Description
A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
STOCK MARKETS IN INDIA
Group Members’ Name
1 2 3 4129 4176 4186 Priyanka Sagar Hemlata Kapadiya Bansari Parmar
STOCK MARKETS
• Stock Market is a market where the trading of company stock, both listed securities and unlisted takes place. It is different from stock exchange because it includes all the national stock exchanges of the country. For example, we use the term, "the stock market was up today" or "the stock market bubble."
STOCK EXCHANGES
• Stock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks or other securities. The members may act either as agents for their customers, or as principals for their own accounts.
HISTORY OF INDIAN STOCK MARKET
• Indian stock market marks to be one of the oldest stock market in Asia. • An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay from the mid-1850s. • In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took place in Bombay. • Though the trading was broad but the brokers were hardly half dozen during 1840 and 1850. • In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the American Civil War broke and the cotton supply from the US to Europe stopped. Further the brokers increased to 250. • In 1956, the Government of India recognized the Bombay Stock Exchange as the first stock exchange in the country under the Securities Contracts (Regulation) Act.
• At present, there are twenty one recognized stock exchanges in India which does not include the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
1. 2. 3. 4. 5. 6. 7. 8. 9. Bombay Stock Exchange Calcutta Stock Exchange (1908) Madras Stock Exchange (1937) Ahmedabad Stock Exchange Delhi Stock Exchange Hyderabad Stock Exchange Bangalore Stock Exchange (1963) Indore Stock Exchange Cochin Stock Exchange (1980)
10. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) 11. Pune Stock Exchange Limited (1982) 12. Ludhiana Stock Exchange Association Limited (1983) 13. Gauhati Stock Exchange Limited (1984) 14. Kanara Stock Exchange Limited (at Mangalore, 1985) 15. Magadh Stock Exchange Association (at Patna, 1986) 16. Jaipur Stock Exchange Limited (1989) 17. Bhubaneswar Stock Exchange Association Limited (1989) 18. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) 19. Vadodara Stock Exchange Limited (at Baroda, 1990) 20. Coimbatore Stock Exchange 21. Meerut Stock Exchange
• Based on Pherwani Committees report submitted in June, 1991, the National Stock Exchange of India Limited (NSEIL) Was established to provide an efficient system.
• National Stock Exchange provides trading in the equity as well as debt market. Maximum volumes take place on NSE and hence enjoy leadership position in the country today. • The National Stock Exchange (NSE) operates a nation-wide, electronic market, offering trading in Capital Market, Derivatives Market and Currency Derivatives segments including equities, equities based derivatives, Currency futures and options, equity based ETFs, Gold ETF and Retail Government Securities.
• Today NSE network stretches to more than 1,500 locations in the country and supports more than 2, 30,000 terminals. • NSE has introduced services like FIX capabilities, colocation facility and mobile trading to cater to the evolving need of the market and various categories of market participants.
• BSE was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia
• BSE has over 6000 companies that are listed in it.
• It has evolved in to its present status as the premier stock exchange.
Over The Counter Exchange of India (OTCEI)
• There is also an Over The Counter Exchange of India (OTCEI) which allows listing of small and medium sized companies. • OTCEI was incorporated in 1990 under the Companies Act 1956.
• OTCEI is the first screen based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
REGULATION OF BUSINESS IN THE STOCK EXCHANGES
• Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of stock exchanges. The SEBI has been inspecting the stock exchanges once every year since 1995-96. • During these inspections, a review of the market operations, organizational structure and administrative control of the exchange is made to ascertain the following:
1. The exchange provides a fair, equitable and growing market to investors.
2. The exchange's organization, systems and practices are in accordance with the Securities Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed there under. 3. The exchange has implemented the directions, guidelines and instructions issued by the SEBI from time to time.
4. The exchange has complied with the conditions, if any, imposed on it at the time of renewal/ grant of its recognition under section 4 of the SC(R) Act, 1956.
