Beruflich Dokumente
Kultur Dokumente
and
competition
law
Introduction
Corporate sectors want a wide market for trading of securities. The investors want
liquidity for their investments. The securities which they hold should easily be sold
when they need cash. Thus, there should be a place where the securities may be
purchased and sold. Stock exchange provides such a place where securities of
different companies can be purchased and sold. Stock exchange is a body of
persons, whether incorporated or not formed with a view to hold, regulate and
control the business of buying and selling securities. Stock exchanges provides
services to the investors, corporate sectors and also to the society. [1]
Stock Exchange
Stock exchanges are organized and regulated markets for various securities issued
by corporate sector and other institutions. The stock exchange enables free
purchase and sale of securities as commodity exchanges allow trading in
commodities. Stock exchanges provide a platform for the buyers and sellers to
purchase and sell of their stocks.[2]Stock exchanges itself does not own shares.
Instead it acts like market where stock buyers connect with their stock sellers.
Stock can be traded in any stock exchanges like BSE and NSE of India. Though
the meaning of stock exchange is explained but it is pertinent to know the history
of stock exchanges.[3]
[16] Id
[17] Id
While competition among stock exchanges is not new, it has intensified in recent
years in various areas of exchange activities, including trading, listing and
settlement. In addition to the obvious effects of demutualization and listing of
exchanges, a rapid improvement in information technology and the creation of
innovative financial instruments have also been among the key factors. Moreover
the scope of competition has broadened from the national to the international level.
While earlier there was only among the domestic level now it has increased to
international level. [18]
With regard to the functioning of securities market competition between exchanges
can produce conflicting results. On the one hand, greater liquidity may be
generated due to enhanced inter-market competition. On the other, insofar as
competition may result in trading fragmentation, concerns regarding market
transparency and indeed financial stability of exchanges emerge, since illiquid
markets tend to be less resilient in periods of volatility.[19]
Concerning the ability of stock exchanges to enhance corporate governance of
listed companies, competition between stock exchanges, in the absence of
minimum standards set by the regulators (or weak enforcement of such standards),
raises concerns. The incentives faced by exchanges to establish and maintain high
regulatory standards might weaken as they weigh the risk of deterring listings
altogether or losing them to competing market places. This risk may be
exacerbated by the pressures a demutualised exchange is subject to from its
shareholders to give top priority to maximizing profitability.[20]
As the stock exchange has itself turned into Business Corporation, in some
jurisdictions its regulation function has been removed.[21]
Books
1. Sharma R.K. and Shashi K.Gupta, Structure of Commerce, (2005)
Articles
1. Tejpal.N History and evolution of stock exchanges in India,
shodhganga(2011)shodhganga.inflibnet.ac.in
2. Harper David, Getting to know the stock exchange,investopedia(22
September2013)http://www.ivestopedia.com
3. Investopedia Staff,Stock basics how stocks trade?,
Investopedia.www.invetopedia.com
4. Rouse.M, Corporate Governance, Tech Target,
(January2008),searchfinancialsecurity.tachtarget.com
5. Christaniansen Hans and Alissa Koldertsova, Role of stock exchange in
Corporate Governance,OECD(2008),http://www.oecd.org
6. Arwa M. Morsy ,The impact of demutualization on the performance of stock
exchanges, MSM,(2007),http://www.msm.com
7. Secondary Market Department, Corporatization and Demutualization of
stock Exchange,(30 January 2003), www.sebi.gov.in
8. Akhtar Shamshad, Demutualization of stock exchanges, Problems, Solutions
and case studies, Director,Governance, Finance and Trade, East and Central Asia
Department, Asian Development Bank, At 83,(2002)http://www.set.org.com
Statutes
1. Securities Regulation and Contract Act, 1952
2. Securities and Exchange Board of India Act, 1992.