major stock exchange in india

K.P.B.HINDUJA COLLEGE Major Stock Exchange In India

CHAPTER 1

INTRODUCTION

Stock markets refer to a market place where investors can buy and sell stocks. The

price at which each buying and selling transaction takes is determined by the

market forces (i.e. demand and supply for a particular stock). Let us take an

example for a better understanding of how market forces determine stock prices.

ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an

upward movement in its stock price. More and more people would want to buy this

stock (i.e. high demand) and very few people will want to sell this stock at current

market price (i.e. less supply). Therefore, buyers will have to bid a higher price for

this stock to match the ask price from the seller which will increase the stock price

of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high

supply and low demand) for the stock of ABC Co. Ltd. in the market, its price will

fall down. In earlier times, buyers and sellers used to assemble at stock exchanges

to make a transaction but now with the dawn of IT, most of the operations are done

electronically and the stock markets have become almost paperless. Now investors

don’t have to gather at the Exchanges, and can trade freely from their home or

office over the phone or through Internet.

1.1 THE ORIGIN

One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years

old history.18th Century East India Company was the dominant institution and by

end of the century, business in its loan securities gained full momentum1830's

Business on corporate stocks and shares in Bank and Cotton presses started in

Bombay. Trading list by the end of 1839 got broader 1840's Recognition from

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banks and merchants to about half a dozen brokers 1850's Rapid development of

commercial enterprise saw brokerage business attracting more people into the

business 1860's The number of brokers increased to 601860-61The American

Civil War broke out which caused a stoppage of cotton supply from United States

of America; marking the beginning of the "Share Mania" in India 1862-63.The

number of brokers increased to about 200 to 250.1865 a disastrous slump began at

the end of the American Civil War (as an example, Bank of Bombay Share which

had touched Rs. 2850 could only be sold at Rs. 87).

1.2 Stock Exchange and the Year of Commencement.

Cochin Stock Exchange (1980)

Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)

Pune Stock Exchange Limited (1982)

Ludhiana Stock Exchange Association Limited (1983)

Gauhati Stock Exchange Limited (1984)

Kanara Stock Exchange Limited (at Mangalore, 1985)

Magadh Stock Exchange Association (at Patna, 1986)

Jaipur Stock Exchange Limited (1989)

Bhubaneswar Stock Exchange Association Limited (1989)

Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)

Vadodara Stock Exchange Limited (at Baroda, 1990)

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CHAPTER 2

BOMBAY STOCK EXCHANGE

The Bombay Stock Exchange (BSE) (formerly, The Stock Exchange, Bombay) is a

stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange

in Asia. The equity market capitalization of the companies listed on the BSE was

US$1.63 trillion as of December 2010, making it the 4th largest stock exchange in

Asia and the 8th largest in the world. The BSE has the largest number of listed

companies in the world. As of June 2011, there are over 5,085 listed Indian

companies and over 8,196 scripts on the stock exchange, the Bombay Stock

Exchange has a significant trading volume. The BSE SENSEX, also called "BSE

30", is a widely used market index in India and Asia. Though many other

exchanges exist, BSE and the National Stock Exchange of India account for the

majority of the equity trading in India. While both have similar total market

capitalization (about USD 1.6 trillion), share volume in NSE is typically two times

that of BSE.

2.1 Hours of operation

SESSION TIMING:

Beginning of the Day Session 8:00 - 9:00

Pre-open trading session 9:00 - 9:15

Trading Session 9:15 - 15:30

Position Transfer Session 15:30 - 15:50

Closing Session 15:50 - 16:05

Option Exercise Session 16:05 - 16:35

Margin Session 16:35 - 16:50

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Query Session 16:50 - 17:35

End of Day Session 17:30

The hours of operation for the BSE quoted above are stated in terms the local time

(i.e. GMT +5:30) in Mumbai, India. BSE's normal trading sessions are on all days

of the week except Saturday, Sundays and holidays declared by the Exchange in

advance.

