Hi st or y& Evol ut i on ofSt ock Exchangesi nI ndi a a)St St ockMa Mar keti sama mar ketwher et het r adi ngofcomp mpany ock Mar ket s: s t oc k,bo t hl i s t e ds e cur i t i e sandunl i s t e dt ake spl ac e .I ti sdi ffe r e ntf r o m st ock exchangebecausei ti ncl udesal lt henat i onalst ock exchangesof t hecount r y .Forexam mp pl e,weuset het er m," t hes t oc k mar ketwas up t oday"or" t hest ockmar ketbubbl e. "
ockExchanges:St b)St ockExchangesareanor gani zedma market pl ace,ei t her cor por at i on ormu mut ualor gani z at i on,wher ememb mber soft heor gani z at i on gat hert ot r adecomp mpanyst ocksorot hersec ur i t i es.Theme memb mber sma mayact ei t heras agent sf or t hei r cust om me er s,oras pr i nci pal sf or t hei r own account s. St o c ke x c hang e sal s of ac i l i t at e sf o rt hei s s ueandr e de m mp pt i o no fs e c ur i t i e sand ot herfinanci ali nst r ument si ncl udi ng t hepayme mentofi ncome meand di vi dends. Ther e cor dkeepi ngi sc ent r albutt r adei sl i nkedt os uc hphysi calpl acebec ause moder n mar ke t s ar e comp mput er i z ed. The t r ade on an e xc hange i s onl y by memb mber sandst oc kbr okerdohav ease atont hee xc hange .
Hi st or yofI ndi an St ockMar ket : I ndi anst ockmar ketmarkst obeoneoft heol destst ockmarketi nAsi a.I tdat es bac kt ot he cl ose of18t h cent ur y when t he Eas tI ndi a Company used t o t r ansactl oan securi t i es.I nt he1830s,t r adi ngon corporat est ocksandshares i n Bank and Cot t on pr es se st ook pl acei n Bom mb bay .hough t he t r adi ng was br oadbutt hebr oke r swer ehar dl yhal fdoz endur i ng1840and1850. An i nf or malgr oup of22 s t oc kbr oker s be gan t r adi ng under a banyan t r ee opposi t et heTown Hal lofBomb mbayf r om t hemi mi d1850s,eachi nve st i nga( t hen) pr i nce l y am mo ountofRupee1.Thi s banyan t r eest i l lst ands i nt he Hor ni man Ci r cl ePar k,Mumbai .I n1860,t heexchangeflour i shedwi t h60br oker s.I nf act t he' Shar eMa Mani a'i nI ndi a began wi t ht heAmer i can Ci vi lWarbr okeand t he cot t onsuppl yf r om t heUSt oEur opes t opped.Fur t hert hebroker si ncr easedt o 250.The i nf or malg r oup ofs t ockbr oker s or gani z ed t hems mse l v es as t he The Nat i v e Shar e and St ockbr oker s Ass oci at i on whi ch, i n 1875, was f or mal l y or gani z edast heBomb mbaySt oc kExc hange( BSE) .
BSE wasshi f t edt oanol dbui l di ngneart heTownHal l .I n1928,t hepl otofl and onwhi cht heBSE bui l di ngnow st ands( att hei nt er sect i onofDal alSt r eet , BombaySamac harMar gandHammam St r ee ti ndownt ownMumbai )was acqui r ed,andabui l di ngwascons t r uct edandoccupi edi n1930.Pr emchand Roychandwasal eadi ngst ockbr okeroft hatt i me,andheassi st edi nset t i ngout t r adi t i ons,convent i ons,andpr ocedur esf ort het r adi ngofst ocksatBombay St ockExchangeandt heyar est i l lbei ngf ol l owed.
Sev er alst ockbr oki ngfir msi nMumbaiwer ef ami l yr unent er pr i ses ,andwer e namedaf t ert heheadsoft hef ami l y .
Thef ol l owi ngi st hel i s tofs omeoft hei ni t i almember soft hee xc hange,and whoar es t i l lr unni ngt hei rr espe ct i v ebusi ness D. S.Pr abhudas& Company( now knownasDSP,andaj oi ntv ent ur epar t ne r wi t hMe r r i l lLync h) JamnadasMor ar j ee( now knownasJM) Champakl alDevi das( now cal l edCi f coFi nance) Br i j mohanLaxmi nar ay an
I n1956,t heGov er nmentofI ndi ar ec ogni z edt heBombaySt ockExc hangeas t hefir stst ockexchangei nt hecount ryundert heSecur i t i esCont r act s ( Re g ul at i on)Ac t .
