bse,nse,ise,otcei,nsdl

BSE, NSE, ISE, BSE, NSE, ISE,

OTCEI and NSDLOTCEI and NSDL

Chapter ObjectivesChapter Objectives

To know the functioning of the various stock exchanges:To know the functioning of the various stock exchanges:

Bombay Stock Exchange (BSE)Bombay Stock Exchange (BSE) National Stock Exchange (NSE)National Stock Exchange (NSE) Inter-connected Stock Exchange (ISE)Inter-connected Stock Exchange (ISE) Over The Counter Exchange of India (OTCEI)Over The Counter Exchange of India (OTCEI) National Securities Depository Limited (NSDL)National Securities Depository Limited (NSDL)

To understand the concept of dematerialisation and To understand the concept of dematerialisation and rematerialisationrematerialisation

Bombay Stock ExchangeBombay Stock Exchange

It is one of the oldest stock exchanges in Asia.It is one of the oldest stock exchanges in Asia. It was formally established in the year 1875.It was formally established in the year 1875. It was recognised on a permanent basis in the year 1957.It was recognised on a permanent basis in the year 1957. The objectives of BSE are as follows:The objectives of BSE are as follows:

To provide a market place for the purchase and sale of To provide a market place for the purchase and sale of securities.securities.

To promote, maintain and develop a well-regulated market for To promote, maintain and develop a well-regulated market for its dealing in securities.its dealing in securities.

To establish and promote honourable and just practices in To establish and promote honourable and just practices in securities’ transactions.securities’ transactions.

Trading SystemTrading System

BSE has designed an online trading system popularly BSE has designed an online trading system popularly known as known as BSE On-line Trading (BOLT).BSE On-line Trading (BOLT).

It has been designed to get the best buy and sell orders It has been designed to get the best buy and sell orders from the investors.from the investors.

It has been expanded successfully in various other cities It has been expanded successfully in various other cities

such as Ahmedabad, Rajkot, Pune, Vadodra and Kolkata.such as Ahmedabad, Rajkot, Pune, Vadodra and Kolkata.

Surveillance SystemSurveillance System

BSE has created a surveillance system for checking BSE has created a surveillance system for checking the unfair trade practices and for managing risks.the unfair trade practices and for managing risks.

These are two types of surveillance systems:These are two types of surveillance systems: Price surveillancePrice surveillance

Circuit fillersCircuit fillers MarginsMargins

Pre-monitoringPre-monitoring Position monitoringPosition monitoring Outstanding market positionOutstanding market position Monitoring concentrated purchase or salesMonitoring concentrated purchase or sales

National Stock ExchangeNational Stock Exchange NSE was set up by IDBI and other financial NSE was set up by IDBI and other financial

institutions in the year 1992 and started functioning institutions in the year 1992 and started functioning in1993.in1993.

It was established to provide nationwide facilities to It was established to provide nationwide facilities to the investors for trading securities.the investors for trading securities.

The various objectives of NSE are:The various objectives of NSE are: To establish a nationwide trading facility for equities and To establish a nationwide trading facility for equities and

debt instruments.debt instruments. To provide fair and efficient securities market to the To provide fair and efficient securities market to the

investors.investors. To meet the current international standards of securities To meet the current international standards of securities

market.market.

Membership of NSEMembership of NSE

The membership of NSE is based on a number of The membership of NSE is based on a number of factors such as capital adequacy, track record, factors such as capital adequacy, track record, education and experience.education and experience.

An applicant has to go through two stages of An applicant has to go through two stages of admission in order to become a member of NSE. admission in order to become a member of NSE. S/He has to appear for a written test which is S/He has to appear for a written test which is followed by an interview.followed by an interview.

The segments in which the applicants are admitted:The segments in which the applicants are admitted: Wholesale debt marketWholesale debt market Capital marketCapital market Derivative marketDerivative market

Capital Market SegmentCapital Market Segment

It is a segment in which the persons and corporate It is a segment in which the persons and corporate entities are admitted.entities are admitted.

Following are the eligibility criteria an individual Following are the eligibility criteria an individual must possess in order to become a member of the must possess in order to become a member of the capital market segment:capital market segment: The applicant must be a graduate.The applicant must be a graduate. The applicant must be solely engaged in the business of The applicant must be solely engaged in the business of

securities.securities. The applicant must have two years of experience in The applicant must have two years of experience in

handling securities.handling securities.

