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Of the 22 stock exchanges in the country, 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. Approximately 70,000 deals are executed on a daily basis, giving it one of the highest per hour rates of trading in the world. There are around 3,500 companies in the country which are listed and have a serious trading volume. The market capitalization of the BSE is Rs.5 trillion. The BSE `Sensex' is a widely used market index for the BSE. The main aims and objectives of the BSE is to provide a market place for the purchase and sale of security evidencing the ownership of business property or of a public or business debt. It aims to promote, develop and maintain a well regulated market for dealing in securities and to safeguard the interest of members and the investing public having dealings on the Exchange. It helps industrial development of the country through efficient resource mobilization. To establish and promote honourable and just practices in securities transactions BSE Sensex The BSE Sensex is a value-weighted index composed of 30 companies with the base April 1979 = 100. It has grown by more than four times from January 1990 till date.The set of companies in the index is essentially fixed. These companies account for around one-fifth of the market capitalization of the BSE. We can use information from April 1979 onwards in estimating the long-run rate of return on the BSE Sensex and that comes to 0.52% per week (continuously compounded) with a standard deviation of 3.67%. This translates to 27% per annum, which translates to roughly 18% per annum after compensating for inflation. New Developments In November, 1996, as a move to reduce the counter party risk, the Exchange set up a trade guarantee scheme i.e. all trades carried out on the BOLT are guaranteed by the Clearing House of the Exchange. A depository has been set up as a joint venture by the Bank of India and the Exchange. However, it will be a subsidiary of the Bank of India. The Exchange introduced trading in fixed income securities under a separate group to give impetus to trading in debentures and other corporate debt instruments, to increase trading in government dated securities. Research & Statistics Department, 21st Floor, P. J. Towers, Dalal Street, Fort, Mumbai - 400 001. INDIA. Phone : 91 22 2655860 / 2655861 / 2655641 (Extension : 8290) FAX : 91 22 2675250 e-mail : info@bseindia.com