Hii! I am Deepjit Karmakar founder of thecommercialinfo.com, here in this article I am gonna tell you about Major stock exchanges in India. There are mainly two major stock exchanges in India which are Bombay stock exchange (BSE) and National stock exchange (NSE).
Bombay stock exchange (BSE)
Bombay stock exchange was established in 1875 as a voluntary non-profit making association at Mumbai. It is Asia's oldest stock exchange and is a major stock exchange in India. The exchange has mechanism to redress grievances of investors as well as members. It provides informative inputs to the investing public.
A governing board comprising of nine elected directors (one third to retire every year by rotation) an Executive Director, 3 government nominees, reserve Bank of India nominee and 5 public nominees regulate the working of the exchange. However, as per SEBI orders issued in March, 2001, the elected directors have been restrained from acting and governing board presently comprises of only 10 directors. The executive director acts as the chief executive officer and is responsible for the day-to-day administration of the exchange.
The members of the stock exchange can trade in the exchange. The members can trade on behalf of outsiders. If a member trades on his own account then transactions can be only among stock exchange members. The shares of listed companies only can be traded at the exchange.
Bombay stock exchange allows following category of persons for trading:
- The commission broker
- The floor broker
- The tarawaniwala, akin to a jobber or specialist
- The dealer in non cleared securities
- The odd-lot dealer
- The dealer in foreign securities or arbitrageur
- The security dealer or dealer in government securities
On striking a deal, traders enter appropriate details in small books called 'Souda books'. At the end of the trading period, all dealer details are transferred to a Souda sheet which is handed over to the BSE computer department for processing. A display board within the ring is used to show the current prices of the important shares from time to time. SEBI has allowed BSE to extend its trading terminals to outside centres and the Bombay Online Trading System (BOLT) has enabled to eat opentrade working stations all over the country.
National Stock Exchange (NSE)
National Stock exchange was incorporated in November, 1992 with an equity capital of rupees 25 crores. It is not an exchange in the traditional sense where brokers own and manage the exchange. NAC is a professionally managed national market for shares, PSU bonds debentures and government securities with all the necessary infrastructure and trading facilities. NSE is an electronic screen based system where members have equal access and equal opportunity of trade irrespective of their location in different parts of the country as they are connected through a satellite network. The system helps to integrate the national market and provide a modern system with a complete audit trail of all transactions.
Objectives of NSE
The followings are the objectives of NSE:
- Providing a nation wide trading facility for equities, debt instruments etc.
- Ensure equal access to investors all over the country through an appropriate communication network.
- Provide fair, efficient and transparent securities market to investors using electronic trading systems.
- Enable shorter settlement cycles and book entry settlement system.
The settlement cycle is completed within 8 days from the last day of the trading cycle. The trading period is a week (Wednesday to Tuesday) and settlement of trade takes place in the ensuing week. NSE clearing corporation stands guarantee to all trades done in the cash market on the exchange and the counter guarantee of the clearing corporation insures that no default, Haider of payment or delivery takes place for the trade done or NSE.