Stock Exchange

The Bombay Stock Exchange

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Bombay Stock Exchange, also referred as BSE, was established in the year 1875 as ‘The Native Share & Stock Brokers’ Association.’ It was introduced by four Gujaratis and one Parsi stock broker under a tree in Mumbai’s Town Hall area.

It is the oldest stock exchange in Asia that has contributed significantly to the establishment and growth of the Indian capital market. Earlier it was known as Bombay Share Bazaar and The Stock Exchange, Bombay before taking the current name. As the name suggests, it is situated in Mumbai that is the financial hub of India.

The Bombay Stock Exchange BSE has the maximum number of listed companies in the world. As on June 2011, it has more than 5000 listed Indian companies and over 8000 scrips on its trading screens. It also ranks 5th globally in terms of the maximum volume of transactions. It is also the first and second in the world to obtain ISO 9001:2000 certification for its quality trading operations. The BSE online- trading systems, commonly known as BOLT, ensures transparency and reliability in daily transactions. The systems also support algorithmic trading within different locations. Its stock market index, the SENSEX, is the most popular index in the country.

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Despite of having almost equal market capitalization, BSE is next to NSE making it the second largest stock exchange in the country. However, both the stock exchanges share the maximum load of equity trading in India.

To widen the scope of trading, BSE introduced its websites in three languages, i.e. Gujarati, Hindi, and Marathi. It entered the Mutual Funds (MF) market in a big way by launching a trading platform that could easily be integrated within the existing infrastructure for trading in MF schemes. It also introduced AMFI Certification to equip MF advisors with the required expertise to transact in the market.

Besides attaining excellence in its operations, BSE has also taken up the function of corporate social responsibility (CSR) with utmost dedication. It has taken welfare initiatives in the area of education, health, and environment. It also got the Golden Peacock Global CSR Award, by the World Council of Corporate Governance, for its social efforts.

Like in other stock exchanges, the daily trading sessions at BSE are also five days a week. The stock exchange is closed on national holidays. Outside the BSE building, a ticker can be seen that shows the live movement in the prices of scrips during trading hours.

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The Prominence of National Stock Exchange

The Indian capital market is divided into two broad categories, the primary market and the secondary market. Primary market is the market for new shares that are generally introduced via the initial public offer route. Secondary market is the one where trading between the shares already issued in the primary market takes place.

Stock exchanges provide a platform to facilitate trading in these secondary shares. However, the shares have to be first listed on a stock exchange. In India, National Stock Exchange, commonly known as NSE, is the largest stock exchange of the country. It ranks third in the world in terms of volume of transactions. The head office of NSE is located in Mumbai. It is also known as Rashtriya Share Bazaar in Hindi.

The Prominence of National Stock Exchange NSE was initially established as a tax-paying company by the leading financial institutions of the country and later on acquired the status of a stock exchange in 1993. It was recognized under the Securities Contracts (Regulation) Act, 1956.

NSE commenced its operations in the wholesale debt market. Gradually, its entry into the capital market was a major breakthrough for companies who enlisted themselves on the stock exchange to create a vast pool of equity funds to finance their expansion plans. Moreover, the investor segment also got aware of the number of companies in the country thereby allowing them to diversify their investment. Today NSE provides trading services in new instruments like derivatives and mutual funds.

NSE provides a fully computerized screen-based trading system that has automated operations. This eliminated the role of brokers significantly, which in turn, erased the brokerage fees and thus lowered the cost of trading multifold. The system also gave an opportunity to small investors to trade in the market. Now, trading has become a part-time profession for many people, including housewives. The technology behind the trading system has added mobility into the system and so investors simply log on to their trading account, study the market movement real-time, and trade accordingly from any place.

NSE has a large network across the country for trading in all types of securities. It follows shorter settlement cycles and book entry settlements. It also has an online portal that provides exhaustive information on its listed companies, market trends, market movements in other stock exchanges, latest regulatory changes affecting the financial market, and many such details relevant for trading decisions. For a novice, it also has a dedicated link providing conceptual information about the market.

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