Players in the stock market
• • • • Stock Exchanges Buyers Sellers Intermediary (Brokers)
The term “Securities” include
? Share
? Scrip ? Stock ? Bond ? Debenture ? Derivative ? Security Receipts ? Government Securities ? other instrument
The Trading Process
Step 1: Order is placed with a broker by phone, Internet, or in person. the broker will ask a variety of questions such as: 1. What stock do you want to purchase? 2. How many shares? 3. What price are you willing to pay? 4. What type of order do you want to place? • A day order expires at the end of the day. • An at-the-market order specifies the number of shares to be bought or sold at the best price when available. • A limit order specifies a maximum price for buying or a minimum price for
selling.
Step 2 : Orders are matched electronically by the Exchange computer system. Step 3 When a match is found, the broker informs the client of the trade price plus the commission.
Step 4 Making the Trade: Once the buyer has opened an account with a brokerage firm, then he is able to place his order. Investors who are fairly knowledgeable and comfortable with making their own decisions on the stock market may choose discount brokers.
A discount broker charges less commission (usually a flat rate) but does not offer investment advice.
The full-service broker charges more commission, but provides investment advice, analyst reports, and research on companies. Commission varies depending on the broker and value of the trade, but is normally charged as a percentage of the trade.
Step 5 The Settlement Process:
Once the buyer has purchased shares of a stock, his broker will tell him how much he must pay for those shares, including the commission the firm charges for its service. The buyer usually have three business days to make the payment. (Money markets generally allow only one day.) The buyer ensures that his or her account has sufficient funds to cover the transaction. The buyer’s broker then forwards payment (less commission) to the brokerage firm of the seller, who forwards payment (less commission) to the seller. When payment is made, ownership of the stock is transferred from the seller to the buyer. The actual transfer of securities takes place through a central clearing house.
• NSE operates on the 'National Exchange for Automated Trading' (NEAT) system. • BSE operates on the “BSE’s Online Trading” (BOLT) system. 1. Market Timings: Trading on the equities segment takes place on all days of the week except Saturdays and Sundays and holidays declared by the Exchange in advance. The Normal Market timings of the equities segment : 09:15 hours to 15:30 hours
•
2. Automated Trading System: Our country has an advanced trading system which is a fully automated screen based trading system. This system adopts the principle of an order driven market
• Orders are first numbered and time-stamped on receipt and then immediately processed for potential match. • Every order has a distinctive order number and a unique time stamp on it. • If a match is not found, then the orders are stored in different 'books'. • Order Conditions in Automated Trading System: A Trading Member can enter various types of orders depending upon his/her requirements. These conditions are broadly classified into three categories: A. Time Related Condition B. Price Related Condition C. Quantity Related Condition
a) Day Order - A Day order is an order which is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day. b) GTC Order - Good Till Cancelled (GTC) order is an order that remains in the system until it is cancelled by the Trading Member. c) GTD - A Good Till Days/Date (GTD) order allows the Trading Member to specify the days/date up to which the order should stay in the system. d) IOC - An Immediate or Cancel (IOC) order allows a Trading Member to buy or sell a security as soon as the order is released into the market, failing which the order will be removed from the market.
a) Limit Price/Order – An order that allows the price to be specified while entering the order into the system. b) Market Price/Order – An order to buy or sell securities at the best price obtainable at the time of entering the order. c) Stop Loss (SL) Price/Order – The one that allows the Trading Member to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price. Until then the order does not enter the market.
a) Disclosed Quantity (DQ)- An order with a DQ condition allows the Trading Member to disclose only a part of the order quantity to the market. • For example, an order of 1000 with a disclosed quantity condition of 200 will mean that 200 is displayed to the market at a time. After this is traded, another 200 is automatically released and so on till the full order is executed. • The Exchange may set a minimum disclosed quantity criteria from time to time.
3. Market Segments: The Exchange operates the following subsegments in the Equities segment: A. Rolling Settlement :The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a specified number of working days between a trade and its settlement. At present, this gap is five working days after the trading day. B. Limited Physical Market : The Exchange has provided a facility of trading in physical shares for Small investors holding (not exceeding 500 shares) physical shares in securities. This market segment is referred to as 'Limited Physical Market' (small window). The Limited Physical Market was introduced on 7th June, 1999. C. Institutional Segment: To facilitate execution of InterInstitutional deals in companies where the cut-off limit of FII investment has been reached, the Exchange introduced a new market segment on 27th December, 1999.
