Stock Exchanges- A Profile

8/8/2019 Stock Exchanges- A Profile

1/24

Bombay Stock exchange-A profile


2/24

Every once in a while, the stock market does

something so stupid it takes your breath

away.Jim Cramer.


3/24

What is a stock

exchange ? A stock exchange,

is a body of individuals whether

incorporated or not, constituted for thepurpose of assisting, regulating or controllingthe business of buying, selling or dealing insecurities.

Stock exchange is a highly organized marketwhere financial securities are purchased andsold.


4/24

In simple words

Stock exchange refers to a specialized marketplace

that facilitates the exchange of securities thatalready exist.

Also known as the secondary market for securities.

It is also sine-qua-non for the primary market.


5/24

Ordering a new car when the earth

runs out of fuel

I just now got thepromotion to afford a

new ferrari.my bad

luck it comes when

there is no fuel left.


6/24

BENEFITS OF STOCK EXCHANGE

FROM THE POINT OF VIEWOF COMMUNITY:

It assist the economic development by providing a body

of interested investors.

it serves as the economic barometer for the society.

It encourages capital formation.

Government can undertake projects of national

importance and social value raising funds through the

sale of its securities on the stock exchange.

It is the stock exchanges through which central bank of acountry can control credit by undertaking open market

operations (purchase and sale of securities).

Mobilization of the saving the community to productive

forces.


7/24

An ideal meeting place to get enough required capitalthrough distribution of new securities.

A company whose shares quoted on stock exchange

they enjoy better reputation and credit.

The market for the shares of such a company isnaturally widened.

The market price of securities is likely to be higher in

relation to its earnings, dividends and property values.

This raises the bargaining power of the company in the

event of a takeover, merger or amalgamation.

A perfect place for dissemination of market data.

FROM THE COMPANY POINT OF VIEW :


8/24

FROM THE INVESTORS POINT OF VIEW:

Liquidity of the investment is increased

The securities dealt on a stock exchange are goodcollateral security for loans.

The stock exchange safeguards interests of investorsthrough strict enforcement of rules and regulations.

The present net worth of investments can be easilyknown by the daily quotations.

His risk is considerably less when he holds or purchaseslisted securities.

The high profits involved in speculative trading.


9/24

BOMBAY STOCK

EXCHANGE

y Bombay Stock Exchange is the oldest stock exchange in

Asia

y Spanning three centuries in its 133 years of existence

y BSE was established as "The Native Share & Stock Brokers'Association" in 1875.

y BSE is the first stock exchange in the country which

obtained permanent recognition (in 1956) from theGovernment of India under the Securities Contracts(Regulation) Act 1956.

y BSE is the world's number 1 exchange in terms of the

number of listed companies(4900 listed companies) and

the world's 5th in transaction numbers.


10/24

Contd..

The market capitalization as on December 31, 2007 stood atUSD 1.79 trillion

BSE has two of world's best exchanges, Deutsche Brse andSingapore Exchange, as its strategic partners.

It has a nation-wide reach with a presence in more than 359cities and towns ofIndia. BSE has always been at par with theinternational standards

BSE provides an efficient and transparent market for trading inequity, debt instruments and derivatives.

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)


11/24

Management

A governing board consisting of

9 elected members from the exchange

An executive director3 government employees

a RBI nominee

5 public representatives

A president , vice president and honorarytreasurer.

Executive director as CEO.


12/24

Listing on BSE

BSE has a separate listing dep't to grant

approval for listing of securities of companies.

Listing norms For new companies

Minimum capital norms

10 crore of issued and subscribed capital after public issue.

20 crore of net worth (equity+reserve-revaluation reserve) Different norms for companies dealing in media and

information technology)


13/24

Contd..

Minimum public offer

As per acc. to SCRA 1957,25% of each type of

securities should be offered to public.

For IPOs by an unlisted companies

Minimum 20 lakh securities to public(excluding

reservation , firm allotment and promoter

contribution) minimum size of offer to the public is 50 cr.


14/24

For companies listed on other stock exchanges

Minimum issued equity capital of 3 cr

Profit track record for 3 years atleast.

Minimum net worth of 20 cr.

Minimum market capitalization of 20 cr.

Minimum average volume traded per day , during last 3

months, should be 1000 with minimum 5 shares per day.

25% issued capital with public(including body corporates) and

minimum 15 shareholders per Rs. 1 lakh of capital in publiccategory.

Should sign an agreement with CSDL and NSDL .


15/24

Other norms .

Submission of letter of application.

Permission to use the name of the exchange

in prospectus. Allotment of securities

Security deposit

Listing fees Listing agreement


16/24

Safety of market

Surveillance dept

A general manager reporting directly to

executive director heads the dept

Circuit filters (the restricted movement of the

price of the security)

OLR

T (O

NL

INE

RE

AL

TIME

) surv

eillancesystem

Brokerage and transaction costs.


17/24

Trading and settlement.

BOLT ( BSE on line trading system) is the

automated computerized mode of trading

effective from 14th march,1995.

This system helps in expansion of BSE network

in India.

Based on the order matching between 2

individuals with reference to price .


18/24

Contd

Exit route scheme For the selling physical securities in the compulsory demat

scrips.

Permitted securities To facilitate the market participants to trade in securities of

such companies, which are actively traded at other stockexchanges but are not listed on BSE, trading in suchsecurities is facilitated as " Permitted Securities" providedthey meet the relevant norms specified by BSE

Closing price Closing price of scrips is computed by BSE on the basis of

weighted average price of all trades executed during thelast 30 minutes of a continuous trading session.


19/24

Scrip groups BSE has, for the guidance and benefit of the investors, classified the scrips in

the Equity Segment into 'A', B,'T', S', TS' and 'Z' groups on certain qualitative

and quantitative parameters.

The "F" Group represents the Fixed Income Securities.

The "T" Group represents scrips which are settled on a trade-to-trade basis as

a surveillance measure.

The "S" Group represents scrips forming part of the "BSE-Indonext" segment.

The "TS" Group consists of scrips in the "BSE-Indonext" segment, which are

settled on a trade-to- trade basis as a surveillance measure.

Trading in Government Securities by the retail investors is done under the "G"

group.

The 'Z' group was introduced by BSE in July 1999 and includes companieswhich have failed to comply with its listing requirements and/or have failed to

resolve investor complaints and/or have not made the required arrangements

with both the depositories, viz., Central Depository Services (I) Ltd. (CDSL) and

National Securities Depository Ltd. (NSDL) for dematerialization of their

securities.

The c-group and odd lot of securities


20/24

Settlement

The CRS i.e. compulsory rolling settlement

and settling of the accounts in stipulated time

period.

T+2 ,wef from april 1,2003.

The A&B groups

The C&Z groups

The F groups


21/24


22/24


23/24

Book building at BSE & IPOS

BSE offers book building through software on

private network.

Largest book building network spanning o

ver350 cities.

The syndicate operate the software through

book runners of the issue.

Bids are placed electronically and info is

collected on line real time until bid ends.


24/24

Documents

Stock Exchanges- A Profile