Advantages of NSEAdvantages of NSE

NSE provides the following advantages:NSE provides the following advantages:

Wider accessibilityWider accessibility

Screen-based tradingScreen-based trading

Transparent transactionsTransparent transactions

Matching of ordersMatching of orders

Effective settlement of corporate benefitEffective settlement of corporate benefit

Recent Trends in NSERecent Trends in NSE

The following are the recent trends in NSE:The following are the recent trends in NSE:

ExpansionExpansion

QualityQuality

More liquidityMore liquidity

Less brokerageLess brokerage

Insurance against riskInsurance against risk

Quick clearing and settlementQuick clearing and settlement

Inter-connected Stock ExchangeInter-connected Stock Exchange

ISE started its operations from August 29, 1998.ISE started its operations from August 29, 1998.

The main objective of ISE is to interlink 15 regional The main objective of ISE is to interlink 15 regional stock exchanges in order to ensure better liquidity.stock exchanges in order to ensure better liquidity.

It helps in minimizing the cost of the regional stock It helps in minimizing the cost of the regional stock exchanges.exchanges.

Over the Counter Exchange of IndiaOver the Counter Exchange of India

OTCEI was established in the year 1992.OTCEI was established in the year 1992. It allows listing of small and medium sized It allows listing of small and medium sized

companies.companies. A company that wants to be listed in OTCEI must A company that wants to be listed in OTCEI must

have a minimum issued share capital of Rs. 3 crores.have a minimum issued share capital of Rs. 3 crores. Financial institutions, scheduled banks, mutual funds Financial institutions, scheduled banks, mutual funds

and other non-banking financial companies can be its and other non-banking financial companies can be its members.members.

The dealers of OTCEI can be individuals, partnership The dealers of OTCEI can be individuals, partnership firms and corporate entities with a minimum net firms and corporate entities with a minimum net worth of Rs. 5 lakhs.worth of Rs. 5 lakhs.

National Securities Depository Ltd.National Securities Depository Ltd.

NSDL is the largest depository of India established in NSDL is the largest depository of India established in the year 1996.the year 1996.

It is promoted by Industrial Development Bank of It is promoted by Industrial Development Bank of India, the Unit Trust of India and the National Stock India, the Unit Trust of India and the National Stock Exchange of India Limited.Exchange of India Limited.

It handles most of the securities held and settled in a It handles most of the securities held and settled in a dematerialised form in the capital market.dematerialised form in the capital market.

The following are the functions that NSDL performs:The following are the functions that NSDL performs: It maintains the holdings of the investor in the electronic It maintains the holdings of the investor in the electronic

form.form. It carries out the settlements of the trader. It carries out the settlements of the trader.

Individual Investor and NSDLIndividual Investor and NSDL

An individual investor has to open an account in order An individual investor has to open an account in order to become the member of NSDL.to become the member of NSDL.

An individual investor enjoys the following benefits in An individual investor enjoys the following benefits in becoming the member of NSDL:becoming the member of NSDL:

If the shares are bought in the depository mode then the If the shares are bought in the depository mode then the investor can become the owner of the shares without loss of investor can become the owner of the shares without loss of time.time.

The paper work is reduced to minimum in selling of shares. The paper work is reduced to minimum in selling of shares.

Transactions of NSDLTransactions of NSDL

Two categories of transactions are undertaken in Two categories of transactions are undertaken in NSDL:NSDL:

New issueNew issue: In this, the investor can either take the shares in : In this, the investor can either take the shares in physical mode or in electronic mode.physical mode or in electronic mode.

Secondary marketSecondary market: In this, the method of trading shares : In this, the method of trading shares remains the same but there is a difference in the settlement remains the same but there is a difference in the settlement and clearing procedures. Trades are settled in demat mode.and clearing procedures. Trades are settled in demat mode.

Dematerialisation and Dematerialisation and RematerialisationRematerialisation

Dematerialisation is a process in which the physical Dematerialisation is a process in which the physical share certificates of the investor are converted into share certificates of the investor are converted into electronic form.electronic form.

Rematerialisation is a process in which the electronic Rematerialisation is a process in which the electronic holdings are converted back into physical share holdings are converted back into physical share certificates.certificates.

Chapter SummaryChapter Summary

By now, you should have:By now, you should have: Understood the functioning of the various stock exchangesUnderstood the functioning of the various stock exchanges

Bombay Stock Exchange (BSE)Bombay Stock Exchange (BSE)

National Stock Exchange (NSE)National Stock Exchange (NSE)

Inter-connected Stock Exchange (ISE)Inter-connected Stock Exchange (ISE)

Over The Counter Exchange of India (OTCEI)Over The Counter Exchange of India (OTCEI)

National Securities Depository Limited (NSDL)National Securities Depository Limited (NSDL)

Learnt the concept of dematerialisation and rematerialisationLearnt the concept of dematerialisation and rematerialisation