Working of Stock Exchange Edited

8/8/2019 Working of Stock Exchange Edited

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WORKING OF STOCK EXCHANGE


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HISTORY AND ORIGIN OF STOCK

EXCHANGE

The first stock exchange was established in London in the year 1773.

various countries like France, Germany and USA also established their ownstock exchange markets.

In India, the first exchange was in Bombay in the year 1875.

Later, in the year 1908, Calcutta stock exchange was established which wasrecognized in the country in the year 1923. The madras stock exchange limited

in 1973. So far the government of India has recognized 22 stock exchange,which is located at major business centers in different parts of country.

Till the mid fifties the stock exchange was governed by their own bye laws andregulations with very little interface by the government. In the year 1925, thegovernment of Bombay promulgated an act securities contracts and controlact, 1925 for regulation of the stock exchange.

During the world war second trading outside the stock exchange flourishedwith adverse effect on investors confidence due to base less issues and higherrate of liquidation of companies. In 1956, the central government passedcontracts (regulation) act 1956, which came into force through out the countryon 20th Feb. 1957.

Recently the government of India has enacted an act (SEBI Act 1952), whichprovides for the establishment of a board to protect the interest of investor insecurities, the SEBI has emerged as a monitoring institution of the country firthe development and regulation of stock market, SEBI has issued from time totime guideline to insider trading listing of securities, registration ofintermediaries mutual funds etc.


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MEANING OF STOCKEXCHANGE

S - Securities provide for investor.

T - Tax Benefits planning and exemption.

O - Optimum return on investment.

C - Cautious Approach.

K - Knowledge of Market.

Ex - Exchange of Securities Transacted.

C - Cyclopedia of Listed Companies.

H - High Yield.

A - Authentic Information N - New Entrepreneur encouraged.

G - Guidance of Investor & Company.

E - Equity


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MANAGEMENT OF STOCKEXCHANGE

AKSHAY

Management of stock exchange is done an electedbody of members. These bodies are know by differentnames in different stock exchange for example, theBOMAY, INDORE and AHEMDABAD stock

exchange are managed by a governingboard. Council of management governs theMADRAS stock exchange. A committee manages theCALCUTTA stock exchange. While the board ofdirector manages stock exchange.

These governing bodies are powerful bodies enjoyingextensive administrative power of management andcontrol over their respective stock exchange the day-to-day function of the stock exchanges are executed bythe sub-committee like the defaulters committeelisting committee, settlement committee etc.


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STOCKBROKERS

SEBI registered stock - brokers interested in providing Internet basedtrading services will be required to apply to the respective stockexchange for a formal permission. The stock exchange should grantapproval or reject the application as the case may be, andcommunicate its decision to the member within thirty calendar daysof the date of completed application submitted to the exchange.

The Exchange closely monitors outstanding position of top buyingmember-brokers and top selling member-brokers on a daily basis. Forthis purpose, it has developed various market monitoring reportsbased on certain pre-set parameters. These reports are scrutinized byofficials of the Surveillance Dept. to ascertain whether a member-broker has built up excessive purchase or sale position compared tohis normal level of business. Further, it is examined whetherpurchases or sales are concentrated in one or more scrips, whether

the margin cover is adequate, whether transactions have beenentered into on behalf of institutional clients and even the quality ofscrips, i.e., liquid or illiquid is looked into in order to assess thequality of exposure. The Exchange also scrutinizes the pay-in positionof the member-brokers and the member-brokers having larger fundspay-in positions are at times, at the discretion of the Exchange,required to make advance pay-in on T+1 day instead of on T+2 day.


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ROLLING SETTLEMENT CYCLE

In a rolling settlement, each trading day is

considered as a trading period and trades

executed during the day are settled based on the

net obligations for the day. At NSE and BSE,trades in rolling settlement are settled on a T+2

basis i.e. on the 2nd working day. For arriving at

the settlement day all intervening holidays,

which include bank holidays, NSE/BSE holidays,

Saturdays and Sundays are excluded. Typicallytrades taking place on Monday are settled on

Wednesday, Tuesday's trades settled on

Thursday and so on.


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BASIC REQUIREMENT OF ASTOCKBROKER

GOPAL

The broker must have a net worth of Rs. 50 lakh if hewants to avail the facility of Internet for his own.

