DIFFERENCES BETWEEN STOCK & COMMODITY EXCHANGE

Now a days one can find that there is quite similarities in the meaning of stock exchange &commodity exchange. Most of public believe that there is no different between stock exchange commodity exchange. However, in a basic sense there are huge differences between the meanings of both the term. One can classify the differences as follows: Stock exchange means any place where the shares, bonds, and debentures are traded. It means that the stock exchange helps in dealing, issue and transactions of shares.

Commodity exchange means that any place where the commodities are traded. It means that they are helping in dealing of, issue of commodities are going on. Stock exchange is related the trading of the security like equity shares, preference shares, debentures, bonds , government securities, mutual fund etc. where in commodity exchange we find that dealing of commodity like cotton, gold, silver etc. are traded.

Stock exchange is blessing for speculators to earn money & get capital for the company. it is the vast medium of capital, where in commodity exchange is blessing for farmers, commodity traders, manufacturers etc.Commodity exchange is playing the pivotal role in our country, as India is agriculture country. There is high risk for investors in stock market as the price of shares are fluctuated at the most rates & day by day in commodity exchange risk is very low compare to stock exchange. People are most interested in stock exchange compare to that commodity exchange is new concept as it is more than 100 years old concept.

Stock exchange is just 4 years old concept where as commodity exchange is 100 years old concept.

Sotck exchange is not related to common people life. Where commodity exchange is related to common men life. In transaction of stock exchange there is not tax provision where compare to that in commodity exchange sales tax, demurrage etc. taxes are there.

In India there are 24 stock exchange in different cities and states, where as commodity exchange are only three in India. In the stock exchange there is no need of stored securities where as in the commodity exchange transaction commodities are needed to be stored. So that warehouses are basic need for commodity exchange.

In the security exchange does not provide any kind of connectivity to their members where as commodity exchange provide V-SAT kind of computerized commodity.

BRIEF HISTORY OF STOCK EXCHANGE

Do you know that the world's foremost marketplace New York Stock Exchange (NYSE), started its trading under a tree (now known as 68 Wall Street) over 200 years ago? Similarly, India's premier stock exchange Bombay Stock Exchange (BSE) can also trace back its origin to as far as 125 years when it started as a voluntary non-profit making association. News on the stock market appears in different media every day. You hear about it any time it reaches a new high or a new low, and you hear about it daily in statements like 'The BSE Sensitive Index rose 5% today'. Obviously, stocks and stock markets are important. Stocks of public limited companies are bought and sold at a stock exchange. However, what really are stock exchanges? Known also as the stock market or bourse, a stock exchange is an organized marketplace for securities (like stocks, bonds, options) featured by the centralization of supply and demand for the transaction of orders by member brokers, for institutional and individual investors. The exchange makes buying and selling easy. For example, you don't have to actually go to a stock exchange, say, BSE - you can contact a broker, who does business with the BSE, and he or she will buy or sell your stock on your behalf. All stock exchanges perform similar functions with respect to the listing, trading, and clearing of securities, differing only in their administrative machinery for handling these functions. Most stock exchanges are auction markets, in which prices are determined by competitive bidding. Trading may occur on a continuous auction basis, may involve brokers buying from and selling to dealers in certain types of stock, or it may be conducted through specialists dealing in a particular stock. However, where did it all start? The need for stock exchanges developed out of early trading activities in agricultural and other commodities. During the middle Ages, traders found it easier to use credit that required supporting documentation of drafts, notes, and bills of exchange. The history of the earliest stock exchange, the French stock exchange, may be traced back to 12th century when transactions occurred in commercial bills of exchange. To control this budding market, Phillip, the Fair, of France (1268-1314) created the profession of couratier de change, which was the predecessor of the French stockbroker. At about the same time, in

Bruges (a prosperous centre of the low countries of Europe), merchants began gathering in front of the house of the Van Der Buerse family to engage in trading. Soon the name of the family became identified with trading and in time, a 'bourse' came to signify a stock exchange. At the same time, stock exchanges began to materialize in other trading centre like the Netherlands (Amsterdam Bourse), Frankfurt (the Deutsche Stock Exchange, formerly the Brse) the London Stock Exchange (LSE) in England and Milan (the Borsa). In 1773, London stock dealers, who had been meeting informally in coffee houses, moved into their own building to establish an exchange (see history: London Stock Exchange). Other European exchanges that opened in the 1600s and 1700s included those in Belgium, Spain, Portugal, and Sweden. From the early exchanges for commercial bills and notes, it was an easy and logical transition to establish stock exchanges for securities. Amsterdam's Bourse was the first to formally begin trading in securities. Across the Atlantic, in the United States, securities markets began speculative trading in issues of the new government. By 1791, the nation's first stock exchange was established in the city of Philadelphia. A year later, in 1792, an exchange was set up in New York City by 24 merchants and brokers, who decided to act as agents for other persons and give preference to each other in their negotiations. They did much of their trading under a tree at what is now 68 Wall Street. That stock exchange grew as the nation became industrialized and by 1863, the New York Stock Exchange (NYSE) adopted its present name (see history: New York Stock Exchange). Today, nearly three thousand companies from all over the world trade their stocks valued at trillions of dollars here. At that time, many stocks that were deemed not well enough for the NYSE were traded outside on the curbs. This so called 'curb trading' has now become the American Stock Exchange (AMEX) (see history: AMEX) . Today, the NYSE and AMEX have been joined by the NASDAQ and hundreds of local and international stock exchanges. By the mid-1800s, many countries outside of Europe (including Canada and Australia) began trading in securities. During the 19th and 20th centuries, major exchanges opened in Asia, Eastern Europe, and parts of Africa and Latin America. The stock trading history in India is obscured in the mists of time. Historical records, as and where they exist, rarely speak about business

and speculative activity except in passing. However, the origin of stock broking in the country may go back to a time, when shares, debentures, and bonds representing titles to property were first issued on the condition of transfer from one person to another and the earliest record of dealings in securities in India is the East India Company's loan securities, back in the 18th century. The first stock exchange in India, Bombay Stock Exchange was established in 1875 as 'The Native Share and Stockbrokers Association' and has evolved over the years into its present status as the premier stock exchange in the country. It may be noted that BSE is the oldest stock exchange in Asia, even older than the Tokyo Stock Exchange, which was founded in 1878. The country's second stock exchange was established in Ahmedabad in 1894, followed by the Calcutta Stock Exchange (CSE). CSE can also trace its origin back to 19th century. From a get together under a 'neem tree' way back in the 1830s, the CSE was formally established in May 1908. India's other major stock exchange National Stock Exchange (NSE), promoted by leading financial institutions, was established in April 1993. Over the years, several stock exchanges have been established in the major cities of India. There are now 23 recognised stock exchanges Mumbai (BSE, NSE and OTC), Calcutta, Delhi, Chennai, Ahmedabad, Bangalore, Bhubhaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur, Kochi, Kanpur, Ludhiana, Mangalore, Patna, Pune, Rajkot, Vadodara, Indore and Meerut. Today, most of the global stock exchanges have become highly efficient, computerised organisations. Computerised networks also made it possible to connect to each other and have fostered the growth of an open, global securities market.

INTRODUCTION TO BSE
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 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 he is assisted by the Chief Operating Officer and other Heads of Departments. 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 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 of account period settlements, introduction of Compulsory Rolling Settlements in all scrips traded on the Exchanges w.e.f. December 31, 2001, etc. have 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.