stk exchange

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� Meaning and working of stock exchange

� Functions of stock Exchange

� Different stock exchanges -NSE and BSE� Guidelines for Listing

� Safeguards and Right of Investors

� Difference between NSE and BSE� Regional Stock Exchanges of India



A stock exchange is simply a market that is designed for

the sale and purchase of securities of corporations and

municipalities. This means that a stock exchange sells and buys

stocks, shares, and other such securities. In addition, the stockexchange sometimes buys and sells certificates representing

commodities of trade.



� Stock exchanges were completely open. Anyone who wished to

buy or sell could do so at a stock exchange. Today,professionals who have a seat at the exchange are the people

who trade at the exchange.

� Stock markets affect the entire economy and encourage

investment. In the United States, larger cities including Boston,

New York, Philadelphia, Denver, Chicago, Los Angeles, and SanFrancisco all have stock exchanges. Major cities across the world

also have exchanges of their own.

� Not all stocks are listed on exchanges. Some are sold on the so-

called over-the-counter market, which means that they are soldand bought directly by brokers. This method of buying became

especially important during the early 1980s.



� The buying and selling of stocks at the exchange is done on an

area which is called the floor.

� All over the floor are positions which are called posts.

� Each post has the names of the stocks traded at that specificpost.

� If a broker wants to buy shares of a specific company they will

go to the section of the post that has that stock.

� The broker sees at the price of the stock what the broker isauthorized to pay, a professional called the specialist may

receive an order.



� The specialist will often act as between the seller and buyer.

What the specialist does is to enter the information from thebroker into a book.

� If the stock reaches the required price, the specialist will sell or

buy the stock according to the orders given to them by the

broker. The transaction is then reported to the investor.

� If a broker approaches a post and sees that the price of the

stock is what they are authorized to pay, the broker can

complete the transaction themselves.



� As soon as a transaction occurs, the broker makes a

memorandum and reports it to the brokerage office bytelephone instantly.

� At the post, an exchange employee jots down on a special card

the details of the transaction including the stock symbol, the

number of shares, and the price of the stocks.

� The employee then puts the card into an optical reader. The

reader puts this information into a computer and transmits the

information of the buy or sell of the stock to the market.

� This means that information about the transaction is added to

the stock market and the transaction is counted on the manystock market tickers and information display devices that

investors rely on all over the world.



� Provides a market for the trading of securities to individuals and

organizations seeking to invest their saving or excess funds through

the purchase of securities

� To provide liquidity to the investors. The investor can recuperate the

money invested when needed. For it, he has to go to the stock

exchange market to sell the securities previously acquired. This

function of the stock market is done on the secondary market.

� To guarantee the legal and economic security of the

agreed contracts.� To provide official information about the quantities that

are negotiated and of the quoted prices.



Functions done by the stock exchange market in favor of the

investor:� It permits him the access to the profitable activities of the big

companies.

� It offers liquidity to the security investments, through a place in

which to sell or buy securities.

� It permits for the investor to have a political power in the

companies in which he invests its savings due that the acquisition

of ordinary shares gives him the right (among other things) to

vote in the general shareholders meetings of the company in

question.� It offers the possibility of diversifying your portfolio by

enlarging the field of strategy of investments due to alternative

options, as could be the derived market, the money market, etc



Function done by the stock exchange market in favor of thecompanies:

� It supplies them with the obtaining of long-term funds thatpermits the company to make profitable activities or to dodetermine projects that otherwise wouldn·t be possible todevelop for lack of financing. Also, this funding signifies a

less cost than if obtained at other channels.� The securities quoted at the stock exchange market usually

have more fiscal purpose advantages for the companies.

� It offers to the company·s free publicity, which in other way

would suppose considerable expenses. The institution isobjecting of attention of the media (television, radio, etc.)in case any important change in its owners (the shareholders).



(a) National Stock Exchange (NSE) of India

It is the largest stock exchange in India in terms of dailyturnover and number of trades, for both equities and derivativetrading.

