stock exchange...........

According to Securities Contact Regulation Act,1956 “Stock Exchange is 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.” 

Organisation and Management

The organization, management, membership and functioning of stock exchanges in India are governed by the provisions of the Securities Contracts (Regulation) Act, 1956. This Act permits only recognized stock exchanges which have to function under the rules, by –laws and regulation approved by the Central Government.At present the stock exchanges in India have one of the following organizational forms:

• Voluntary non-profit- making association

• Public limited company

• Company limited by guarantee.

A stock exchange is managed by a governing body consisting of:

1. a president,

2. a vice-president,

3. an executive director,

4. the elected directors,

5. the public representatives, and

6. the nominees of the Government(s)

Share: Owning a share means, you are having the ownership of a company however it small may be. The shares can be purchased in two ways - either in IPO or from the stock exchanges where the shares are being traded. The IPO stands for Initial Public Offering. It comes under the primary market. Here a company declares to sell shares at a given premium. You can directly apply for the IPOs through your broker or bank where your demat account is maintained. Once the offer is closed you will be informed whether you have been allotted of the shares or not.

The second way is to purchase the shares through stock exchanges. You need to have a demat and trading account to purchase the shares from the exchanges.

Sensex and Nifty: These two are the major indexes of the Indian share market. The sensex stands for sensitivity of share index price and nifty stands for national fifty.

There are two main stock exchanges in India - BSE and NSE. BSE stands for Bombay Stock Exchange. This is the oldest exchange in India. Thirty shares are included in sensex. NSE stands for National Stock Exchange. It is having the fifty shares included in it. Apart from BSE and NSE there several others stock exchanges like calcutta stock exchange, Bangalore Stock exchange etc and they are interconnected through BSE and NSE.Besides nifty and sensex, there are other index also like Bank Nifty, CNXIT, Midcap and small cap index also.

NSE incorporated in 1992 was given recognition as stock exchange in April 1993 and started operation in June 1994.NSE was set up by IDBI and other financial institutions with paid up equity capital of Rs.25 crores. It is India’s first national online stock market with segment for both debt and equity securities.NSE was set to establish a nation wide trading. Its aim was to provide equal access to investors all over the country and to ensure fairness, efficiency and transparency in trading of securities to make Indian securities market confirm to global standards.

There is no trading floor in this exchange. The trading is screen based, meaning that the brokers are connected to the exchange by PC terminals. This makes trading very transparent and it is also cost effective. The settlement cycle on this exchange is at T+3 and some time in near future it will become T+1.This means transaction on the exchange will be much faster, and seller will get their money and the buyer their securities very quickly. The exchange provides facility of screen based trading with automated order matching. The system is order driven and conceals the identity of all parties. All orders received are sorted at best order price getting the first priority for matching i.e the the best buy order matches with the best sell order.The trading system is very flexible, and this enables the investors to place several time, price and volume related orders. The system provides complete market information online. Due to this it is possible for the investors to know the actual position of the market, before placing the order ,

Trading system on NSE may divided into two segments :

1) In Capital Market Segment: 

It covers trading on equities and retail trade in debt instruments like Non- Convertible instruments and hybrid instruments.NSE provide the complete flexibility to members in the kind of orders that can be placed. Orders, as and when they are received for the first time are processed for a potential match. If the order is not matched, then the the ordered are stored in different books,in the price time priority as passive orders.

2) Wholesale Debt Market Segment : 

WDM or money market is a market where pure debt instruments such as government securities, treasury bills, public sector bonds, corporate debentures, commercial paper, certificates of deposits etc. are traded. A few large usually institutional investors and a very high volume of trade dominate this segment. Trades on this market are settled on the basis of trade for trade i.e each transaction are settled individually. The trading system is an order driven, automated order matching system which does not reveal the identity of the parties to an order or to a trade.This help orders, whether large or small. Trading system provides flexibility to the users in terms of type of orders that can be placed on the system. Several time related ,price related and volume related condition can easily be applied.