2.2 History

The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to

the 1850s, when four Gujarati and one Parsi stockbroker would gather under

banyan trees in front of Mumbai's Town Hall. The location of these meetings

changed many times, as the number of brokers constantly increased. The group

eventually moved to Dalal Street in 1874 and in 1875 became an official

organization known as 'The Native Share & Stock Brokers Association'. In 1956,

the BSE became the first stock exchange to be recognized by the Indian

Government under the Securities Contracts Regulation Act. The Bombay Stock

Exchange developed the BSE SENSEX in 1986, giving the BSE a means to

measure overall performance of the exchange. In 2000 the BSE used this index to

open its derivatives market, trading SENSEX futures contracts. The development

of SENSEX options along with equity derivatives followed in 2001 and 2002,

expanding the BSE's trading platform. Historically an open outcry floor trading

exchange, the Bombay Stock Exchange switched to an electronic trading system in

1995. It took the exchange only fifty days to make this transition. This automated,

screen-based trading platform called BSE On-line trading (BOLT) currently has a

capacity of 8 million orders per day. The BSE has also introduced the world's first

centralized exchange-based internet trading system, BSEWEBx.co.in to enable

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investors anywhere in the world to trade on the BSE platform.[5] The BSE is

currently housed in Phiroze Jeejeebhoy Towers at Dalal Street, Fort area.

2.3 Timeline

Following is the timeline on the rise of the SENSEX through Indian stock market

history.1830's Business on corporate stocks and shares in Bank and Cotton presses

started in Mumbai.1860-1865 Cotton price bubble as a result of the American Civil

War.1870 - 90's Sharp increase in share prices of jute industries followed by a

boom in tea stocks and coal 1978-79 Base year of SENSEX, defined to be 100.

1986 SENSEX first compiled using a market Capitalization-Weighted

methodology for 30 component stocks representing well-established companies

across key sectors. 30 October 2006 The SENSEX on October 30, 2006 crossed

the magical figure of 13,000 and closed at 13,024.26 points, up 117.45 points or

0.9percent. It took 135 days for the SENSEX to move from 12,000 to 13,000 and

123 days to move from 12,500 to 13,000.5 December 2006 The SENSEX on

December 5, 2006 crossed the 14,000-mark to touch 14,028 points. It took 36 days

for the SENSEX to move from 13,000 to the 14,000 mark.6 July 2007 the

SENSEX on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005

points in afternoon trade. It took seven months for the SENSEX to move from

14,000 to 15,000 points.19 September 2007 the SENSEX scaled yet another

milestone during early morning trade on September 19, 2007. Within minutes after

trading began, the SENSEX crossed 16,000, rising by 450 points from the previous

close. The 30-share Bombay Stock Exchange's sensitive index took 53 days to

reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points.

The SENSEX finally ended with a gain of 654 points at 16,323. The NSE Nifty

gained 186 points to close at 4,732. 26 September 2007 The SENSEX scaled yet

another height during early morning trade on September 26, 2007. Within minutes

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after trading began, the SENSEX crossed the 17,000-mark. Some profit taking

towards the end saw the index slip into red to 16,887 - down 187 points from the

day's high. The SENSEX ended with a gain of 22 points at 16,921. 9 October 2007

The BSE SENSEX crossed the 18,000-mark on October 9, 2007. It took just 8 days

to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time

intra-day high of 18,327. It finally gained 789 points to close at an all-time high of

18,280. The market set several new records including the biggest single day gain of

789 points at close, as well as the largest intra-day gains of 993 points in absolute

term backed by frenzied buying after the news of the UPA and Left meeting on

October 22 put an end to the worries of an impending election.

15 October 2007 The SENSEX crossed the 19,000-mark backed by revival of

funds-based buying in blue chip stocks in metal, capital goods and refinery sectors.

The index gained the last 1,000 points in just four trading days. The index touched

a fresh all-time intra-day high of 19,096, and finally ended with a smart gain of

640 points at 19,059.The Nifty gained 242 points to close at 5,670.

