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An Introduction to Stock Market Index


An aggregate value produced by combining several stocks or other investment vehicles
together and expressing their total values against a base value from a specific date. Market
indexes are intended to represent an entire stock market and thus track the market's changes
over time. Stock and bond market indexes are used to construct index mutual funds and
exchange-traded funds (ETFs) whose portfolios mirror the components of the index.
The Standard & Poor's 500 is one of the world's best known indexes, and is the most
commonly used benchmark for the stock market. Other prominent indexes include the DJ
Wilshire 5000, Dow Jones Industrial Average, NASDAQ Composite Index and The Russell 2000.

Stock Exchange in Bangladesh:
Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), where trading is
conducted by Computerized Automated Trading System and Chittagong Stock Exchange (CSE),
which is also conducted by Computerized Automated Trading System . All exchanges are self-
regulated, private sector entities which must have their operating rules approved by the SEC.
The Securities and Exchange Commission (SEC) was established on 8th June, 1993 under the
Securities and Exchange Commission Act, 1993. Dhaka Share Market consists of the Dhaka
Stock Exchange or DSE, the main share market of Bangladesh. It formally started its trading in
the year 1956. It is still at its infant stage and has to walk a long way for coming into the radar
of the Global Financial Market. The Chittagong Stock Exchange (CSE) began its journey in 10th
October of 1995. Founder members of the proposed Chittagong Stock Exchange approached
the Bangladesh Government in January 1995 and obtained the permission of the Securities and
Exchange Commission on February 12, 1995 for establishing the country's second stock

Stock Exchanges are mutual organization that facilitates trading of company stocks and
securities to the stock brokers and traders. The stock exchanges deals with the issue of
securities and other financial instruments. The stock exchanges also involves in the payment of
income and dividends.
The role of the stock exchange is to raise capital for businesses, mobilize savings for
investment, facilitate company growth, and redistribute wealth as well as raising capital for
financing the development projects of the government.