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STOCK EXCHANGES AND ITS REGULATIONS

WHAT IS STOCK EXCHANGE?


Stock exchange is also called as Stock Market or Share Market.

Stock exchange is that place where trading of shares is done in


terms of sale and purchase.

Once a companys public offering is gets listed in a stock exchange. After listing it would be available for trading to all investors in the stock exchanges where they are listed.

DEFINITION
According to Husband and dockerary,

Securities or stock exchange are privately organized markets


which are used to facilitate trading in securities.

The Indian Securities contracts act of 1956 defines Stock


Exchanges as, an association, organization or body of individuals, whether

incorporated or not, established for the purpose of assisting,


regulating and controlling business in buying, selling and dealing in securities.

FEATURES OF STOCK EXCHANGES


Market for securities. Deals in second hand securities. Regulates trade in securities. Allows dealing only in listed securities. Transactions effected only through members. Association of persons. Recognition from central government.

Working as per rules.


Specific location. Financial barometers.

FUNCTIONS OF STOCK EXCHANGE- MAIN FUNCTION IN THE MARKET


Continuous and ready market for securities Facilitates evaluation of securities Encourages capital formation Provides safety and security in dealings

Regulates company management


Facilitates public borrowing Provides clearing house facility Facilitates healthy speculation Serves as economic barometer Facilitates bank lending

SERVICES GIVEN BY STOCK EXCHANGE TO INVESTORS


Provides liquidity to investment Provides collateral value to securities Offers opportunity to participate in the industrial growth

Estimates the worth of securities


Offers safety in corporate investment

SERVICES GIVEN BY STOCK EXCHANGE TO COMPANIES


Widens market for securities Creates goodwill and reputation Facilitates fair pricing of listed securities Provides better response from investors Facilitates quick selling of securities

SERVICES GIVEN BY STOCK EXCHANGE TO ECONOMY


Brings economic development

STOCK EXCHANGE IN INDIA


Ahmadabad stock exchange -Ahmadabad

Bangalore stock exchange -Bangalore


Bhubaneswar stock exchange -Bhubaneswar Bombay stock exchange -Mumbai

Calcutta stock exchange -Calcutta


Cochin stock exchange -cochin Coimbatore stock exchange -Coimbatore

Delhi stock exchange -Delhi


Guwahati stock exchange -Guwahati

STOCK EXCHANGE IN INDIA CONT.


Hyderabad stock exchange -Hyderabad Indore stock exchange -Indore Jaipur stock exchange-Jaipur Kanpur stock exchange

Ludhiana stock exchange -Ludhiana


Madras stock exchange -Chennai Magadh stock exchange -Patna

Mangalore stock exchange -Mangalore


Pune stock exchange -Pune

STOCK EXCHANGE IN INDIA CONT.


Saurashtra stock exchange -Rajkot

Vadodara stock exchange -Vadodara


NSE-Mumbai OTCEI stock exchange -Mumbai M.P stock exchange -Indore

THE ROLE OF A STOCK EXCHANGE IN BUYING AND SELLING SHARES


The SEBI (Securities and Exchange Board of India), provide a trading platform where buyers and sellers can meet to transact in securities. The trading platform provided by the stock exchange is an electronic one. There is no need for buyers and sellers to meet at a physical location trade.

ROLE AND IMPORTANCE OF STOCK EXCHANGE


Convenient meeting places for sellers and buyers Permanent market for securities. Stock exchange facilitate price discovery.

Stock exchange reduces cost of transaction.


Provide ready and continuous market for securities. Liquidity and marketability.

Protect the genuine investors.

ROLE AND IMPORTANCE OF STOCK EXCHANGE


Flow of capital to profitable venture.

Promotion of investment.
Help capital formation. Give mobility to capital. Exercise control over the working of companies. Marketing of new issues. Companies &government to raise funds from the investors. Providing forecasting services. Miscellaneous services.