29 October 2007 The SENSEX crossed the 20,000 mark on the back of aggressive

buying by funds ahead of the US Federal Reserve meeting. The index took only 10

trading days to gain 1,000 points after the index crossed the 19,000-mark on

October 15. The major drivers of today's rally were index heavyweights Larsen and

Toubro, Reliance Industries, ICICI Bank, HDFC Bank and SBI among others. The

30-share index spurted in the last five minutes of trade to fly-past the crucial level

and scaled a new intra-day peak at 20,024.87 points before ending at its fresh

closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record

high 5,922.50 points before ending at 5,905.90, showing a hefty gain of 203.60

points.

8 January 2008 The SENSEX peaks. It crossed the 21,000 mark in intra-day

trading after 49 trading sessions. This was backed by high market confidence of

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increased FII investment and strong corporate results for the third quarter.

However, it later fell back due to profit booking.

13 June 2008 the SENSEX closed below 15,200 mark, Indian market suffer with

major downfall from January 21, 2008

25 June 2008 The SENSEX touched an intra-day low of 13,731 during the early

trades, then pulled back and ended up at 14,220 amidst a negative sentiment

generated on the Reserve Bank of India hiking CRR by 50 bps. FII outflow

continued in this week.

2 July 2008 The SENSEX hit an intra-day low of 12,822.70 on July 2, 2008. This

is the lowest that it has ever been in the past year. Six months ago, on January 10,

2008, the market had hit an all-time high of 21206.70. This is a bad time for the

Indian markets, although Reliance and Infosys continue to lead the way with

mostly positive results.

6 October 2008 The SENSEX closed at 11801.70 hitting the lowest in the past 2

years.

10 October 2008 The SENSEX today closed at 10527, 800.51 points down from

the previous day having seen an intraday fall of as large as 1063 points. Thus, this

week turned out to be the week with largest percentage fall in the SENSEX

18 May 2009 after the result of 15th Indian general election SENSEX gained

2100.79 points from the previous close of 12173.42, a record one-day gain. In the

opening trade itself the SENSEX evinced a 15percent gain over the previous close

which led to a two-hour suspension in trading. After trading resumed, the SENSEX

surged again, leading to a full day suspension of trading.

19 October 2010 BSE introduced the 15-minute special pre-open trading session, a

mechanism under which investors can bid for stocks before the market opens. The

mechanism, known as 'pre-open session call auction', lasted for 15 minutes (from

9:00-9:15 am).

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5 November 2010 BSE SENSEX crossed the 21000 mark (exactly 21004.96).

2.4 Indices

The launch of SENSEX in 1986 was later followed up in January 1989 by

introduction of BSE National Index (Base: 1983-84 = 100). It comprised 100

stocks listed at five major stock exchanges in India - Mumbai, Calcutta, Delhi,

Ahmedabad and Madras. The BSE National Index was renamed BSE-100 Index

from October 14, 1996 and since then, it is being calculated taking into

consideration only the prices of stocks listed at BSE. BSE launched the dollar-

linked version of BSE-100 index on May 22, 2006. BSE launched two new index

series on 27 May 1994: The 'BSE-200' and the 'DOLLEX-200'. BSE-500 Index

and 5 sectorial indices were launched in 1999. In 2001, BSE launched BSE-PSU

Index, DOLLEX-30 and the country's first free-float based index - the BSE TECk

Index. Over the years, BSE shifted all its indices to the free-float methodology

(except BSE-PSU index). BSE disseminates information on the Price-Earnings

Ratio, the Price to Book Value Ratio and the Dividend Yield Percentage on day-to-

day basis of all its major indices. The values of all BSE indices are updated on real

time basis during market hours and displayed through the BOLT system, BSE

website and news wire agencies. All BSE Indices are reviewed periodically by the

BSE Index Committee. This Committee which comprises eminent independent

finance professionals frames the broad policy guidelines for the development and

maintenance of all BSE indices. The BSE Index Cell carries out the day-to-day

maintenance of all indices and conducts research on development of new indices.

