INTRODUCTION

The Capital market consists of many financial institutes, Banks, Stock Markets etc. The capital Market is being divided between two parts:  Primary Market  Secondary market.

The stock exchange comes in the secondary market & these exchanges are performing various functions. Stock exchange performs these functions with the help of middleman called the intermediaries. These intermediates act as a link in between buyer & seller on the stock exchange. Without the presence of these intermediaries it is impossible to trade on the stock exchange. Stock exchange is trading in share, securities, gilt-edge securities, bonds, mutual fund & commodities. There are 23 stock exchanges in India like BSE, NSE, , Cochin stock exchange, , kolkatta stock exchange & many others.

The intermediaries in the capital market are:  Merchant Banker

Their function & working are very crucial to the operating in the primary market. They are the issue manager, lead manager, co-manager & are responsible to the company & SEBI.

 Registrar :

BABASAB PATIL Their function are next to merchant banker in importance. They collect the application for the new issue, their cheques, stock invests, classify & computerize them. They also make allotment in consultation with the regional stock exchange regarding norms in the event of over subscription & before a public representative.

 Collecting Banker :

Collecting banker collects the subscription in cash, cheques, stock invest, ect.

 Underwriter:

Underwriter mar be financial institution, banks, mutual fund, ect., & undertake to mobilise the subscription up to some limit. Falling to secure subscription as agreed to, they have to make good the shortfalls by their own subscription.

Stock Market Intermediaries:

 Client Broker :

They are doing simple broking between buyer & seller & earning only brokerage for their service from the client.

 Floor Broker:

These are authorized clerks & sub-brokers who enter the trading floor & execute the orders for the client or other member.

BABASAB PATIL  Jobber & Market Maker:

Those members who are ready to buy & sell simultaneously in selected scrips, offering on the trade floor & earning profit through the margin between buying & selling rate. Market Maker undertakes this work compulsorily for some companies & bank finance in available to them.

 Arbitrage r :

Those who do inter market deals for a profit through difference in price as between markets say buy in Kolkatta & sell in Mumbai & vice versa.

 Badla Financiers:

Those members who finance carry forward deals in specified group (A group) for a return in the form of interest, called Badla Rate. They lend money or shares for the brokers who are over bought or over sold respectively at the time of settlement. Badla in carry forward facility from one settlement to another without taking a delivery up to a maximum period of 90 days at a time.

Introduction To

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its

BABASAB PATIL present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education programmes and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive

Director & Chief Executive Officer and a Chief Operating Officer. The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange and the Chief Operating Officer and other Heads of Departments assist him.

The Exchange has inserted new Rule No.126 A in its Rules, Bye-laws & Regulations pertaining to constitution of the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of three elected

BABASAB PATIL directors, three SEBI nominees or public representatives, Executive Director & CEO and Chief Operating Officer has been constituted. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority, matters regarding annulment of transactions, admission, continuance and suspension of member-brokers, declaration of a member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits, margins and other monies payable by the member- brokers to the Exchange, etc.

Turnover on the Exchange

• The average daily turnover of the Exchange during the financial year 2000-2001 (April-March), was Rs.3984.19 crores and the average number of daily trades was 5.69 lakhs. • The average daily turnover of the Exchange in the subsequent two financial years, i.e., 2001-02 & 2002-03, has declined • Considerably to Rs. 1248.15 crores and Rs. 1251.29 crores respectively. • The average number of daily trades recorded during 2001-02 and 2002-03 numbered 5.17 lakhs and 5.63 lakhs respectively.

The average daily turnover and average number of daily trades during the quarter April-June 2003 were Rs. 1101.05 crores and 5.70 lakhs respectively.

The ban on all deferral products like Borrowing & Lending of Securities Scheme (BLESS) and Automated Lending & Borrowing Mechanism (ALBM) in the Indian capital markets by SEBI w.e.f. July 2, 2001, abolition

BABASAB PATIL of account period settlements, introduction of Compulsory Rolling Settlements in all scrips traded on the Exchanges w.e.f. December 31, 2001, etc. has adversely impacted the liquidity in the market and consequently there is a considerable decline in the average daily turnover at the Exchange as reflected in above statistics.

The Stock Exchange, Mumbai Governing Board For The Year 2005

Mr. S. Jambunathan IAS (Retd.) Executive Director & CEO Mr. Rajnikant Patel Mr. Bhanubhai G. Fozdar Mr. Siddharth J. Shah Mr. Prakash R. Kacholia Mr. Alok C. Churiwala Mr. Deven R. Choksey Mr. Balkishan Mohta Mr. Uttam Bagri Mr. Radheyshyam B. Khandelwal Mr. Nagji Keshavji Rita Mr. Jitesh Khosla Joint Secretary, Dept. of Company Affairs, Govt. of India Mr. P.P. Vora Mr. P. K. Banerji Retired IAS Officer Mr. Jagdish Capoor

BABASAB PATIL Chairman, HDFC Bank Mr. Vijay Mukhi Managing Director, Vijay Mukhi's Computer Institute Mr. Pradip P. Shah Chairman, IndAsia Fund Advisors Private Limited Prof. N. Ravichandran Professor, IIM Ahmedabad

NATIONAL STOCK EXCHANGE LTD.

The Organisation:

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 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 (Regulation) 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.

Our Mission:

BABASAB PATIL NSE's mission is setting the agenda for change in the securities markets in India. The NSE was set-up with the main objectives of:

• Establishing a nation-wide trading facility for equities, debt instruments and hybrids,

• Ensuring equal access to investors all over the country through an appropriate communication network,

• Providing a fair, efficient and transparent securities market to investors using electronic trading systems,

• Enabling shorter settlement cycles and book entry settlements systems, and

• Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology has become industry benchmarks and is being emulated by other market participants. NSE is more than a mere market facilitator. It's that force which is guiding the industry towards new horizons and greater opportunities.

Our Logo: Say NSE’s LOGO

The logo of the NSE symbolises a single nationwide securities trading facility ensuring equal and fair access to investors, trading members and issuers all over the country. The initials of the Exchange viz., N, S and E have been etched on the logo and are distinctly visible. The logo symbolises

BABASAB PATIL use of state of the art information technology and satellite connectivity to bring about the change within the securities industry. The logo symbolises vibrancy and unleashing of creative energy to constantly bring about change through innovation.

Promoters:

NSE has been promoted by leading financial institutions, banks, insurance companies and other financial intermediaries:

 Industrial Development Limited

 Industrial Finance Corporation of India Limited

 Life Insurance Corporation of India

 ICICI Bank Limited

 IL & FS Trust Company Limited

 Stock Holding Corporation of India Limited

 SBI Capital Markets Limited

 The Administrator of the Specified Undertaking of Unit Trust of India

BABASAB PATIL  General Insurance Corporation of India

 National Insurance Company Limited

 The Company Limited

 The Oriental Insurance Company Limited

 United India Insurance Company Limited

 Oriental Bank of Commerce

Corporate Structure

NSE is one of the first de-mutualised stock exchanges in the country, where the ownership and management of the Exchange is completely divorced from the right to trade on it. Though the impetus for its establishment came from policy makers in the country, it has been set up as a public limited company, owned by the leading institutional investors in the country.

From day one, NSE has adopted the form of a demutualised exchange - the ownership, management and trading is in the hands of three different sets of

BABASAB PATIL