4. Brokerage And Other Transaction Costs
• Brokerage is negotiable. The Exchange has not prescribed any minimum brokerage. • The maximum brokerage is subject to a ceiling of 2.5 percent of the contract value. • Typically there are different scales of brokerages for delivery transaction, trading transaction, etc.
• The Stamp Duty on transfer of securities in physical form is to be paid by the seller but in practice it is paid by the buyer while registering the shares in his name. The rate of stamp duty varies from State to State.
• In case of transfer of shares as well as debentures, the rate is 50 paisa for every Rs. 100/- or part thereof on the basis of the amount of consideration.
5. Transfer Of Ownership • Transfer of ownership of securities, if the same is not delivered in demat form by the seller, is effected through a date stamped transfer-deed which is signed by the buyer and seller. • A nominal duty becomes payable in the form of stamps to be affixed on the transfer-deeds. • However, for delivery of shares in the market, transfer deed is valid for 12 months or till book closure date of the company.
6. Listing of Securities • Listing means admission of the securities to dealings on a recognized stock exchange. The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc.
• The objectives of listing are mainly to : - provide liquidity to securities; - mobilize savings for economic development; - protect interest of investors by ensuring full disclosures. • The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, By-laws and Regulations of the Exchange. • The exchange prescribes different listing requirements for new companies, for company listed on other stock exchanges and for companies delisted by the Exchange seeking relisting of the same Exchange.
7. Surveillance at BSE • The main objective of the Surveillance function of the Exchange is to promote market integrity in two ways: I. By monitoring price and volume movements (volatility) as well as by detecting potential market abuses at a growing stage, with a view to minimizing the ability of the market participants, both in Cash and Derivative market, to influence the price of the series in the absence of any meaningful information. II. By managing default risk by taking necessary actions timely. • Surveillance activities at the Exchange are divided broadly into two major segments, price monitoring and position monitoring. i. Price monitoring is mainly related to the price movement/ abnormal fluctuation in prices or volumes. ii. position monitoring relates mainly to abnormal positions of members in order to manage default risk.
doc_151928409.pptx
A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
STOCK MARKETS IN INDIA
Group Members’ Name
1 2 3 4129 4176 4186 Priyanka Sagar Hemlata Kapadiya Bansari Parmar
STOCK MARKETS
• Stock Market is a market where the trading of company stock, both listed securities and unlisted takes place. It is different from stock exchange because it includes all the national stock exchanges of the country. For example, we use the term, "the stock market was up today" or "the stock market bubble."
STOCK EXCHANGES
• Stock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks or other securities. The members may act either as agents for their customers, or as principals for their own accounts.
HISTORY OF INDIAN STOCK MARKET
• Indian stock market marks to be one of the oldest stock market in Asia. • An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay from the mid-1850s. • In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took place in Bombay. • Though the trading was broad but the brokers were hardly half dozen during 1840 and 1850. • In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the American Civil War broke and the cotton supply from the US to Europe stopped. Further the brokers increased to 250. • In 1956, the Government of India recognized the Bombay Stock Exchange as the first stock exchange in the country under the Securities Contracts (Regulation) Act.
• At present, there are twenty one recognized stock exchanges in India which does not include the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
1. 2. 3. 4. 5. 6. 7. 8. 9. Bombay Stock Exchange Calcutta Stock Exchange (1908) Madras Stock Exchange (1937) Ahmedabad Stock Exchange Delhi Stock Exchange Hyderabad Stock Exchange Bangalore Stock Exchange (1963) Indore Stock Exchange Cochin Stock Exchange (1980)
10. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) 11. Pune Stock Exchange Limited (1982) 12. Ludhiana Stock Exchange Association Limited (1983) 13. Gauhati Stock Exchange Limited (1984) 14. Kanara Stock Exchange Limited (at Mangalore, 1985) 15. Magadh Stock Exchange Association (at Patna, 1986) 16. Jaipur Stock Exchange Limited (1989) 17. Bhubaneswar Stock Exchange Association Limited (1989) 18. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) 19. Vadodara Stock Exchange Limited (at Baroda, 1990) 20. Coimbatore Stock Exchange 21. Meerut Stock Exchange
• Based on Pherwani Committees report submitted in June, 1991, the National Stock Exchange of India Limited (NSEIL) Was established to provide an efficient system.
