Stock Exchange

Stock exchange is an organized market for buying and selling corporate and other securities. Here, securities are purchased and sold out as per certain well-defined rules and regulations. It provides a convenient and secured mechanism or platform for transactions in different securities. Such securities include shares and debentures issued by public companies which are duly listed at the stock exchange, and bonds and debentures issued by government, public corporations and municipal and port trust bodies.

 Stock exchanges are indispensable for the smooth and orderly functioning of corporate sector in a free market economy. A stock exchange need not be treated as a place for speculation or a gambling den. It should act as a place for safe and profitable investment, for this, effective control on the working of stock exchange is necessary. This will avoid misuse of this platform for excessive speculation, scams and other undesirable and anti-social activities

 London stock exchange (LSE) is the oldest stock exchange in the world. While Bombay stock exchange (BSE) is the oldest in India.

Definitions of Stock Exchange

According to Husband and Dockerary, "Stock exchanges are privately organized markets which are used to facilitate trading in securities. The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as, "An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities."

Features of Stock Exchange

Market for securities Deals in new and second hand securities Regulates trade in securities Allows dealings only in listed securities Transactions effected only through members Association of persons Recognition from Central Working as per rules Specific location Financial Barometers

Functions of sock exchange

Continuous and ready market for securities Facilitates evaluation of securities Encourages capital formation Provides safety and security in dealings Regulates company management Facilitates healthy speculation Serves as Economic Barometer Facilitates Bank Lending

Services given by Stock Exchange to Investors

Provides liquidity to investment Provides collateral value to securities Offers opportunity to participate in the industrial growth Estimates the worth of securities Offers safety in corporate

Services given by Stock Exchange to Companies

Widens market for securities Creates goodwill and reputation Facilitates fair pricing of listed securities Provides better response from investors Facilitates quick selling of securities Service given by Stock Exchange to Economy Brings economic development

Listing
Listing means permission to quote shares and debenture officially on the trading floor of the stock exchange.

Requirement of listing
Following information must be filled by the exchange: Memorandum of article of association. Copies of all prospectuses. Copies of balance sheet, audited accounts,agreements,promoters,underwriters ,brokers. Details of shares and debenture &shares forfeited.

 Details of issue of bonus and dividend declared. History of company in brief. Agreement with managing director etc. List of highest 1o holders of each class or kind of securities of company.

Objectives of listing
To ensure the proper supervision and control of dealings in securities. To protect the interest of shareholders and the investors. To ensure marketing facilities for securities. To ensure liquidity of securities. To regulate the dealings in securities.

Advantage of listing
Publicity of security. Protection of investors. Ensure liquidity. Better goodwill.

Procedure for dealing at stock exchange

Selection of a broker. Pacing an order. Making the contract. Contract note (buying and selling note). Settlements-The selling broker handover the certificate and transfer form to buying broker. the settlement of ready and forward delivery done with different types:Settlement of ready delivery: done in 3 -7 days of the transaction. if full settlement is done than it is known as liquidation in full.

Settlement of forward delivery contract: can be done speculative purposes, can be done in any of three ways: liquidity in full liquidation in full payment of differences carry over to the next settlement

 Electronic settlement for trade. purchasing the dematerlised securities & selling the the dematerlised securities Rolling statement-T+5 T-is trade date 5- 5 days are given for delivery of securities and payment

Operators of stock excahnge

Jobbers:- who deals In security on their own. they fixed two prices one in which they wants to purchase and second in which they wants to sell the security . and the difference of these two prices known as jobbers profit. Brokers:- a commission agent who bring together buyers & seller to perform a deal.

 Tarawaniwalas:- The menbers of bombay stock exchange divided them in to two parts i.e:Brokers & Tarawaniwalas Last one act like a broker as well as jobber, he purchase and sell security on their own and from the side of public also.

Speculators in stock excahnge

Bull:- also known as Tejiwala who expects high in prices .he purchases the securities with the intention to sell the securities at high prices. bull speculator tries to raise the prices by placing the big orders. Bear:-also known as Mandiwala, expects that prices fall in future and tends to sell the securities in present.

 Stag:- satg purchase the shares to sell them in premium. Lame duck:- when bear find it difficult to fulfill its commitment it is known as lame duck.

Weaknesses & Development in Stock Exchange ?????