Stock exchange

From Wikipedia, the free encyclopedia Jump to: navigation, search This article is about the trading entity. For the song by Miss Kittin & The Hacker, see Stock Exchange (song). A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of increased speed and reduced cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or overthe-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities. Look up bourse or stock exchange in Wiktionary, the free dictionary.

Contents
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1 The first stock exchanges 2 The role of stock exchanges o 2.1 Raising capital for businesses o 2.2 Mobilizing savings for investment o 2.3 Facilitating company growth o 2.4 Profit sharing o 2.5 Corporate governance o 2.6 Creating investment opportunities for small investors o 2.7 Government capital-raising for development projects o 2.8 Barometer of the economy 3 Major stock exchanges 4 Listing requirements o 4.1 Requirements by stock exchange 5 Ownership 6 Other types of exchanges 7 Gallery 8 See also 9 Notes 10 External links

[edit] The first stock exchanges

In 12th century France the courtiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers. Some stories suggest that the origins of the term "bourse" came from the Latin bursa meaning a bag because, in 13th century Bruges, the sign of a purse (or perhaps three purses), was hung on the front of the house where merchants met.

House Ter Beurze in Bruges, Belgium.

The story may well be apocryphal, however it is possible that in the late 13th century commodity traders in Bruges gathered inside the house of the Van der Burse family (for some a Venetian family with original name "Della Borsa" and used three leather bags as coat-of-arms), and in 1309 they institutionalized this until now informal meeting and became the "Bruges Bourse." The idea spread quickly around Flanders and neighboring counties and "Bourses" soon opened in Ghent and Amsterdam. In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351, the Venetian Government outlawed spreading rumors intended to lower the price of government funds. There were people in Pisa, Verona, Genoa and Florence who also began trading in government securities during the 14th century. This was only possible because these were independent city states ruled by a council of influential citizens, not by a duke. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profitsor losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. In 1688, the trading of stocks began on a stock exchange in London. On May 17, 1792, in order to more easily trade cotton, twenty-four supply brokers signed the Buttonwood Agreement outside 68 Wall Street in New York underneath a buttonwood tree. On March 8, 1817, properties got renamed to New York Stock & Exchange Board. In the 19th century, exchanges (generally famous as futures exchanges) got substantiated to trade futures contracts and then choices contracts. There are now a large number of stock exchanges in the world.

[edit] The role of stock exchanges

Stock exchanges have multiple roles in the economy. This may include the following:[1]

[edit] Raising capital for businesses

The Stock Exchange provide companies with the facility to raise capital for expansion through selling shares to the investing public.[2]

[edit] Mobilizing savings for investment

When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized and redirected to promote business activity with benefits for several economic sectors such as agriculture, commerce and industry, resulting in stronger economic growth and higher productivity levels of firms.

[edit] Facilitating company growth

Companies view acquisitions as an opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion.

[edit] Profit sharing

Both casual and professional stock investors, through dividends and stock price increases that may result in capital gains, will share in the wealth of profitable businesses.

[edit] Corporate governance

By having a wide and varied scope of owners, companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than privately held companies (those companies where shares are not publicly traded, often owned by the company founders and/or their families and heirs, or otherwise by a small group of investors). Despite this claim, some well-documented cases are known where it is alleged that there has been considerable slippage in corporate governance on the part of some public companies. The dot-com bubble in the late 1990's, and the subprime mortgage crisis in 2007-08, are classical examples of corporate mismanagement. Companies like Pets.com (2000), Enron Corporation (2001), One.Tel (2001), Sunbeam (2001), Webvan (2001), Adelphia (2002), MCI WorldCom (2002), Parmalat (2003), American International Group (2008), Bear Stearns (2008), Lehman Brothers (2008), General Motors (2009) and Satyam Computer Services (2009) were among the most widely scrutinized by the media. However, when poor financial, ethical or managerial records are known by the stock investors, the stock and the company tend to lose value. In the stock exchanges, shareholders of underperforming firms are often penalized by significant share price decline, and they tend as well to dismiss incompetent management teams.