• National Stock Exchange provides trading in the equity as well as debt market. Maximum volumes take place on NSE and hence enjoy leadership position in the country today. • The National Stock Exchange (NSE) operates a nation-wide, electronic market, offering trading in Capital Market, Derivatives Market and Currency Derivatives segments including equities, equities based derivatives, Currency futures and options, equity based ETFs, Gold ETF and Retail Government Securities.
• Today NSE network stretches to more than 1,500 locations in the country and supports more than 2, 30,000 terminals. • NSE has introduced services like FIX capabilities, colocation facility and mobile trading to cater to the evolving need of the market and various categories of market participants.
• BSE was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia
• BSE has over 6000 companies that are listed in it.
• It has evolved in to its present status as the premier stock exchange.
Over The Counter Exchange of India (OTCEI)
• There is also an Over The Counter Exchange of India (OTCEI) which allows listing of small and medium sized companies. • OTCEI was incorporated in 1990 under the Companies Act 1956.
• OTCEI is the first screen based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
REGULATION OF BUSINESS IN THE STOCK EXCHANGES
• Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of stock exchanges. The SEBI has been inspecting the stock exchanges once every year since 1995-96. • During these inspections, a review of the market operations, organizational structure and administrative control of the exchange is made to ascertain the following:
1. The exchange provides a fair, equitable and growing market to investors.
2. The exchange's organization, systems and practices are in accordance with the Securities Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed there under. 3. The exchange has implemented the directions, guidelines and instructions issued by the SEBI from time to time.
4. The exchange has complied with the conditions, if any, imposed on it at the time of renewal/ grant of its recognition under section 4 of the SC(R) Act, 1956.
Players in the stock market
• • • • Stock Exchanges Buyers Sellers Intermediary (Brokers)
The term “Securities” include
? Share
? Scrip ? Stock ? Bond ? Debenture ? Derivative ? Security Receipts ? Government Securities ? other instrument
The Trading Process
Step 1: Order is placed with a broker by phone, Internet, or in person. the broker will ask a variety of questions such as: 1. What stock do you want to purchase? 2. How many shares? 3. What price are you willing to pay? 4. What type of order do you want to place? • A day order expires at the end of the day. • An at-the-market order specifies the number of shares to be bought or sold at the best price when available. • A limit order specifies a maximum price for buying or a minimum price for
selling.
Step 2 : Orders are matched electronically by the Exchange computer system. Step 3 When a match is found, the broker informs the client of the trade price plus the commission.
Step 4 Making the Trade: Once the buyer has opened an account with a brokerage firm, then he is able to place his order. Investors who are fairly knowledgeable and comfortable with making their own decisions on the stock market may choose discount brokers.
A discount broker charges less commission (usually a flat rate) but does not offer investment advice.
The full-service broker charges more commission, but provides investment advice, analyst reports, and research on companies. Commission varies depending on the broker and value of the trade, but is normally charged as a percentage of the trade.
Step 5 The Settlement Process:
Once the buyer has purchased shares of a stock, his broker will tell him how much he must pay for those shares, including the commission the firm charges for its service. The buyer usually have three business days to make the payment. (Money markets generally allow only one day.) The buyer ensures that his or her account has sufficient funds to cover the transaction. The buyer’s broker then forwards payment (less commission) to the brokerage firm of the seller, who forwards payment (less commission) to the seller. When payment is made, ownership of the stock is transferred from the seller to the buyer. The actual transfer of securities takes place through a central clearing house.
