WHAT IS STOCK EXCHANGE?

Stock Exchange (also called Stock Market or Share Market) is

one important constituent of capital market.
Stock Exchange is an organized market for the purchase and
sale of industrial and financial security.
It is convenient place where trading in securities is conducted
in systematic manner i.e. as per certain rules and regulations.
It performs various functions and offers useful services to
investors and borrowing companies.
It is an investment intermediary and facilitates economic and
industrial development of a country.

DEFINITIONS OF STOCK EXCHANGE

According to Husband and Dockerary,
"Stock exchanges are privately organized markets
which are used to facilitate trading in securities."
The Indian Securities Contracts (Regulation) Act of 1956, defines
Stock Exchange as,
"An association, organization or body of individuals,
whether incorporated or not, established for the
purpose of assisting, regulating and controlling
business in buying, selling and dealing in securities."


FEATURES OF STOCK EXCHANGE
It is a market for securities
It deals in second hand securities
Regulates trade in securities
Allows dealings only in selected securities
Transactions effected only through members
Association of persons
Recognition from central government
Working as per rules


FUNCTIONS OF STOCK EXCHANGE
Providing a ready market
The organization of stock exchange provides a ready market to speculators and
investors in industrial enterprises.

Providing a quoting market prices
It makes possible the determination of supply and demand on price.

Providing facilities for working
It provides opportunities to Jobbers and other members to perform their
activities with all their resources in the stock exchange.

Safeguarding activities for investors
The stock exchange renders safeguarding activities for investors
which enables them to make a fair judgment of a securities.



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Operating a compensation fund
It also operate a compensation fund which is always available to
investors suffering loss due to the speculating dealings in the stock
exchange.
Creating the discipline
Its members controlled under rigid set of rules designed to protect
the general public and its members.
Checking functions
New securities checked before being approved and admitted to
listing.
Adjustment of equilibrium
The investors in the stock exchange promote the adjustment of
equilibrium of demand and supply of a particular stock and thus
prevent the tendency of fluctuation in the prices of shares.




































Maintenance of liquidity
The bank and insurance companies purchase large number of securities
from the stock exchange. These securities are marketable and can be turned
into cash at any time.
Promotion of the habit of saving
Stock exchange provide a place for saving to general public. Thus it creates
the habit of thrift and investment among the public.
Refining and advancing the industry
Stock exchange advances the trade , commerce and industry in the country.
Promotion of capital formation
It plays an important part in capital formation in the country.
Increasing Govt. Funds
The govt. can undertake projects of national importance and social
value by raising funds through sale of its securities on stock
exchange.



NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) is India's leading stock
exchange having national reach.
NSE was set up by IDBI and other financial institutions in the year
1992 and started functioningin1993.
It was established to provide nationwide facilities to the investors
for trading securities.
The various objectives of NSE are:
To establish a nationwide trading facility for equities and debt
instruments.
To provide fair and efficient securities market to the investors.
To meet the current international standards of securities market.


OPERATIONS OF NSE
Wholesale Debt Market (WDM) segment
in June 1994.
Capital Market (Equities) commenced
operations in November 1994.
Derivatives segment commenced in June
2000.

WHOLESALE DEBT MARKET
The Wholesale Debt Market segment deals in fixed income securities and
is fast gaining ground in an environment that has largely focussed on
equities.
This segment provides trading facilities for a variety of debt instruments
including Government Securities, Treasury Bills and Bonds issued by
Public Sector Undertakings/ Corporates/ Banks like Floating Rate Bonds,
Zero Coupon Bonds, Commercial Papers, Certificate of Deposits,
Corporate Debentures, State Government loans, Units of Mutual Funds and
Securitized debt by banks, financial institutions, corporate bodies, trusts
and others.
Large investors and a high average trade value characterize this segment.
The commencement of this segment by NSE has brought about
transparency and efficiency to the debt market.



OVER THE COUNTER EXCHANGE OF
INDIA (OTCEI)
OTCEI was established in the year 1992 at Mumbai.

It allows listing of small and medium sized companies.

A company that wants to be listed in OTCEI must have a minimum
issued share capital of Rs. 3 crores.

It is recognised by the Government of India as a recognised stock
exchange under the Securities Control and Regulation Act, 1956.

It was promoted jointly by the financial institutions like UTI, ICICI,
IDBI, LIC, GIC, SBI, IFCI, etc.

FEATURES OF OTCEI
OTCEI is a floorless exchange where all the activities are fully
computerised.
Its promoters have been designated as sponsor members and they
alone are entitled to sponsor a company for listing there.
Trading on the OTCEI takes place through a network of computers
or OTC dealers located at different places within the same city and
even across the cities. These computers allow dealers to quote,
query & transact through a central OTC computer using the
telecommunication links.
A Company which is listed on any other recognised stock exchange
in India is not permitted simultaneously for listing on OTCEI.
OTCEI deals in equity shares, preference shares, bonds, debentures
and warrants.