NSE has a market capitalization ofaround 7,262,507 crore (US$1,575.96 billion) (October 2010)

and was expected to become the biggest stock exchange in Indiain terms of market capitalization by 2009 end, although this hasnot yet occurred.

Though a number of other exchanges exist, NSE and the BombayStock Exchange are the two most significant stock exchanges in

India, and between them are responsible for the vast majority ofshare transactions.

The NSE's key index is the S&P CNX Nifty, known as theNSE NIFTY (National Stock Exchange Fifty), an index of fiftymajor stocks weighted by market capitalisation.



� NSE is mutually-owned by a set of leading financial institutions,

banks, insurance companies and other financial intermediaries in

India but its ownership and management operate as separateentities.

� There are at least 2 foreign investors NYSE Euronext and

Goldman Sachs who have taken a stake in the NSE.[

� As of 2006, the NSE VSAT terminals, 2799 in total, cover morethan 1500 cities across India.

� In October 2007, the equity market capitalization of the

companies listed on the NSE was US$ 1.46 trillion, making it the

second largest stock exchange in South Asia.

� NSE is the third largest Stock Exchange in the world in terms of

the number of trades in equities.

� It is the second fastest growing stock exchange in the world with

a recorded growth of 16.6%.



� In April 1993, it was recognized as a stock exchange under

the Securities Contracts (Regulation) Act, 1956. NSE commenced

operations in the Wholesale Debt Market (WDM) segment in June

1994.

� Listing on NSE provides qualifying companies with the broadest

access to investors, the greatest market depth and liquidity, cost-

effective access to capital, the highest visibility, the fairest pricing,

and investor benefits.

� NSE introduced for the first time in India, fully automated screen

based trading. It uses a modern, fully computerised trading system

designed to offer investors across the length and breadth of the

country a safe and easy way to invest.

� The NSE trading system called 'National Exchange for AutomatedTrading' (NEAT) is a fully automated screen based trading system,

which adopts the principle of an order driven market.

� Being the first and the only exchange to trade GOLD ETFs

(exchange traded funds) in India.

�



Initial Public Offerings (IPO)

A corporate may raise capital in the primary market by

way of an initial public offer, rights issue or private placement. An

Initial Public Offer (IPO) is the selling of securities to the public inthe primary market. It is the largest source of funds with long or

indefinite maturity for the company.



(b) Bombay Stock Exchange (BSE) of India

� It was originally named as ´The Native Share & Stock Brokers·

Associationµ, was established in 1875. This makes BSE the oldeststock exchange in the Asian economic region.

� It is also the biggest South Asian stock exchange in terms of

market capitalization (NSE is the second largest!), and the 11th

largest on a global level (A

ugust 2009).� When the government passed the Securities Contracts

(Regulation) Act in 1956, the BSE was the first stock exchange in

India to be recognized under the Act.

� Originally mooted as an AOP (Association of Persons), BSE was

demutualised and corporatized in 2005, and now functions as

a company.



� BSE is the world's number 1 exchange in the world in terms ofthe number of listed companies (over 4900).

� It is in the top ten of global exchanges in terms of the marketcapitalization of its listed companies (as of December 31,2009). The companies listed on BSE command a total marketcapitalization of USD Trillion 1.28 as of Feb, 2010.

� BSE is the first exchange in India and the second in the world toobtain an ISO 9001:2000 certification.

� It is also the first Exchange in the country and second in theworld to receive Information Security Management SystemStandard BS 7799-2-2002 certification for its BSE On-Linetrading System (BOLT).

� The BSE Index, SENSEX, is India's first and most popular Stock

Market benchmark index. Exchange traded funds (ETF) onSENSEX, are listed on BSE and in Hong Kong. Futures andoptions on the index are also traded at BSE.



