By Dr. Snigdha Mishra Assistant Professor The stock exchange is an organised and centralised market for the purchase and sale of industrial and financial securities of all descriptions, viz., Stocks, Shares, Debentures etc. It is a market for transactions in old securities. Practically, it is a place where the buyer of a security may find a seller who is ready to sell his holdings at a fair and reasonable price provided the security has been listed. According to the Securities Contracts (Regulations) Act of 1956, a stock exchange is „an association, organisation 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‟. The stock exchange was established by “East India company” in 18th century . In India it was established in 1850 with 22 stock brokers opposite to town hall Bombay .This stock exchange is known as oldest stock exchange of Asia. In 1975, it was renamed as Bombay Stock Exchange (BSE). There are 23 stock exchanges in the India. Mumbai's (earlier known as Bombay), Bombay Stock Exchange is the largest, with over 6,000 stocks listed. The BSE accounts for over two thirds of the total trading volume in the country. Established in 1875, the exchange is also the oldest in Asia. Among the twenty- two Stock Exchanges recognised by the Government of India under the Securities Contracts (Regulation) Act, 1956, it was the first one to be recognised and it is the only one that had the privilege of getting permanent recognition ab-initio. It is an organized market It is a securities market It is an important constituent of capital market i.e., market for long- term finance It is a voluntary association of persons desirous of dealing in securities Stock exchange is a voluntary association, its membership is not open to everybody In a stock exchange, only the members can deal in i.e., buy & sell securities The members of a stock exchange can buy and sell securities either as brokers for & on behalf of their clients The dealings in a stock exchange are under certain accepted code of conduct i.e., rules and regulations 1. Bombay stock exchange 13. Guwahati stock exchange 2. National stock 14. Hyderabad stock exchange exchange(Mumbai) 15. Madhya Pradesh stock 3. Bangalore stock exchange exchange(indore) 4. Uttar Pradesh stock 16. Jaipur stock exchange exchange(Kanpur) 17. Ludhiana stock exchange 5. Magadh stock 18. Mangalore stock exchange exchange(Patna) 19. Pune stock exchange 6. Ahmedabad stock exchange 20. Saurashtra Kutchh stock 7. Vadodara stock exchange exchange(Baroda) 21. Over The Counter Exchange 8. Bhubaneswar stock exchange of India (Mumbai) 9. Calcutta stock 22. Delhi Stock Exchange, Delhi exchange(Kolkata) 23. Capital Stock Exchange 10. Madras stock exchange Kerala Ltd. Kerala 11. Cochin stock exchange 12. Coimbatore stock exchange Practically, the organisation and working of a stock exchange differs from exchange to exchange in technical details although the general pattern of all exchanges is almost the same. The general pattern of a stock exchange is noted: (a) Constitution: It is an association of members which may be a voluntary and non-profit association or company limited by shares or guarantee. (b) Membership: Membership is a „must‟ for transacting business since non-members are not allowed to enter the stock- exchange. Membership is strictly limited, i.e., no one is allowed to be a member unless there is a vacancy. Membership is acquired outright by the payment of membership fees prescribed by the stock exchange. (c) Management: The general administration of a stock exchange is administered by a committee of management and is called by different names in different exchanges. The selected Executive Committee of different stock exchanges carries on management of their day-to-day activities through sub- committees such as Listing Committee, Defaulters‟ Committee, Arbitration Committee, etc. (d) Under the Securities Contracts (Regulation) Act, 1956, the Central Government is empowered to nominate a maximum of its three representatives on the governing board. (e) In the day-to-day management, the governing board is assisted by a number of subcommittees like listing committee, arbitration committee, defaulters committee admission committee, and share-examination committee 1. Provide central and convenient meeting places for sellers and buyer of securities 2. Increase the marketability and liquidity of securities 3. Contribute to stability of prices of securities 4. Equalization of price of securities 5. Smoothen price movement 6. Help the investors to know the worth of their holdings 7. Promote the habit of saving and investment 8. Help capital formation 9. Help companies and government to raise funds from the investors 10. Provide forecasting service . Listing means the admission of securities of a company to trading on a stock exchange. Listing is not compulsory under the Companies Act 2013/1956. It becomes necessary when a Public