Themos tde ci si v eper i odi nt hehi s t or yoft heBSEt ookpl aceaf t er1992.I nt he af t er mat hofamaj orscandalwi t hmar ketmani pul at i oni nvol vi ngaBSE membernamedHar shadMeht a,BSE r es pondedt oc al l sf orr ef or m wi t h i nt r ans i g e nc e .Thef o ot dr ag g i ngbyt heBSE he l pe dr adi c al i s et hepo si t i o no f t hegover nment ,whi chencour agedt hecr eat i onoft heNat i onalSt ockExchange ( NSE) ,whi chcr eat edanel ect r oni cmarket pl ace.NSE st art edt r adi ngon4
Nov ember1994.Wi t hi nl esst hanaye ar ,NSE t ur nov erexc ee dedt heBSE.BSE r api dl yaut omat ed,buti tnev ercaughtupwi t hNSE spotmar kett ur nove r .The secondst r at egi cf ai l ur eatBSE camei nt hef ol l owi ngt woyears.NSE embarked o nt hel aunc ho fe qui t yde r i v at i v e st r adi ng .BSE r e s po nde dbypo l i t i c ale ffo r t , wi t haf r i endl ySEBIc hai r man( D.R.Me ht a)ai medatbl oc ki nge qui t y der i vat i vest r adi ng.TheBSE andD.R.Meht asucceededi ndel ayi ngt heonset o fe qui t yde r i v at i v e st r adi ngbyr o ug hl yfiv ey e ar s .Butt hi st r adi ng ,andt he accompanyi ngshi f toft hespotmarkett orol l i ngset t l ement ,di dcomeal ongi n 2000and2001-hel pedbyanot hermaj orsc andalatBSE i nv ol vi ngt het hen Pre si dentMr .AnandRat hi .NSE sc or ednear l y100% mar ketshar ei nt he runawaysuccessofequi t yderi vat i vest r adi ng,t husconsi gni ngBSE i nt ocl earl y sec ondpl ace.Today ,NSE hasr oughl y66% ofequi t yspott ur nove randr oughl y 100% o fe qui t yde r i v at i v e st ur no v e r .
St ockExchangepr ovi desat r adi ngpl at f orm,wher ebuyer sandsel l er scanmee t t ot r a ns ac ti ns ec ur i t i e s.
Ther ear et wol eadi ngs t oc ke xc hangesi nI ndi awhi c hhel pust r adear e:
1.Nat i onalSt ockExchange:Nat i onalSt ockExchangei ncor por at edi nt he y ear1992pr ovi dest r adi ngi nt heequi t yaswe l lasdebtmar ke t . Maxi mum v ol umest akepl aceonNSE andhencee nj oyl eade r shi p posi t i oni nt hecount ryt oday 2.BombaySt oc kExc hange :BSE ont heo t herhandwass e tupi nt hey ear 1875 and i st heol destst ock exchangei n Asi a.I thas evol ved i nt oi t s pr esentst at usast hepr emi erst ockexchange.
I nt r oduct i on t oBSE: As we r ead i nt he hi s t or y ofI ndi an s t oc ke xc hange;t he s t oc k exc hange, Mumbai ,popul ar l y known as" BSE" .BSE wases t abl i shed i n 1875 as" The
Nat i veShar eandSt ock Br oker sAssoci at i on" .I ti st heol destonei n Asi a,even ol dert han t heTokyoSt ock Exchange,whi ch wases t abl i shed i n 1878.I ti sa v ol unt ar y nonpr ofitmaki ngAss oci at i on ofPer sons( AOP)and hasc onv er t ed i t s e l fi nt ode mut ual i s e dandc or po r at ee nt i t y .I thase v ol v e do v ert hey e ar si nt o i t spr esentst at usast hePr emi erSt ock Exchangei nt hecount ry .I ti st hefir st St oc k Exc hange i nt he Count r yt o hav e obt ai ned per manentr ec ogni t i on i n 1956 f r om t heGovt .ofI ndi aundert heSecur i t i esCont r act s( Regul at i on)Act , 1956. TheExc hange,whi l epr ovi di ngan effic i entandt r anspar e ntmar ke tf ort r adi ng i ns e c ur i t i e s ,de btand de r i v at i v e supho l dst hei nt e r e s t soft hei nv e s t o r sand ensur esr edr essaloft hei rgri evanceswhet heragai nstt hecompani esori t sown member br okers .I tal so st r i ve st o educat e and enl i ght en t he i nve st or s by conduct i ng i nv es t or educat i on pr ogr ammes and maki ng av ai l abl et ot hem necessaryi nf ormat i vei nput s. A Gov er ni ng Boar d havi ng 20 di r ect or si st he ape x body ,whi c h deci des t he pol i ci es and r eg ul at es t he affai r s of t he Exc hange . The Gov er ni ng Boar d consi st sof9el ect eddi r ect ors,whoar ef r om t hebr oki ngcommuni t y( onet hi r d of t hem r et i r e ev er y ye ar by r ot at i on) ,t hr ee SEBI nomi nee s, si x publ i c r epre sent at i ve sandanExecut i veDi r ect or& Chi efExecut i veOfficerandaChi ef Oper at i ngOffice r . TheExecut i v eDi r ect orast heChi efExe cut i v eOffic eri sr e sponsi bl ef ort heday t oday admi ni s t r at i on of t he Exc hange and he i s ass i s t ed by t he Chi ef Oper at i ngOffice randot herHeadsofDepar t ment The Exc hange has i nse r t ed ne w Rul ei ni t s Rul e s,By el aws & Regul at i ons per t ai ni ng t o cons t i t ut i on of t he Exec ut i ve Commi t t ee of t he Exc hange. Ac cor di ngl y ,an Exe cut i v e Commi t t ee,consi s t i ng oft hr ee el ec t e d di r ect or s, t hr eeSEBInomi neesorpubl i cr epre sent at i ve s,Execut i veDi r ect or& CEO and Chi efOper at i ngOfficerhasbeenconst i t ut ed.TheCommi t t eeconsi der sj udi ci al & quasimat t er si n whi c ht heGov er ni ng Boar d has power sas an Appe l l at e Aut hor i t y , mat t e r s r egar di ng annul ment of t r ansact i ons, admi ssi on, cont i nuance and suspensi on ofmember br oker s,decl ar at i on ofa member br oker as def aul t e r , nor ms , pr oc edur e s and ot her mat t er s r e l at i ng t o
arbi t r at i on,f ees,deposi t s,margi nsand ot hermoni espayabl ebyt hemember br oker st ot heExc hange,e t c .