[edit] Creating investment opportunities for small investors

As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors.

[edit] Government capital-raising for development projects

Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds can be raised through the Stock Exchange whereby members of the public buy them, thus loaning money to the government. The issuance of such bonds can obviate the need to directly tax the citizens in order to finance development, although by securing such bonds with the full faith and credit of the government instead of with collateral, the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature.

[edit] Barometer of the economy

At the stock exchange, share prices rise and fall depending, largely, on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. An economic recession, depression, or financial crisis could eventually lead to a stock market crash. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy.

[edit] Major stock exchanges

New York Stock Exchange, New York City

London Stock Exchange, the City of London

Sao Paulo Stock Exchange, Sao Paulo

Australian Securities Exchange's Sydney Exchange Centre, Sydney

Borsa Italiana, Milan Stock Exchange

Tokyo Stock Exchange, Tokyo

Toronto Stock Exchange, Toronto

Frankfurt Stock Exchange, Frankfurt

Paris Stock Exchange, Paris

SWX Swiss Exchange, Zurich

Mexican Stock Exchange, Mexico City Major Stock Exchanges : Year ended 31 October 2010 Source: World Federation of Exchanges - Statistics/Monthly Economy United States United States United Kingdom Japan Europe China Hong Kong Canada India India Brazil Germany Australia Spain Stock Exchange New York Stock Exchange NASDAQ London Stock Exchange Tokyo Stock Exchange Euronext Shanghai Stock Exchange Hong Kong Stock Exchange Toronto Stock Exchange Bombay Stock Exchange National Stock Exchange of India BM&F Bovespa Deutsche Brse Australian Securities Exchange BME Spanish Exchanges Market Capitalization (USD Billions) 12826 3653 3598 3469 2989 2803 2679 1963 1627 1588 1504 1393 1341 1247 Trade Value (USD Billions) 13991 8282 2074 3306 1584 5514 1740 1100 264 809 880 1167 942 1492

China Switzerland South Korea

Shenzhen Stock Exchange SIX Swiss Exchange Korea Exchange

1246 1140 1013

3884 619 1525

The main stock exchanges:

American Stock Exchange Australian Securities Exchange Athens Stock Exchange Belgrade Stock Exchange Berliner Brse Bermuda Stock Exchange Bolsa Mexicana de Valores Bolsa de Valores de Colombia Bolsa de Valores de Lima Bombay Stock Exchange Bucharest Stock Exchange Budapest Stock Exchange Bulgarian Stock Exchange - Sofia Cairo & Alexandria Stock Exchange Casablanca Stock Exchange Channel Islands Stock Exchange Chicago Stock Exchange Czech Stock Exchange - RM-SYSTM Euronext Amsterdam Euronext Brussels Euronext Lisbon Euronext Paris Frankfurt Stock Exchange Ghana Stock Exchange Helsinki Stock Exchange Hong Kong Stock Exchange Indonesia Stock Exchange Istanbul Stock Exchange JASDAQ JSE Securities Exchange Karachi Stock Exchange Korea Stock Exchange Kuwait Stock Exchange London Stock Exchange Madrid Stock Exchange Malaysia Stock Exchange Milan Stock Exchange Montreal Stock Exchange Moscow Interbank Currency Exchange Nagoya Stock Exchange

National Stock Exchange of India New York Stock Exchange New Zealand Exchange Nigerian Stock Exchange Osaka Securities Exchange Philippine Stock Exchange Russian Trading System Santiago Stock Exchange So Paulo Stock Exchange (BOVESPA) Shanghai Stock Exchange Shenzhen Stock Exchange Singapore Exchange Stockholm Stock Exchange Stock Exchange of Thailand Taiwan Stock Exchange Tehran Stock Exchange Tel Aviv Stock Exchange Tokyo Stock Exchange Toronto Stock Exchange Warsaw Stock Exchange Zurich Stock Exchange

See also: Category:Stock exchanges

[edit] Listing requirements

Listing requirements are the set of conditions imposed by a given stock exchange upon companies that want to be listed on that exchange. Such conditions sometimes include minimum number of shares outstanding, minimum market capitalization, and minimum annual income.