Limited Company wants to issue shares or debentures to the public. When securities are listed on a stock exchange, the company has to comply with the requirements of the exchange. The listing provides an exclusive privilege to securities on the stock exchange. Only listed shares are quoted on the stock exchange. Stock exchange provides transparency in transactions of listed securities and equality and competitive conditions. Listing is beneficial for the company, to the investor, and to the public at large. To provide liquidity to securities To provide a mechanism for effective control and supervision of trading To mobilize savings for economic development To provide free negotiability to stocks. Ability to raise further capital Comply with the Companies Act, SCRA, SEBI and rules & regulations of the exchange. To be submitted along with the application for listing:- Memorandum of Associations, Articles of Association, Prospectus, Directors’ report, Annual Accounts, Agreement with Underwriters, etc. Company’s activities, capital structure, distribution of shares, dividends and bonus shares issued, etc. For this purpose companies have been classified into 2 groups:- Large Cap Companies (minimum issue size of Rs.10 crores and market capitalization of not less than Rs.25 crores) Small Cap Companies (minimum issue size of Rs.3 crores and market capitalization of not less than Rs.5 crores) • Submission of Letter of Application along with the necessary documents Step -1 • Permission to Use the Name of BSE Listing Process in Issuer Company’s Prospectus Step-2 • Payment of Listing Fees Step-3 • Allotment of Securities Step-4 • Trading Permission by SEBI Step-5 • Payment of 1% Security with the designated Stock Exchange Step-6 • Advertisement Step-7 Provides Liquidity to securities. Regular information Easy Transferability Income tax benefit Transparency in dealing. Helps the company to gain national importance and widespread recognition. Helps in rising additional capital. Listed companies are subjected to do various regulatory measures of the stock exchange and SEBI. Essential information has to be submitted by the listed companies to stock exchange. Annual meeting and annual general report. Public offers is an expensive exercise. Delisting is the process of termination of permission given to a listed company from trading its securities on the stock exchange. They can be in 2 ways:- Compulsory Delisting Voluntary Delisting COMPULSORY DELISTING VOLUNTARY DELISTING Non-payment of listing fee or violation of listing Unable to pay listing fee. agreement. Business is sick/ closed/ Thin/ negligible trading or thin shareholding base. suspended. Non- redressel of grievances. Capital base is small. Unfair trade practices at the behest of promoters or Mergers, acquisitions managers, such as issuing of duplicate or fake shares by the management BROKER: He is one acts as a intermediary on behalf of others. A broker in a stock exchange ,is a commission agent who transacts business in securities on behalf of non members. JOBBER: He is not allowed to deal with the public directly .He deals with brokers who are engaged with the investors . Thus, the securities is bought by the jobber from members and sells to members who are operating on the stock exchange as broker. SPECULATION : It is the transaction of members to buy or sell securities on stock exchange with a view to make profits to anticipated raise or fall in price of securities. SPECULATOR : The dealer in stock exchange who indulge in speculation are called speculator . They do not take delivery of securities purchased or sold by them , but only pay or rescue the difference between the purchase price and sale price . The different types of speculators are- 1- BULL 2- BEAR 3- STAG 4- LAME DUCK 1. BULL {TEJIWALA}: He is speculator who expects the future raise in price of securities he buys the securities to sell them at future date at the higher price. He is called as bull because his activities resembles as a bull ,as the bull tends to throw its victims up in the air through its horns. In simple the bull speculator tries to raise the price of securities by placing a big purchase orders. 2. BEAR {MANDIWALA}: He is speculator who expects future fall in prices , he does an agreement to sell securities at future date at the present market rate . He is called as bear because his altitude resembles with bear , as the bear tends to stamp its victims down to earth through its paws . In simple the bear speculator forces of prices of securities to fall through his activities. 3. STAG {DEER}: He operates in new issue of market . He is just like a bull speculator . He applies large number of shares in the issue market only by paying , application money , allotment money. He is not a genuine investor because , he sells the allotted securities at the premium and makes profit. In simple he is cautious in his dealings .