INDIAN STOCK EXCHANGES

INDIAN STOCK EXCHANGESSCRA,1956

Any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying and selling or dealing in securities 1ECONOMIC FUNCTIONS Adequate Liquidity & Marketability

Safety to Investors

Evaluation of Securities

Mobilization of Savings

Widening Share Ownership Base

2DEVELOPMENT OF INDIAN STOCK MARKETSEighteenth Century concept came, when transactions were limited to loans and stock transactions of East India Company

Corporate Share came to picture in 1830, with enactment of the Companies Act in 1850

First Organised Stock Exchange established in July,1875 as an association of native brokers,named as Native Shares and Stock Brokers Association. Its formal deed of association was executed in 1887. This is today Bombay Stock Exchange3DEVELOPMENT OF INDIAN STOCK MARKETS1894-Ahemedabad Stock Exchange 1908-Calcutta SE1930.Indore(MP)1937-Madras1943-Hyderabad1947-Delhi1957. Bangalore1978-Cochin

4DEVELOPMENT OF INDIAN STOCK MARKETS1978-Cochin1982-UP(Kanpur)1982-Pune1983-Ludhiana1984-Gauhati1985-Kanada(Mangalore)1986-Magadh(Patna)5DEVELOPMENT OF INDIAN STOCK MARKETS1983-Jaipure1989-Bhubaneswar1989-Daurastra Kutch1990-Vadodara Baroda1991-Coimbatore1991-Meerut1989-OTCEI BombayNational Stock Exchange6ORGANISATIONAL STRUCTURE OF A STOCK EXCHANGEA.-GOVERNING BOARDA-President, Vice-President, Secretary/TreasurerExecutive DirectorSecretary Monitoring DepartmentPRO & Library7ORGANISATIONAL STRUCTURE OF A STOCK EXCHANGESecretaryListing Deptt.Operations Dept.ComputerInspection & AuditAdministration8ORGANISATIONAL STRUCTURE OF A STOCK EXCHANGEOperations Dept.Settlement Clearance

ComputerEDPMISAdministrationInvestors Service CellArbitration & Complaints

9COMPOSITION OF GO VERNING BOARD(as per SCR,1956)Six members elected from the members of SE

Three nominated by Govt.

Three Public Representatives nominated by Board

One Executive Director to be appointed by Stock Exchange

10MAJOR TASK OF GBPower to make amend and suspend the operation of the rulesBye-laws and regulations amendmentPower to admit and expel membersTo warn, fine suspend membersApprove formation and dissolutopn of partnershipTo determine mode and conditions of St.Excs business & Regulate tradingTo supervise, direct, & control all matters & activities11MAJOR DEPARTMENTS OF ST EX.Listing Dept

Operations Dept.

Computer & EDP Dept.

Monitoring Dept.

Investor Service Dept.12Developments since 1991Over-the Counter Market System(GSPatel, Abid Hussain)National Stock Market SystemNSE comprises:

Stock Holding Corporation of India Ltd

National Clearing &Depository System

Securities Trading Corpoartion of India 13DEMUTUALISATION OF ST.EXSDemutualisation is the process by which any member-owned organisation can become shareholder-owned company. Which can be either listed, or closely held by its shareholders.14DEMUTUALISATION OF ST.EXSDemutualisation separates the OWNERSHIP and CONTROL of Stock Exchange from the Trading Rights of its members

Stock exchange can become a CORPORATE ENTITY

From a Non-Profit making company to a Profit making Company

Tax exempted unit to a Tax paying Company

REGULATIONS OF ST.EXCentral Govt. through SCRegulation Act,1956

SE Division of Ministry of Finance (Head Office at New Delhi & Br Office at Mumbai/Calcutta)

Governing Board16FUNCTIONAL SPECIALISATION OF MEMBERSBull Broker=TejiwallaBear Brokers=MandiwallaStag Brokers=New Issues for future Sell =No interest in Purch/Sell of existingsCommission BrokersFloor BrokersOdd-lot DealersDealers of Non-active shares

17FUNCTIONAL SPECIALISATION OF MEMBERSTaravaniwalla=Jobbers =Specialist in specific shares =Market MakersBudliwalla18GOVERNING BOARDLinks Govt. & Stock ExchangesClose Watching OperationsAdvise in CrisisEnsures compliances of Listing provisionsIssuance of Licence to BrokersDirecting SEBI to issue Rules & Regulations for strengthening Securities market in India19TRADING IN EXCHANGESOpen Outcry system to Online SystemFloorbased Trading to Screen Based TradingExecution of Orders by price driven to Matching OrderTransparent TransactionOperational Efficiency, Less Time, No Risk/FraudElimination of Jobbers/Chain of Brokers20TRADING IN EXCHANGESLow Transaction CostIntegration of Different Trading Centers in to a single trading platformProvision of Internet TradingTwo types of Trading Syste Order Driven Quote Driven21PROHIBITING INSIDER TRADING & GRAY MARKET OPERATIONSTrading in shares by Persons in the Management of concerned SEs

Use of Undisclosed Price Sensitive Information regarding the Company

22TRADING IN TRADITIONAL EXCHANGESBuyer & SellerBrokers- Buy Order/Sell OrderBrokers in Trading FloorAuctioning(Bids & Offers)Transaction is FinalisedReported to Stock ExchangePay-In & Pay-OutFeedback Confirmation23DEVELOPMENTS IN STOCK EXCHANGES SINCE LIBERALISATIONHigh Power Committes

G.S.Patel Committee (on SE Reforms) Abid Hussain Committee (on CapitalMarket Reform)

Recommendations for Creation of OTCEI 1990 (Second Tier Stock Market)

Recommendation by Pherwani Committee,1991 for National Stock Market System

24DEVELOPMENTS IN STOCK EXCHANGES SINCE LIBERALISATION(Clear (Regulations on)No Unfair TradingInvestors ProtectionNo Insider-TradingMargin System(Sept.2001)Intra-day Trading LimitsCercuit Brakers Scripwise SEBI-1995 USA-1987

25DEVELOPMENTS IN STOCK EXCHANGES SINCE LIBERALISATION(Clear (Regulations on)Trading/Settlement from 14 days to 7 daysCarry Forward to Rolling Settlement System T+5 Jan(10 Scrips),May(153 Scrips),2000 T+3 April,2002 T+2 April,2003Electronic Fund TransferDematerialisation26