[edit] Requirements by stock exchange

Companies have to meet the requirements of the exchange in order to have their stocks and shares listed and traded there, but requirements vary by stock exchange:

Bombay Stock Exchange: Bombay Stock Exchange (BSE) has requirements for a minimum market capitalization of Rs.250 Million and minimum public float equivalent to Rs.100 Million.[3] London Stock Exchange: The main market of the London Stock Exchange has requirements for a minimum market capitalization (700,000), three years of audited financial statements, minimum public float (25 per cent) and sufficient working capital for at least 12 months from the date of listing. NASDAQ Stock Exchange: To be listed on the NASDAQ a company must have issued at least 1.25 million shares of stock worth at least $70 million and must have earned more than $11 million over the last three years.[4]

New York Stock Exchange: To be listed on the New York Stock Exchange (NYSE) a company must have issued at least a million shares of stock worth $100 million and must have earned more than $10 million over the last three years.[5]

[edit] Ownership
Stock exchanges originated as mutual organizations, owned by its member stock brokers. There has been a recent trend for stock exchanges to demutualize, where the members sell their shares in an initial public offering. In this way the mutual organization becomes a corporation, with shares that are listed on a stock exchange. Examples are Australian Securities Exchange (1998), Euronext (merged with New York Stock Exchange), NASDAQ (2002), the New York Stock Exchange (2005), Bolsas y Mercados Espaoles, and the So Paulo Stock Exchange (2007). The Shenzhen and Shanghai stock exchanges can been characterized as quasi-state institutions insofar as they were created by government bodies in China and their leading personnel are directly appointed by the China Securities Regulatory Commission.

[edit] Other types of exchanges

In the 19th century, exchanges were opened to trade forward contracts on commodities. Exchange traded forward contracts are called futures contracts. These commodity exchanges later started offering future contracts on other products, such as interest rates and shares, as well as options contracts. They are now generally known as futures exchanges.

Clearing and settlement is a post trade activity. Clearing Agencies ensure trading members meet their fund/security obligations. It acts as a legal counter party to all trades and guarantees settlement for all members. The original trade between the two parties is cancelled and clearing corporation acts as counter party to both the parties, thus manages risk and guarantees settlement to both the parties. This process is called novation. It determines fund/security obligations and arranges for pay-in of the same. It collects and maintains margins, processes for shortages in funds and securities. It takes help of clearing members, clearing banks, custodians and depositories to settle the trades. The settlement cycle in India is T+2 days i.e. Trade + 2 days. T+2 means the transactions done on the Trade day, will be settled by exchange of money and securities on the second business day (excluding Saturday, Sundays, Bank and Exchange Trading Holidays). Pay-in and Pay-out for securities settlement is done on a T+2 basis. The following is the summary of trading and settlement process in India.

Investors place orders from their trading terminals. Broker houses validate the orders and routes them to the exchange (BSE or NSE depending on the clients choice) Order matching at the exchange. Trade confirmation to the investors through the brokers. Trade details are sent to Clearing Corporation from the Exchange. Clearing Corporation notifies the trade details to clearing Members/Custodians who confirm back. Based on the confirmation, Clearing Corporation determines obligations. Download of obligation and pay-in advice of funds/securities by Clearing Corporation. Clearing Corporation gives instructions to clearing banks to make funds available by pay-in time. Clearing Corporation gives instructions to depositories to make securities available by pay-in-time. Pay-in of securities: Clearing Corporation advises depository to debit pool account of custodians/Clearing members and credit its (Clearing Corporations) account and depository does the same. Pay-in of funds: Clearing Corporation advises Clearing Banks to debit account of Custodians/Clearing members and credit its account and clearing bank does the same. Payout of securities: Clearing Corporation advises depository to credit pool accounts of custodians/Clearing members and debit its account and depository does the same. Payout of funds: Clearing Corporation advises Clearing Banks to credit account of custodians/ Clearing members and debit its account and clearing bank does the same. Note: Clearing members for buy order and sell order are different and Clearing Corporation acts as a link here. Depository informs custodians/Clearing members through Depository Participants about pay-in and pay-out of securities. Clearing Banks inform custodians/Clearing members about pay-in and pay-out of funds. In case of buy order by normal investors Clearing members instruct his DP to credit the clients account and debit its account. The money will be debited (Total settled amount margins paid at the time of trade) from the clients account. In case of sell order by normal investors Clearing members instruct his DP to debit the clients account and credit its account. The money will be credited to the clients account.

