Bombay Stock Exchange

BSE - Origin, Growth and Practices

1. BOMBAY STOCK EXCHANGE(BSE) By KOWSALYA S

2. CONTENT Definition Features Objectives History Vision Functions

3. Definition of Bombay Stock Exchange (BSE) The Bombay Stock Exchange (BSE) is the first and largest securities market in india and was established in 1875 as the native share and stock broker’s association. Based in Mumbai,India,the BSE lists close to 6000 companies and is one of the largest exchanges In the world, along with the New York Stock Exchange (NYSE),NASDAQ,London Stock Exchange Group,Japan Exchange Group, and Shanghai Stock Exchange. The BSE has helped develop the country’s capital markets, including the retail dept market,and helped grow the indian corporate sector.

4. Features of BSE BSE has the largest number of companies listed in the world with more than 5000.however,only 3000 are actively traded. Trading on BSE was done under Banyan Tree in 1955. The Bombay Stock Exchange was established as The Native Share & Stock Brokers’ association in 1875,which was later changed to BSE. The first stock to be traded was Dutch East India Company. BSE’s popular equity index, the Sensex or the S&P BSE Sensex is India’s most Widely tracked stock market benchmark index. Originally, the fee for membership of the association-the right of admission to the Broker’s Hall- was fixed at Rs 51.

5. Objectives of BSE To safeguard the interest of investing public having dealings on the exchange. To establish and promote honorable and just practices in securities transactions. To promote, develop and maintain well-regulated market in securities. To promote industrial development in the country through efficient resource mobilization by the way of investment in corporate securities.

6. History of BSE The Bombay Stock Exchange traces its history to 1855,when four Gujarati and one parsi stockbroker would gather under banyan trees in front of Mumbai’s town hall. The location of these meetings changed many times as the number of brokers constantly increased. The group eventually moved to dalal street in 1874 and in 1875 became an official organization known as “The Native Share & Stock Brokers Association”. On 31 august 1957, the BSE became the first stock exchange to be recognized by the indian government under the securities contracts regulation act. The development of SENSEX options along with equity derivatives followed in 2001 and 2002, expanding the BSE’s trading platform .

7. Vision of BSE The main vision of Bombay Stock Exchange is to “Emerge as the premier Indian Stock Exchange with best-in-class global practice in technology,products innovation and customer service ”.

8. Functions of BSE 1. Providing liquidity and marketability to existing securities: Stock exchange is a market place where previously issued securities are traded. Various types of securities are traded here on regular basis. Whenever required , an investor can invest his money through this market into securities and can reconvert this investment into cash. Availability of ready market for sale and purchase of securities increases their marketability and enhances liquidity.

9. 2.Pricing of securities: A stock exchange provides platform to deal in securities. The forces of demand and supply work freely in the stock exchange. In this way , prices of securities are determined.

10. 3.Safety of transactions: Stock exchange are organized markets. They fully protect the interest of investors. Each stock exchange has it own laws and bye-laws. Each member of stock exchange has to follow them and if member is found violating them, His membership is cancelled. For instance, if any broker working in stock exchange charges more commission than stipulated from any investor or misleads him in any other way, then the management committee of the stock exchange can fine the broker and even his membership can be cancelled.

11. 4.contributes to economic growth: A stock exchange provides liquidity to securities. This gives the investor a double benefit-first, the benefit of the change in the market price of securities can be taken advantage of , and secondly, in case of need for money they can be sold at the existing market price at any time. These advantages provided by the share market encourage the people to invest their money in securities .

12. 5.Spreading equity cult: Share market collects every type of information in respect of the listed companies. generally , this information is published or in case of need anybody can get it from the stock exchange free of any cost. In this way, the stock exchange guides the investors by providing various types of information. consequently, the number of shareholders in companies is increasing continuously.

13. 6.providing scope for speculation: When securities are purchased with a view to getting profit as a result of change in their market price, it is called speculation.it is allowed or permitted under the provisions of the relevant Act.it is accepted that in order to provide liquidity to securities, some scope for speculation must be allowed.

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