ROLE FUNCTIONS OF SEBI IN MONITORING THE STOCK EXCHANGE


What is SEBI? Securities and Exchange Board Of India (SEBI) is an apex body for overall development and regulation of the securities market. It was setup on April 12, 1988. Later on it became a statutory body under the Securities Exchange Board of India Act, 1992.

DEMUTUALISATION OF STOCK EXCHANGES


Demutualization refers to the legal structure of an exchange
whereby the ownership, the management and the trading rights at the exchange are segregated from one another.

SPECULATION ON THE STOCK EXCHANGE


Stock exchange transactions are made either for the purpose of investment or speculation. Investment transactions require actual delivery of securities on the part of sellers and the payment of their full price by its buyers. Speculative transactions does not involve full payment for and taking delivery of the securities that the speculators have contracted to transfer. The transaction can be made by the deposit of a fractional part of the price. The volume of speculative transaction far exceed that of investment transaction on a stock exchange. It is therefore argued that speculation is necessary to ensure sufficient volume and continuity of business in the stock exchange. There are 23 stock exchanges functioning in India including the OTCEI (Over the Counter

Exchange of India) and the National Stock Exchange (NSE). The Bombay Stock exchange
established in 1878 is the oldest in Asia. There are over 10,000 companies listed and the number of investors is also one of the largest in the world. Only members and their authorized clerks can enter the trading floor and conduct buying and selling of securities.

TYPES OF SPECULATOR
Bull: Is a speculator who buys shares in the expectation of selling it at a higher price. Bear: Sells securities in the expectation of a fall in their prices in future. Stag: Neither buys nor sells but applies for subscription to the new issues expecting that he can sell them later at a premium. Option Dealing: Option is the right to buy or sell a certain quantity of the security at a certain price within a certain time. The option to buy is known as Call Option and the option to sell is know as a Put Option. In an option dealing, the speculator is given the right or option to buy

or sell, or both buy and sell as the case maybe on the settlement day or
else he will forfeit the option money.

REGULATIONS
Capital issue (control) act, 1947

Securities contract (regulation) act, 1956


SEBI Act, 1996 Depositories Act, 1996 Companies Act, 1956

CAPITAL ISSUE (CONTROL) ACT, 1947

Any firm, issuing shares needed central government permission


Also determine the amount and price of the issue The act was repealed in 1992

Market determined allocation started

SECURITIES CONTRACT (REGULATION) ACT, 1956


It provides for control on:

All aspect of securities trading and


Running of stock exchange to prevent undesirable transaction

It gives central government regulatory jurisdiction over: Stock exchanges: recognition and supervision Processing application of recognition of stock exchanges Grant of recognition to stock exchange

Procedure of corporatization and demutualization of stock exchanges


Withdrawal of recognition to stock exchange Contracts in securities Listing of securities

DEMUTUALISATION AND BSE


BSE has completed the process of Demutualization in terms of

The BSE ( Corporatization and Demutualization) scheme, 2005.


The Bombay Stock Exchange Limited has succeeded The Stock Exchange, Mumbai in accordance with the scheme.

The Securities and Exchange Board of India (SEBI) had


approved and published the Scheme of The Stock Exchange, Mumbai vide notification No. S. O. 684(E), dated 20-5-2005.

SECURITIES CONTRACT (REGULATION) ACT, 1956 CONT.


This act also empowers the Central government to call for periodical returns and make direct enquiries. To direct rules to be made and powers of SEBI to make or amend bye-laws of recognized stock exchanges have been laid down. To supersede governing body of recognized stock exchanges and vests with the central government. The power to suspend business of recognized stock exchanges.

SECURITIES CONTRACT (REGULATION) ACT, 1956 CONT.


Contracts in securities: If the central government is not satisfied regarding the nature or the volume of transactions in securities it may, by notification in the Official gazette, declare contracts in notified areas illegal. Listing of securities:

The act also provides conditions of:


Listing, delisting of securities Right of appeal against refusal of stock exchanges to list securities of public companies. Right of appeal to SAT against refusal of stock exchange to list securities of public companies, procedures and powers of SAT. Right to legal representation.