Listing means admission of securities to dealings on arecognised stock exchange. The securities may be of any public

limited company, Central or State Government, quasi

governmental and other financial institutions/corporations,

municipalities, etc.The objectives of listing are mainly to :

-Provide liquidity to securities

-mobilize savings for economic development

-protect interest of investors by ensuring full disclosures



A company intending to have its securities listed on BSE has to

comply with the listing requirements prescribed by it. Some of the

requirements are as under :

Minimum Listing Requirements for New Companies

Minimum Listing Requirements for Companies already Listed on other Stock

Exchanges

Minimum Requirements for Companies Delisted by BSE seeking relisting on BSEPermission to Use the Name of BSE in an Issuer Company's Prospectus

Submission of Letter of Application

Allotment of Securities

Trading PermissionRequirement of 1% Security

Payment of Listing Fees

Compliance with the Listing Agreement

Cash Management Services (CMS) - Collection of Listing Fees



SCHEDULE OF LISTING FEES FOR THE YEAR 2010-11

Securities *other than Privately Placed Debt Securities Sr.No. Particulars Amount

(Rs.) 1 Initial Listing Fees 20,000.00 2 Annual Listing Fees

(i) Companies with listed capital* upto Rs. 5 crore

(ii) Above Rs. 5 crore and upto Rs. 10 crore

(iii)Above Rs. 10 crore and upto Rs. 20 crore

Companies which have a listed capital* of more than Rs. 20 crore are required

to pay an additionalfee @ Rs. 750 for every additional Rs. 1 crore or part thereof.

10,000.00

15,000.00

30,000.00

NOTE: In case of debenture capital (not convertible into equity shares) , th

fees will be25% of the above fees.



Privately Placed Debt Securities Sl.No. Particulars Amount (Rs.) 1 Initial Listing Fees NIL

2

Annual Listing Fees(i) Issue size up to Rs.5 crore

(ii) Above Rs.5 crore and up toRs.10 crore

(iii) Above Rs.10 crore and up toRs.20 crore

Above Rs.20 crore

Rs.2,500.00

Rs.3,750.00

Rs.7,500.00

Additional fee of Rs.200.00 for every additional Rs.1crore or part thereof

Subject to a maximum of Rs.30,000.00 per instrument. The cap on the annual listing fee of debt instruments per issuer is Rs.5,00,000.00 per annum.

Mutual Funds Sr. No Particulars Amount (Rs.)

1 Initial listing fee NIL

2 Annual Listing Fee for tenure of the scheme : 6months or part thereof

Issue size up to Rs.100 Crores Rs. 16,000

Above Rs.100 Crores and up to Rs.300 Crores. Rs. 29,000

Above Rs.300 Crores and up to Rs.500 Crores. Rs. 47,000

Above Rs.500 Crores and up to Rs. 1000 Crores Rs. 78,000

Above 1000 Crores Rs. 1,25,000



� Protecting the interest of the investors dealing in securities is oneof the main objectives of BSE.Department of Investor ' Serviceswas set up in 1986 .

� The grievances of investors against listed companies and BSETrading Members are redressed by BSE. BSE also assists in the

arbitration process both, between Trading Members inter-seand between Trading Members and non - Trading Members.

� The capital market can grow only when investors find it safe forthem to invest and they are assured that the rules governing themarket are fair and just to all the players.

� These procedures are duly embodied in the Rules, Bye-laws andRegulations of BSE, which have been duly approved by theGovernment of India / Securities and Exchange Board of India(SEBI)



Selecting a Broker/ Sub - Broker

-Deal only with a SEBI registered Broker / Sub - broker after duediligence.

Entering into an Agreement

-Fill in a Client registration form with the Broker / Sub ² broker

-Enter into Broker / Sub - broker - Client Agreement.

Transacting

-Specify to the Broker / Sub - broker, the exchange through which yourtrade is to be executed and maintain separate account for each

exchange.-Obtain a valid Contract Note from the Broker / Sub-broker within 24hours of the execution of the trade.



Settlement

� Ensure delivery of securities /payment of money to the broker

immediately upon getting the Contract Note for sale / purchase but inany case, before the prescribed pay-in-day.

� Member should pay the money or securities to the investor within 24 hours

of the payout.

� Open a demat account.

