange (NYSE) circuit breakers

 % Drop Time of drop Close trading for

10  before 2 pm one hour halt

10  2 pm – 2:30 pm half-hour halt

10  after 2:30 pm market stays open

20  before 1 pm halt for two hours

20  1 pm – 2 pm halt for one hour

20  after 2 pm close for the day

30  any time during day close for the day

Single - Stock Circuit Breakers

• In February 2012, the Investment Industry Regulatory Organization of Canada (IIROC) introduced single-stock circuit breakers.

World Stock Exchanges

Rank Economy Stock Exchange Location

Market Capitaliza

tion(USD

 Billions)

Trade Value(USD

Billions)

1 United States Europe

NYSE Euronext (US & Europe)

New York City

14,242 20,161

2 United States Europe

NASDAQ OMX (US & North Europe)

New York City

4,687 13,552

3  Japan Tokyo Stock Exchange Tokyo 3,325 3,972

4  United Kingdom London Stock Exchange

London 3,266 2,837

5  China Shanghai Stock Exchange

Shanghai 2,357 3,658

6  Hong Kong Hong Kong Stock Exchange

Hong Kong 2,258 1,447

7  Canada Toronto Stock Exchange

Toronto 1,912 1,542

8  Brazil BM&F Bovespa São Paulo 1,229 931

Cont…..9  Australia Australian Securities

ExchangeSydney 1,198 1,197

10  Germany Deutsche Börse Frankfurt 1,185 1,758

11  Switzerland SIX Swiss Exchange Zurich 1,090 887

12  China Shenzhen Stock Exchange

Shenzhen 1,055 2,838

13  Spain BME Spanish Exchanges

Madrid 1,031 1,226

14  India Bombay Stock Exchange

Mumbai 1,007 148

15  South Korea Korea Exchange Seoul 996 2,029

16  India National Stock Exchange of India

Mumbai 985 589

17  Russia MICEX-RTS Moscow 800 514

18  South Africa JSE Limited Johannesburg 789 372

Stock Exchanges in INDIA

• Bombay Stock Exchange (BSE)• National Stock Exchange of

India (NSE)• Indian Commodity Exchange (ICEX)• United Stock Exchange of India (USE)• Multi Commodity Exchange (MCX)• MCX Stock Exchange (MCX-SX)• Over the Counter Exchange of

India (OTCEI)• Inter-connected Stock Exchange of

India (ISE)• Madras Stock Exchange (MSE)• Ahmedabad Stock Exchange (ASE)

• Bhubaneshwar Stock Exchange (BhSE)• Cochin Stock Exchange (CSE)• Hyderabad Stock Exchange (HSE)• Calcutta Stock Exchange (CSE)• Delhi Stock Exchange (DSE)• Bangalore Stock Exchange• Madhya Pradesh Stock Exchange,

Indore• Jaipur Stock Exchange (JSE)• Magadh Stock Exchange, Patna• UP Stock Exchange (UPSE)• Vadodara Stock Exchange,Vadodara

(VSE)

Commodity Exchanges

• Multi Commodity Exchange of India Limited (MCX)

• National Commodity & Derivatives Exchange Limited (NCDEX)

• Indian National Multi-Commodity Exchange (NMCE)

• Commodity Exchange Limited ICEX.