I nt r oduct i on t oNSE: TheNat i onalSt oc k Exc hange( NSE)i sI ndi a' sl e adi ngs t oc ke xc hangec ov er i ng 364 ci t i e s and t owns ac r os st he count r y . NSE was se t up by l eadi ng i nst i t ut i onst opr ovi deamodern,f ul l yaut omat edscr eenbased t r adi ngsyst em wi t h nat i onal r eac h. The Exc hange has br ought about unpar al l e l ed t r anspar ency ,speed & effici ency ,saf et y and mar keti nt egr i t y .I thas se tup f ac i l i t i e st hats e r v easamo de lf o rt hese c ur i t i e si ndus t r yi nt e r mso fs y s t e ms , pr act i cesandpr ocedur es. NSE haspl ayedacat al yt i crol ei nr ef ormi ngt heI ndi ansecuri t i esmar keti n t er msofmi cr ost r uct ur e,marketpr act i cesandt r adi ngvol umes.Themarket t odayusesst at eof arti nf ormat i ont echnol ogyt opr ovi deaneffici entand t r ansparentt r adi ng,cl eari ngandset t l ementmechani sm,andhaswi t nessed s e v e r a li nno v at i o nsi npr o duc t s& s e r v i c e sv i z .de mut ual i s at i o no fs t oc k exchangegovernance,scr eenbasedt r adi ng,compr essi onofset t l ementcycl es, de mat e r i al i s at i onande l e c t r o ni ct r a ns f e rofs e cur i t i e s ,s e c ur i t i e sl e ndi ngand bor r owi ng,pr of essi onal i z at i onoft r adi ngmember s,finet unedr i sk managementsys t ems,emer ge nceofcl ear i ngcor por at i onst oass ume count erpart yri sks,marketofdebtandderi vat i vei nst rument sandi nt ensi ve useofi nf ormat i ont echnol ogy. TheNat i onalSt oc kExc hangeofI ndi aLi mi t edhasgenesi si nt her epor toft he Hi gh Powe r edSt udyGr oup on Es t abl i shmentofNe w St oc k Exc hange s,whi c h r ecommendedpr omot i onofaNat i onalSt ockExchangebyfinanci ali nst i t ut i ons ( FI s)t o pr ovi de access t oi nves t orsf r om al lacr oss t he count ryon an equal f oo t i ng. Bas ed on t he r e commendat i ons, NSE was pr omot ed by l eadi ng Fi nanci alI nst i t ut i ons at t he behes t oft he Gov er nment ofI ndi a and was i ncor por at ed i n Nov ember1992 as a t axpayi ng company unl i ke ot hers t oc k exc hangesi nt hecount r y .On i t sr ec ogni t i on as a st ock exc hangeundert he Sec ur i t i es Cont r act s( Regul at i on)Act ,1956 i n Apri l1993,NSE commence d oper at i onsi nt heWhol es al eDebtMar ke t( WDM)se gme nti n June1994.The
Capi t alMar ket( Equi t i es )se gmentc ommenced oper at i ons i n Nov ember1994 andoper at i onsi nDer i v at i v ess eg mentcommencedi nJune2000. NSE' s mi ssi on i s set t i ng t he agenda f orchangei nt he secur i t i esmarket si n I ndi a.TheNSEwasset upwi t ht hef ol l owi ngobj ect i ves:
e s t abl i s hi nganat i o nwi det r a di ngf ac i l i t yf o requi t i e s ,de bti ns t r ume nt s andhybri ds,
ensur i ng equalacc es st oi nve st or s al lo ve rt he count r yt hr ough an appr opr i at ecommuni cat i onnet wor k,
pr ovi di ngaf ai r ,effici entand t r ansparentsecuri t i esmarkett oi nvest ors us i nge l e c t r o ni ct r adi ngs y s t e ms ,
enabl i ngshort ers et t l ementcycl esand book ent ryset t l ement ssyst ems, andmeet i ngt hecurr enti nt ernat i onalst andardsofsecuri t i esmarket s.