Provision for maintenance of adequate back upsystem.

The software system to be used by him should besecured and reliable.

To employ the qualified staff for this purpose.

To send order/trade confirmation to the client alsothrough e-mail.

The contract notes must be issued to the clients as perexisting regulation within 24 hours of the execution oftrades.

The broker and his client should use authenticationtechnologies.


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WHAT IS DEMATERIALIZATION?

Dematerialization in short calledas 'demat is the process by whichan investor can get physical

certificates converted intoelectronic form maintained in anaccount with the DepositoryParticipant


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WHAT IS DEMATERIALIZATION? G!

Depository : The organization responsibleto maintain investor's securities in theelectronic form is called the depository. In

India there are two such organizationsviz. NSDL and CDSL(i.e National Securities Depository

Limited and Central DepositorySecurities Ltd )

Depository Participant : The marketintermediary through whom thedepository services can be availed by the

investors is called a DepositoryPartici ant DP .


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PROCEDURE OF OPENING A DEMAT

ACCOUNT:

Opening an individual Demat account is a

two-step process: You approach a DP andfill up the Demat account-opening booklet.

The Web sites of the NSDL and the CDSL

list the approved DPs. You will then

receive an account number and a DP IDnumber for the account. Quote both the

numbers in all future correspondence with

your DPs.


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PROCEDURE TO DEMATERIALIZE YOUR

SHARE CERTIFICATES: VARUN

Fill up a dematerialization request form, which is available with your DP.Submit your share certificates along with the form; (write "surrendered fordemat" on the face of the certificate before submitting it for demat) Receivecredit for the dematerialized shares into your account within 15 days.In case of directly purchasing dematerialized shares from the broker, instructyour broker to purchase the dematerialized shares from the stock exchangeslinked to the depositories. Once the order is executed, you have to instruct yourDP to receive securities from your broker's clearing account. You have toensure that your broker also gives a matching instruction to his DP to transferthe shares purchased on your behalf into your depository account. You shouldalso ensure that your broker transfers the shares purchased from his clearingaccount to your depository account, before the book closure/record date to availthe benefits of corporate action.

Stocks traded under demat:Securities and Exchange Board of India (SEBI) has already specified forsettlement only in the dematerialized form in for 761 particular scripts.Investors interested in these stocks receive shares only in demat form withoutany instruction to your broker. While SEBI has instructed the institutionalinvestors to sell 421 scripts only in the demat form. The shares by noninstitutional investors can be sold in both physical and demat form. As there isa mix of both form of stocks, it is possible if you have purchased a stock in thiscategory, you may get delivery of both physical and demat shares.


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TYPES OF ORDERS Limit Order

Market Order

Stop Loss Order


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PROCEDURE OF TRADING

VINAY

1.Select of broker

The first step is buying or selling of share is to select a broker for transaction business on behalf of theinvestor. The trading of securities on the stock exchange can be done through members of the exchange.

An investor prefers to select a broker who shall.

Act with due skill. Care and diligence in the conduct of all his business.

Not create false market either singly or in concert with other.

2.Opening An Account With The Broker

The next step to open account with the broker. It helps the investor to provide his credit worthiness, if theclients were not to do margin money with the broker.

3.Selection Of Securities

This is application for buying securities. The investor may be consulted with broker and take advise forselection of securities.

4.Selection Of Time For Trading

This is important to get the best advantage from buying or selling the securities.

5. Placing An Order

Various method of placing an order with the broker has been evolved to give the broker leverage when he is

on the floor of the stock exchange. 6. Preparation Of Contract Note

SEBI circular of 4th Feb. 1991 requires that all member of the recognized stock exchange issue contractnote to the investors on the execution of trade. Brokers, therefore issue contract note to the client, whichgives the name of the company, price of trade, brokerage, time of execution, provision regarding arbitrationetc. in term of the bye-laws of stock exchange, this is statutory requirement and mandatory.

7. Settlement

The settlement is the process where by payment is made by brokers who have made purchase and sharedelivery by those brokers who have made sales.


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THANKYOU

J -Jeevan Rajan

21

V -Vinayak Achari 02

-Varun Jain 33

A -Akshay Purushotaman 42

L -Lino Mathew Varghese 44

G -Gopalakrishnan Srinivasan

25

Documents

Working of Stock Exchange Edited