Bombay Stock Exchange Limited The Edge is Efficiency INTRODUCTION The stock exchange, Mumbai popularly known, as Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. It was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Bombay Stock Exchange Limited
T h e E d g e i s E f f i c i e n c y
INTRODUCTION
The stock exchange, Mumbai popularly known, as Bombay
Stock Exchange Limited is the oldest stock exchange in Asia with a
rich heritage. It was established as "The Native Share & Stock
Brokers Association" in 1875. It is the first stock exchange in the
country to obtain permanent recognition in 1956 from the Govt. of
India under the Securities Contracts (Regulation) Act, 1956. The
Exchange's pivotal and pre-eminent role in the development of the
Indian capital market is widely recognized and its index, SENSEX, is
tracked worldwide. Earlier an Association of Persons (AOP), the
Exchange is now a demutualised and corporatised entity
incorporated under the provisions of the Companies Act, 1956,
pursuant to BES (Corporatisation and Demutualisation) Scheme,
2005 notified by the Securities and Exchange Board of India (SEBI)
With demutualisation, the trading rights and ownership rights
have been delinked effectively addressing concerns regarding
perceived and real conflicts of interest. The Exchange is
professionally managed under the overall direction of the Board of
Directors. The Board comprises eminent professionals,
representatives of Trading members and the managing Director of
the Exchange. The Board is inclusive and is designed to benefit
from the participation of market intermediaries.
In terms of organization structure, the Board formulates larger
policy issues and exercises over-all control. The committees
constituted by the Board are board based. The Day-to-Day
operations of the Exchange are managed by the Managing Director
and a management team of professionals.
The Exchange has a Nation wide reach with a presence in 417
cities and towns of India. The systems and processes of the
Exchange are designed to safeguard the market integrity and
enhance transparency in operations. During the year 2005-2006, the
trading volumes on the Exchange showed robust growth. The
Exchange provides an efficient and transparent market for trading in
equity, debt instruments and derivatives. The BSE's Online Trading
System (BOLT) is a proprietary system of Exchange and is BS
7799-2-2002 certified. The surveillance and clearing & settlement
2
functions of the Exchange are ISO 9001:2000 certified.
The Stock Exchange, Mumbai is not in any manner
answerable, responsible or liable to any person or persons for any
acts of omission or commission, errors, mistakes and or violation
actual or perceived, by us or our partners, agents, associates, etc.,
of any of the rules, regulations, Bye-Laws of the Stock Exchange,
Mumbai, SEBI Act or any other laws in force from time to time. The
Stock exchange, Mumbai is not answerable, responsible or liable for
any information on this website or for any services rendered by us,
our employees and our servants.
3
THE ORGANIZATION
The national stock exchange of India Limited has genesis in
the report of the High Powered Study Group on establishment of
new stock exchanges, which recommended promotion of a national
stock exchange by financial institutions (FIS) to provide access to
investors from all across the country on an equal footing. Based on
the recommendations, NSE was promoted by leading financial
institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax paying company, unlike
other stock exchanges in the country.
On its recognition as a stock exchange under the securities
contracts (regulations) Act, 1956 in April 1993, NSE commenced
operations in the wholesale debt market (WDM) segment in June
1994. The capital market (Equities) segment commenced operations
in November 1994 and operations in derivatives segment
commenced in June 2000.
4
DEFINITIONS AND EXPLANATIONS
1. Shares:-
In every day language, when we talk of shares we
normally refer to equity shares or ordinary shares of a company. The
terms shares and stock essentially means the same things, the letter
being a more common American usage.
An equity share is evidence of ownership in a
company. The physical evidence of this ownership of this document
is called the Share Certificate. Now days, shares are usually kept in
electronic, or dematerialized, form with a depository participant
(Banks, brokers, financial institutions) of the National Securities
Depository Limited (NSDL). However, if one wants one can still hold
the share in the physical form which has your name endorsed on it,
and is proved that you are a part owner of the company. Your
ownership rights are proportionate to the number of share you own.
Companies issue shares of a certain fixed denomination, called face
value or par value of that share, which is clearly indicated on a
share certificate in the physical form.
2. Investment: -
Investment essentially refers to what you do with
your savings in order to preserve them and make them grow or yield
an income. If you keep your savings in the form of cash, they are
certainly going to diminish in value because the purchasing power of
money is constantly going down as a result of inflation. (The value of
money is judged by the quantity of goods and services you can buy
5
with it). Therefore, if you want to maintain or increase the value of
your savings, you have to keep them in forms other than cash. This
is what investment is all about, deployment of your saving with the
intentions of preserving or increasing their value. This deployment
can be done by using your savings to buy land, residential
properties, commercial properties, gold, jewelry, works of art, fixed
deposits in banks and companies, shares, bonds, infact, anything
whose value is likely to either remain constant or appreciate with
time. Investment also refer to using one's savings with the intention
of earning an income.
3. Demate A/c:-
On doing an online business ever customer has to
open and demate account in any bank whichever he likes. Demate
account is the account in which the trading done by the customer is
mentioned. If the customer sales or purchases any share the details
of this sale and purchasing are in demate account. This account
contents the name of the shares and also the number of shares held
or sold and also the rate of the share with this demate account. It is
also compulsory for every customer to open a saving account in the
bank because the amount which is to be received when the
customers sales the shares are transferred from the demate account
to the saving account.