• NSE operates on the 'National Exchange for Automated Trading' (NEAT) system. • BSE operates on the “BSE’s Online Trading” (BOLT) system. 1. Market Timings: Trading on the equities segment takes place on all days of the week except Saturdays and Sundays and holidays declared by the Exchange in advance. The Normal Market timings of the equities segment : 09:15 hours to 15:30 hours
•
2. Automated Trading System: Our country has an advanced trading system which is a fully automated screen based trading system. This system adopts the principle of an order driven market
• Orders are first numbered and time-stamped on receipt and then immediately processed for potential match. • Every order has a distinctive order number and a unique time stamp on it. • If a match is not found, then the orders are stored in different 'books'. • Order Conditions in Automated Trading System: A Trading Member can enter various types of orders depending upon his/her requirements. These conditions are broadly classified into three categories: A. Time Related Condition B. Price Related Condition C. Quantity Related Condition
a) Day Order - A Day order is an order which is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day. b) GTC Order - Good Till Cancelled (GTC) order is an order that remains in the system until it is cancelled by the Trading Member. c) GTD - A Good Till Days/Date (GTD) order allows the Trading Member to specify the days/date up to which the order should stay in the system. d) IOC - An Immediate or Cancel (IOC) order allows a Trading Member to buy or sell a security as soon as the order is released into the market, failing which the order will be removed from the market.
a) Limit Price/Order – An order that allows the price to be specified while entering the order into the system. b) Market Price/Order – An order to buy or sell securities at the best price obtainable at the time of entering the order. c) Stop Loss (SL) Price/Order – The one that allows the Trading Member to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price. Until then the order does not enter the market.
a) Disclosed Quantity (DQ)- An order with a DQ condition allows the Trading Member to disclose only a part of the order quantity to the market. • For example, an order of 1000 with a disclosed quantity condition of 200 will mean that 200 is displayed to the market at a time. After this is traded, another 200 is automatically released and so on till the full order is executed. • The Exchange may set a minimum disclosed quantity criteria from time to time.
3. Market Segments: The Exchange operates the following subsegments in the Equities segment: A. Rolling Settlement :The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a specified number of working days between a trade and its settlement. At present, this gap is five working days after the trading day. B. Limited Physical Market : The Exchange has provided a facility of trading in physical shares for Small investors holding (not exceeding 500 shares) physical shares in securities. This market segment is referred to as 'Limited Physical Market' (small window). The Limited Physical Market was introduced on 7th June, 1999. C. Institutional Segment: To facilitate execution of InterInstitutional deals in companies where the cut-off limit of FII investment has been reached, the Exchange introduced a new market segment on 27th December, 1999.
4. Brokerage And Other Transaction Costs
• Brokerage is negotiable. The Exchange has not prescribed any minimum brokerage. • The maximum brokerage is subject to a ceiling of 2.5 percent of the contract value. • Typically there are different scales of brokerages for delivery transaction, trading transaction, etc.
• The Stamp Duty on transfer of securities in physical form is to be paid by the seller but in practice it is paid by the buyer while registering the shares in his name. The rate of stamp duty varies from State to State.
• In case of transfer of shares as well as debentures, the rate is 50 paisa for every Rs. 100/- or part thereof on the basis of the amount of consideration.
5. Transfer Of Ownership • Transfer of ownership of securities, if the same is not delivered in demat form by the seller, is effected through a date stamped transfer-deed which is signed by the buyer and seller. • A nominal duty becomes payable in the form of stamps to be affixed on the transfer-deeds. • However, for delivery of shares in the market, transfer deed is valid for 12 months or till book closure date of the company.
6. Listing of Securities • Listing means admission of the securities to dealings on a recognized stock exchange. The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc.
• The objectives of listing are mainly to : - provide liquidity to securities; - mobilize savings for economic development; - protect interest of investors by ensuring full disclosures. • The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, By-laws and Regulations of the Exchange. • The exchange prescribes different listing requirements for new companies, for company listed on other stock exchanges and for companies delisted by the Exchange seeking relisting of the same Exchange.
7. Surveillance at BSE • The main objective of the Surveillance function of the Exchange is to promote market integrity in two ways: I. By monitoring price and volume movements (volatility) as well as by detecting potential market abuses at a growing stage, with a view to minimizing the ability of the market participants, both in Cash and Derivative market, to influence the price of the series in the absence of any meaningful information. II. By managing default risk by taking necessary actions timely. • Surveillance activities at the Exchange are divided broadly into two major segments, price monitoring and position monitoring. i. Price monitoring is mainly related to the price movement/ abnormal fluctuation in prices or volumes. ii. position monitoring relates mainly to abnormal positions of members in order to manage default risk.
doc_151928409.pptx