In case of trades by mutual fund houses the custodians act as clearing members.

Please note that a clearing member is the brokerage firm which acts as a trading member and clearing member of clearing agency where as custodians are only clearing members. Even if the clients dont meet their obligations clearing members are required to meet their obligations to the clearing corporations.

Stock Market of India Introduction Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock). Let us take an example for a better understanding of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. More and more people would want to buy this stock (i.e. high demand) and very few people will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market, its price will fall down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost paperless. Now investors dont have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet. History of the Indian Stock Market - The Origin One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old history. 18th Century 1830's 1840's 1850's 1860's 1860-61 East India Company was the dominant institution and by end of the century, busuness in its loan securities gained full momentum Business on corporate stocks and shares in Bank and Cotton presses started in Bombay. Trading list by the end of 1839 got broader Recognition from banks and merchants to about half a dozen brokers Rapid development of commercial enterprise saw brokerage business attracting more people into the business The number of brokers increased to 60 The American Civil War broke out which caused a stoppage of cotton supply from United States of America; marking the beginning of the "Share Mania" in India The number of brokers increased to about 200 to 250

1862-63

1865

A disastrous slump began at the end of the American Civil War (as an example, Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs. 87)

Pre-Independance Scenario - Establishment of Different Stock Exchanges 1874 With the rapidly developing share trading business, brokers used to gather at a street (now well known as "Dalal Street") for the purpose of transacting business. "The Native Share and Stock Brokers' Association" (also known as "The Bombay Stock Exchange") was established in Bombay Development of cotton mills industry and set up of many others Establishment of "The Ahmedabad Share and Stock Brokers' Association" Sharp increase in share prices of jute industries in 1870's was followed by a boom in tea stocks and coal "The Calcutta Stock Exchange Association" was formed Madras witnessed boom and business at "The Madras Stock Exchange" was transacted with 100 brokers. When recession followed, number of brokers came down to 3 and the Exchange was closed down Establishment of the Lahore Stock Exchange Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in South India with establishment of new textile mills and plantation companies Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was established Establishment of "The Hyderabad Stock Exchange Limited" "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares Exchange Limited" were established and later on merged into "The Delhi Stock Exchange Association Limited"

1875 1880's 1894 1880 - 90's 1908 1920 1923 1934 1936 1937

1940 1944 1947

Post Independance Scenario The depression witnessed after the Independance led to closure of a lot of exchanges in the country. Lahore Estock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was registered in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized under the Act were: 1. Bombay

2. 3. 4. 5. 6. 7. 8.

Calcutta Madras Ahmedabad Delhi Hyderabad Bangalore Indore

Many more stock exchanges were established during 1980's, namely: 1. Cochin Stock Exchange (1980) 2. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) 3. Pune Stock Exchange Limited (1982) 4. Ludhiana Stock Exchange Association Limited (1983) 5. Gauhati Stock Exchange Limited (1984) 6. Kanara Stock Exchange Limited (at Mangalore, 1985) 7. Magadh Stock Exchange Association (at Patna, 1986) 8. Jaipur Stock Exchange Limited (1989) 9. Bhubaneswar Stock Exchange Association Limited (1989) 10. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) 11. Vadodara Stock Exchange Limited (at Baroda, 1990) 12. Coimbatore Stock Exchange 13. Meerut Stock Exchange 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). Government policies during 1980's also played a vital role in the development of the Indian Stock Markets. There was a sharp increase in number of Exchanges, listed companies as well as their capital, which is visible from the following table: S. No. 1 2 3 4 5 6 As on 31st December No. of Stock Exchanges No. of Listed Cos. No. of Stock Issues of Listed Cos. Capital of Listed Cos. (Cr. Rs.) Market value of Capital of Listed Cos. (Cr. Rs.) Capital per Listed Cos. 1946 1961 1971 1975 1980 1985 7 7 8 8 9 14 4344 6174 9723 1991 20 6229 8967 32041 1995 22 8593 11784 59583