It is the responsibility of the customers that the
share which he purchased or sales are properly transferred in
demate account from the stock exchange whichever he deals. The
amount of dividend whichever to be received on the shares when
held for one or more year are also transferred in this demate
6
account. It is compulsory for every customer to have a PAN no. For
opening an demate account. If PAN no. Is not there is no chance for
the customer to do any trading on line. There is no limit of amount to
deal in this account.
4. Circuit Limit:-
While issuing the shares to the public the company
has to fix a particular limit of the rate of the per share this limit is
called as circuit limit. This circuit limit is generally fixed on the
percentage basis. This circuit limit is applied to both the ends of the
share. That is to the upper limit also and also to the lower limit
actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit
limit. This limit is beneficial to both. The customer and also to the
company generally every company fix below 10%of the rate of per
share.
5.Upper Limit: -
While issuing the shares to the public the company
has to fix the upper limit this limit is also calculated in percentage
the limit is also beyond which the rate of the shares cannot exceed
nor that the customer doing the trading can sell above the level.
For ex. Customer wants to sell a share which is of
Rs10 and its upper limit is fixed at 10% so in this case the person
will have to sell it at Rs11 or the rate which ever he wants but the
person cannot sell it beyond this Rs 11 because by addition of upper
7
limit to the rate of share the maximum amount of the shares is Rs 11
only and not above.
6.Lower Limit: -
At the time of issuing share the company has to fix
the lower limit also. This lower limit is calculated on the basis of the
rate of the shares. This limit bears the same percentage, which is
mentioned for the upper limit of the share. Like upper limit in this
limit also the share minimum rate of the share is fixed the customer
who wants to se; the holding shares has to first consider the upper&
lower limit of the share he cannot sell the share below the lower limit
and not above the upper limit like the upper limit
Percentage generally in this limit also the percentage is below 10%
of the face value of the shares the percentage is below 10% of the
face value of the shares the percentage of the upper &lower limit is
equal to every type of share
For ex. Suppose the person wants to sell the shares and
the rate of the share is Rs. 10/- and the lower limit percentage is 10% of
the rate. So in this case the person cannot sell the share at below Rs. 9/-.
He will have to sell at above Rs. 9/- or up to the upper limit of the share.
7. Sensex:-
When the shares are issued to the public the stock
exchange gives a particular group to the company. For ex. The
Reliance Group is given the group “A” like this there are several
companies which fall in “A” Group. The weightage mean is
calculated according to its equity when all the companies of Group
8
“A” has calculated this weightage mean they are added all together
when this addition is done the result which comes down is known as
“Sensex”.
The trading of shares of “A” group is totally
depended on this sensex value. The price of the share rises this
sensex value also rises and when the price of this share comes
down the sensex value also comes down. With the sensex value the
investors can know that the share market is in plus position or minus
position.
8. Scripts:-
The company, which has more than one working
area, it has to issue the share separately than that company is the
company which has the script of its name.
For Ex. The Reliance this company has its several
working area Namely Reliance, Capital Reliance, Infocom Reliance
Energy, Reliance Industry. So reliance company issues separate
share for separate working area but the bold name which is given to
the working area is “Reliance”. So in this case Reliance has its own
scripts. Other example Ambuja, Birla, Etc.
9. Groups:-
When the shares are issued by the company they
are given the particular group by the Stock exchange according to
its demand in the market. There are mainly 7 groups known as:-
i. Group “A”
ii. Group “B”
iii. Group “C”
9
iv. Group “K”
v. Group “T”
vi. Group “TS”
vii. Group “Z”
The company which are in great demand is given
as Group “A” company. And the company which are not in so
demand are given in other group. This means that the companies
are given the group according to its demand.
10
BUYING AND SELLING
The first step is to open a demate account with your selected
Depository Participants (DP). All transactions on both the BSE and
NSE are done in demate securities.
When you buy shares, you are required to pay money to your
broker or sub-broker immediately upon getting the contract
note/confirmation memo for the purchase of shares. The broker
issue as contract note, whereas sub-broker issues a confirmation
memo. Similarly, when you sale shares you are required to give
delivery of your shares by transferring them to the demate account
of your broker/sub-broker immediately upon getting the contract note
or confirmation memo. When you buy the shares then the share you
have purchased will come first to demate account of your
broker/sub-broker. Once this happens, you can instruct your
broker/sub-broker to transfer those shares to your demate account
for receiving shares in your demate account you will have to give
your broker or sub-broker the details regarding your demate
account.
When you sale shares you are required to give delivery of
share from your demate account by instructing your DP to transfer
the number of shares that you have sold from your account to the
demate account of your broker. In this regard, you will be required to
include the details of the demate account of your broker in the
instruction slip that you give to your DP. Your broker or sub-broker
will help you to fill in the delivery instructions. These instructions are
of a technical nature and the delivery instruction forms and
procedures differ from DP to DP.
11
PROCEDURE FOR REGISTRATION
For registration, send your name, address, phone no. and E-
Mail ID, package name and duration of your subscription with
payment details like DD, Cheque no., or online fund transfer detail.
Mode of payment:-
Pay us buy cheque or demand draft or pay for our
services to I.C.I.C.I bank. For more details E-Mail at