SECURITIES CONTRACT (REGULATION) ACT, 1956 CONT.


Penalties and procedure:

The act also provide various cases when a person is liable for
penalties such as when there is failure to: Furnish information, return, etc Enter into agreements with clients Redress investors grievances Segregate securities or moneys of client or clients Comply with provision of listing and delisting conditions etc.

SEBI Act, 1992


The SEBI Act, 1992 was enacted to empower SEBI with

statutory powers for


Protecting the interests of investors in securities Promoting the development of the securities market Regulating the securities market by measures it thinks fit.

SEBI ACT, 1992 CONT.


The measure provide for: Regulating the business in stock exchanges and other securities

markets.
Registering and regulating the working of: Stock brokers, sub-brokers, share transfer agents, bankers to

an issue, trustee of trust deeds, registrar to an issue,


merchant bankers, underwriters, portfolio managers, investment advisors, depositories, participants, foreign

institutional investors, credit rating agencies, venture capital


funds, collective investment schemes including mutual funds and other intermediaries.

SEBI ACT, 1992 CONT.


Prohibiting fraudulent and unfair trade practices relating to securities markets. Promoting investors education and training of intermediaries of securities markets. Prohibiting insider trading in securities. Regulating substantial acquisition in shares and takeover of companies. Undertaking inspection, conducting inquires and audits of the stock exchanges, mutual funds, other persons associated with the securities market.

DEPOSITORIES ACT, 1996


The Depositories Act, 1996 provides for the establishment of depositories for securities to ensure transferability of securities

with
Speed Accuracy

Security
The act provides the right and obligations of: Depositories Participants Issuers Beneficial owners

DEPOSITORIES ACT, 1996 CONT.


A depository is required to enter into an agreement with one or more participants as its agent. Any person through a participant can enter into an agreement for availing its services. Any person who enters into an agreement with depository should surrender the certificate of security for which he requires the services of a depository to the issuer. After the issuer receives the certificate of security, he should cancel the certificate of security and substitute in its records the name of the depository as a registered owner in respect of that security.

DEPOSITORIES ACT, 1996 CONT.


The depository should enter the name of the person who has entered into agreement, as the beneficial owner in its records. After receiving intimation from the participant, every depository should register the transfer of security in the name of the transferee. All securities held by a depository should be dematerialized and be in a fungible form. The depositories should be deemed to be the registered owner for the purpose of effecting transfer of ownership of security on behalf

of a beneficial owner.
The depository as a registered owner should not have any voting rights or other rights in the securities held by it.

DEPOSITORIES ACT, 1996 CONT.


A beneficial owner, with the prior approval of the depository

create a pledge or hypothecation of securities owned by him


through a depository. The depository is required to maintain a registered and an index

of beneficial owners.
The depositories are required to furnish information about the transfer of securities in the name of beneficial owners at such

intervals and in such manner as may be specified by the byelaws.

COMPANIES ACT, 1956


It deals with issue, allotment and transfer of securities and

various aspects relating to company management.


Provide for standard disclosure in public issues Company management Management perception of the risk factors Information about other listed companies under the same management Companys other projects

REFERENCES
http://www.authorstream.com/Presentation/ranjeet56-

118760-stock-exchange-entertainment-ppt-powerpoint/
http://www.scribd.com/doc/45310072/Stock-Exchange-Ppt http://www.wepapers.com/Papers/93213/WHAT_IS_STOCK

_EXCHANGE_ppt
http://www.scribd.com/doc/20732155/Stock-ExchangeSEBI-BSE-NSE-Sensex-Nifty-Cal-of-Sensex http://www.scribd.com/doc/53353159/SEBI-PPT http://www.slideshare.net/saifsidd/indian-stock-marketpresentation