SENSEX is significantly correlated with the stock indices of other emerging

markets.

CHAPTER 3

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NATIONAL STOCK EXCHANGE OF INDIA

The National Stock Exchange (NSE) is a stock exchange located at Mumbai,

Maharashtra, India. It is the 9th largest stock exchange in the world by market

capitalization and largest in India by daily turnover and number of trades, for both

equities and derivative trading. NSE has a market capitalization of around US$1.59

trillion and over 1,552 listings as of December 2010. Though a number of other

exchanges exist, NSE and the Bombay Stock Exchange are the two most

significant stock exchanges in India and between them are responsible for the vast

majority of share transactions. The NSE's key index is the S&P CNX Nifty, known

as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks

weighted by market capitalization. NSE is mutually-owned by a set of leading

financial institutions, banks, insurance companies and other financial

intermediaries in India but its ownership and management operate as separate

entities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs

who have taken a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in

total, cover more than 1500 cities across India. NSE is the third largest Stock

Exchange in the world in terms of the number of trades in equities. It is the second

fastest growing stock exchange in the world with a recorded growth of

16.6percent.

3.1 Origins

The National Stock Exchange of India was promoted by leading financial

institutions at the behest of the Government of India, and was incorporated in

November 1992 as a tax-paying company. In April 1993, it was recognized as a

stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE

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commenced operations in the Wholesale Debt Market (WDM) segment in June

1994. The Capital market (Equities) segment of the NSE commenced operations in

November 1994, while operations in the Derivatives segment commenced in June

2000.

3.2 Innovations

Being the first national, anonymous, electronic limit order book (LOB) exchange

to trade securities in India. Since the success of the NSE, existent market and new

market structures have followed the "NSE" model. Setting up the first clearing

corporation "National Securities Clearing Corporation Ltd." in India. NSCCL was

a landmark in providing innovation on all spot equity market (and later, derivatives

market) trades in India. Co-promoting and setting up of National Securities

Depository Limited, first depository in India. Setting up of S&P CNX Nifty. NSE

pioneered commencement of Internet Trading in February 2000, which led to the

wide popularization of the NSE in the broker community. Being the first exchange

that, in 1996, proposed exchange traded derivatives, particularly on an equity

index, in India. After four years of policy and regulatory debate and formulation,

the NSE was permitted to start trading equity derivatives being the first and the

only exchange to trade GOLD ETFs (exchange traded funds) in India. NSE has

also launched the NSE-CNBC-TV18 media center in association with CNBC-

TV18. NSE.IT Limited, setup in 1999, is a 100percent subsidiary of the National

Stock Exchange of India. A Vertical Specialist Enterprise, NSE.IT offers end-to-

end Information Technology (IT) products, solutions and services. NSE (National

Stock Exchange) was the first exchange in the world to use satellite

communication technology for trading, using a client server based system called

National Exchange for Automated Trading (NEAT). For all trades entered into

NEAT system, there is uniform response time of less than one second.

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Type National Stock Exchange

Location Mumbai, India

Coordinates 19°3'37N 72°51'35E

Founded 1992

Owner National Stock Exchange of India Limited

Key people Ravi Narain (MD)

Currency Indian rupee ()

No. of listings 1,552

Market Cap US$1.59 trillion (Dec 2010)

Indexes S&P CNX Nifty

CNX Nifty Junior

S&P CNX 500

Website www.nse-india.com

3.3 Market

Currently, NSE has the following major segments of the capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Currency futures

Mutual Fund

Stocks lending and borrowing

August 2008 Currency derivatives were introduced in India with the launch of

Currency Futures in USD INR by NSE. Currently it has also launched currency

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futures in EURO, POUND & YEN. Interest Rate Futures was introduced for the

first time in India by NSE on 31 August 2009, exactly after one year of the launch

of Currency Futures.