1125 1203 1599 1552 2265 1506 2111 2838 3230 3697 270 753 1812 2614 3973

971 1292 2675 3273 6750 25302 110279 478121 24 63 113 168 175 224 514 693

(4/2)(Lakh Rs.) 7 Market Value of Capital per Listed Cos. (Lakh Rs.) (5/2) Appreciated value of Capital per Listed Cos. (Lak Rs.) 86 107 167 211 298 582 1770 5564

358

170

148

126

170

260

344

803

Trading Pattern of the Indian Stock Market Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are divided into two categories:

Types of Transactions The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:

Indian stock exchange allows a member broker to perform following activities: 1. 2. 3. 4. Act as an agent, Buy and sell securities for his clients and charge commission for the same, Act as a trader or dealer as a principal, Buy and sell securities on his own account and risk.

Over The Counter Exchange of India (OTCEI) Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry. This age-old trading mechanism in the Indian stock markets used to create many functional inefficiencies. Lack of liquidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. In order to overcome these inefficiencies, 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.

Advantages of OTCEI 1. Greater liquidity and lesser risk of intermediary charges due to widely spread trading mechanism across India 2. The screen-based scripless trading ensures transparency and accuracy of prices 3. Faster settlement and transfer process as compared to other exchanges 4. Shorter allotment procedure (in case of a new issue) than other exchanges National Stock Exchange In order to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. NSE provides exposure to investors in two types of markets, namely: 1. Wholesale debt market 2. Capital market Wholesale Debt Market - Similar to money market operations, debt market operations involve institutional investors and corporate bodies entering into transactions of high value in financial instrumets like treasury bills, government securities, commercial papers etc. Trading at NSE 1. Fully automated screen-based trading mechanism 2. Strictly follows the principle of an order-driven market 3. Trading members are linked through a communication network

4. This network allows them to execute trade from their offices 5. The prices at which the buyer and seller are willing to transact will appear on the screen 6. When the prices match the transaction will be completed 7. A confirmation slip will be printed at the office of the trading member Advantages of trading at NSE 1. 2. 3. 4. Integrated network for trading in stock market of India Fully automated screen based system that provides higher degree of transparency Investors can transact from any part of the country at uniform prices Greater functional efficiency supported by totally computerized network

Stock Exchange Trading

The term 'Stock Exchange Trading' suggests the exchange of stocks or shares, or other securities of companies that are carried forward by brokers or traders of stocks. Parties concerned with stock trading can be an individual or a company. The market for such exchanges is called Stock Exchange. A stock exchange is the chief component of a stock market. Supply and demand forces in stock markets is guided by various factors which, as in all free markets, affect the price of stocks. Stock Exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities involved in Stock Exchange Trading include: Shares issued by companies Unit trusts Other pooled investment products like bonds

In order to indulge into Stock Exchange Trading, a company has to enlist itself under a stock exchange. Usually there is a central location at least for record keeping. However, riding the success of technology, modern markets are electronic networks have raised the speed and cost of transactions. Stocks and bonds are offered initially to investors is done in the primary market. Henceforth, trading is carried out in the secondary market.

This is the usual way that bonds are traded. Trading at stock exchanges is gradually becoming a part of a global market for securities. Stock Exchange Trading has multiple roles in the functioning of an economy. Such diverse roles played by stock exchanges include, generation of initial capital required for starting a business, channelizing savings for further investment, facilitating growth of a company, redistributing funds of the company, and creating investment opportunities for small investors. Stock Exchanges act as barometers of the economy since the movement of share prices and in general of the stock indexes indicate the general trend in the economy. Thus despite involving a tremendous amount of risk, Stock Exchange Trading is gaining popularity day-by-day.