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Demutualisation of Indian Stock Exchange

Demutualisation of Indian Stock Exchange

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Published by: shankarsingh19 on Mar 19, 2009
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ASSIGNMENTONDemutualisation of Indian stock market. 
ASSIGNMENT PREPARD BYSHANKAR KUMAR SINGH -07F042.SOHINI SAMANTA -07F044.SOUMYA TRIPATHI -07F046.SUBHOJIT DAS -07F048.
UNDER THE GUIDANCE OFPROF (Dr.). S. DEV
INSTITUTE OF MANAGEMENT AND INFORMATION SCIENCEBHUBANESWAR 
 
 CONTENTS
Ø
EXECUTIVE SUMMARY1
Ø
INTRODUCTION2
Ø
DEMUTUALISATION3
Ø
ADVANTAGES OF DEMUTUALISATION 4
Ø
STOCK EXCHANGE BOARD OF INDIA’S GUIDELINES 5
Ø
THEORITICAL FRAMEWORK 6
Ø
M.H.KANAI COMMITTEE 8
Ø
DEMUTUALISATION OF REGIONAL STOCK EXCHANGE 9
Ø
PROCESS OF DEMUTUALISATION 10
Ø
RESARCH AND METHODOLOGY 11
Ø
CHALLENGES OF DEMUTUALISATION 13
Ø
CONCLUSION 14
Ø
REFERENCES 15
 
INTRODUCTION
Earlier the stock exchanges in India are formed asassociation of stock brokers. Stock exchanges were mutualorganizations that were managed by members in a single city witha huge dealer population. They were registered as what is known assection 25 companies or as not-for-profit organization.Organizational profit making was never the motive; the exchangesrequired funds only the extent of meeting its expenses. Any surplusmade by the exchange resulted in reduced access fees for members.Though outside professionals have been appointed to researchwings and to positions such as executive directors, in practice, theexchanges have been run by broker-members electedrepresentatives.The members, who provide brokerage services also own, controland manage the exchange. DRAWBACKS:-
1)
The conflict of interests between the owners, the membersand the management - since all the brokers are managing theexchange together then such conflict is advent to happen.2) Brokers were manipulating the market for their advantage-That is investors interest was ignored.
3)
Scams took place in pre-demutualization phase-1992-Harshad Mehta scam & 2001-Ketan Parekh Scam
4)
Lack of strict vigilance on the market-No one person or management was there to look after the affair of theexchange. 
So Indian market and financial sector felt the need of demutualization.

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