� Opt for buying and selling shares in demat form.



� To receive all benefits/ material information declared for the

investors by the Company.

� Prompt services from the Company such as transfers, Sub-

divisions and consolidation of holdings in the Company.

� As an equity holder have a right to subscribe to further issue of

capital by the Company.� Brokerage not to exceed 2.5% of the contract price.

� Receipt of the Contract Note from the broker in the specified

format showing transaction price, brokerage, Service Tax and

STT, separately.� Expect delivery of shares purchased/value of shares sold within

24 hours from pay-out.

� Approach concerned Regional Arbitration Centres of BSE , by

confirming geographical jurisdiction .



Brokerage & Stamp Duty

BSE has not prescribed any minimum brokerage, and hence the

same is negotiable. Though the maximum brokerage allowed is

2.5% percent of the contract price, the brokerage generally

charged by the Members is much lower.

The present duty for equity shares transfer is 25paise for every

Rs.100 or part thereof, on the amount of consideration while the

duty for transfer of debentures varies from state to state,

applicable on the basis of the location of the registered office ofthe concerned issuing company.



NSE Stands for National Stock Exchange. It has more than 2000stocks from different sectors listed with it. It is fully automatedelectronic order processing exchange. Nifty is major index of NSEand it comprise of 50 scripts from different sectors.

BSE Stand for Bombay Stock Exchange. It is India's Oldest StockExchange with listing of over 4000 scripts with it. This not fullyautomated yet but progress towards full automation is underway.SENSEX is major index of BSE and it comprise of 30 scripts from

different sectors.The initial joining fee for a member at BSE is Rs. 90 Lakhswhile that for an NSE member is between 100 to 300 Lakhdepending on the kind of membership one chooses.



BSE NSE

Main Index: BSE Sensex S & P CNX Nifty

Full Name: Bombay Stock Exchange

Limited

National Stock

Exchange of India

Limited

Key Person: Mr. Madhu Kannan (MD &

CEO)

Mr. Ravi Narain

(Managing Director)

Claim to fame: Oldest stock exchange in Asia.

Largest stock exchange

in India in terms of daily turnover andnumber of trades.

What is it?: Indian Stock exchange Indian Stock exchangeLocation: Mumbai, India Mumbai, India

Established in: 1875 1992

Name: Bombay Stock ExchangeNational Stock Exchange

Market capitalization of listed

companies: Rs. 4,670,227 crore Rs. 3,367,350 crore.

Number of members: 951 (Oct 2007)1,009 as on March

2007

Number of listed companies (June

2010): 6000+ 1,810

Geographical spread: Presence in 417 cities Presence in 1,486 cities

Website: www.bseindia.com www.nseindia.com

Index value (June 2010): 17,757 5,322



(c) Regional Stock Exchanges (RSE) of

IndiaThe Regional Stock Exchanges in India

started spreading its business operation from 1894. The

first RSE to start its functioning in India was Ahmedabad

Stock Exchange (ASE) followed by Calcutta StockExchange (CSE) in 1908.

The stock exchange in India witnessed a

flourishing phase in 1980s with the incorporation of

many exchanges under it



Catalog of Regional Stock Exchanges in India

� Ahmedabad Stock Exchange

� Bangalore Stock Exchange� Bhubaneshwar Stock Exchange

� Calcutta Stock Exchange� Cochin Stock Exchange

� Coimbatore Stock Exchange

� Delhi Stock Exchange

� Guwahati Stock Exchange� Hyderabad Stock Exchange

� Jaipur Stock Exchange� Ludhiana Stock Exchange

� Madhya Pradesh Stock Exchange� Madras Stock Exchange

� Magadh Stock Exchange� Mangalore Stock Exchange

� Meerut Stock Exchange� OTC Exchange Of India

� Pune Stock Exchange� Saurashtra Kutch Stock Exchange

� Uttar Pradesh Stock Exchange

� Vadodara Stock Exchange



� http://www.nseindia.com

� http://www.bseindia.com

� www.google.coin

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