NSE became the first stock exchange to get approval for Interest rate futures as

recommended by SEBI-RBI committee, on 31 August 2009, a futures contract

based on 7percent 10 Year GOI bond (NOTIONAL) was launched with quarterly

maturities.

3.4 Hours

NSE's normal trading sessions are conducted from 9:15 am India Time to 3:30 pm

India Time on all days of the week except Saturdays, Sundays and Official

Holidays declared by the Exchange (or by the Government of India) in advance.

The exchange, in association with BSE (Bombay Stock Exchange Ltd.), is thinking

of revising its timings from 9.00 am India Time to 5.00 pm India Time. There were

System Testing going on and opinions, suggestions or feedback on the New

Proposed Timings are being invited from the brokers across India. And finally on

18 November 2009 regulator decided to drop their ambitious goal of longest Asia

Trading Hours due to strong opposition from its members.

On 16 December 2009, NSE announced that it would advance the market opening

to 9:00 am from 18 December 2009. So NSE trading hours will be from 9.00 am

till 3:30 pm India Time. However, on 17 December 2009, after strong protests

from brokers, the Exchange decided to postpone the change in trading hours till 4

Jan 2010. NSE new market timing from 4 Jan 2010 is 9:00 am till 3:30 pm India

Time.

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3.5 Indices

NSE also set up as index services firm known as India Index Services & Products

Limited (IISL) and has launched several stock indices, including:

S&P CNX Nifty (Standard & Poor's CRISIL NSE Index)

CNX Nifty Junior

CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)

S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)

CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

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CHAPTER 4

Multi commodity exchange

Type Private

Industry Business Services

Founded 2003

Headquarters Exchange Square, Suren Road, Chakala, Andheri (East),

Mumbai, India

Key people Lamon Rutten, MD and CEO

Products Futures exchange

Revenue Rs 104.39 crore (2005–2006)

Website www.mcxindia.com

Multi commodity exchange (MULTI COMMODITY EXCHANGE) is an

independent commodity exchange based in India. It was established in 2003 and is

based in Mumbai. The turnover of the exchange for the fiscal year 2009 was US$

1.24 trillion, and in terms of contracts traded, it was in 2009 the world's sixth

largest commodity exchange. Multi Commodity Exchange offers futures trading in

bullion, ferrous and non-ferrous metals, energy, and a number of agricultural

commodities (mentha oil, cardamom, potatoes, palm oil and others).

Multi Commodity Exchange has also set up in joint venture the Multi Commodity

Exchange Stock Exchange. Earlier spin-offs from the company include the

National Spot Exchange, an electronic spot exchange for bullion and agricultural

commodities, and National Bulk Handling Corporation (NBHC) India's largest

collateral management company which provides bulk storage and handling of

agricultural products.

It is regulated by the Forward Markets Commission.

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Multi Commodity Exchange is India's No. 1 commodity exchange with 83percent

market share in 2009

The exchange's main competitor is National Commodity & Derivatives Exchange

Ltd.

Globally, MULTI COMMODITY EXCHANGE ranks no. 1 in silver, no. 2 in

natural gas, no. 3 in crude oil and gold in futures trading.

The highest traded item is gold.

MULTI COMMODITY EXCHANGE has several strategic alliances with leading

exchanges across the globe.

As of early 2010, the normal daily turnover of MULTI COMMODITY

EXCHANGE was about US$ 6 to 8 billion.

MULTI COMMODITY EXCHANGE now reaches out to about 800 cities and

towns in India with the help of about 126,000 trading terminals.

MULTI COMMODITY EXCHANGE COMDEX is India's first and only

composite commodity futures price index

4.1 Key shareholders

Financial Technologies Ltd, State Bank of India and its associates, National Bank

for Agriculture and Rural Development (NABARD), National Stock Exchange of

India Ltd. (NSE), Fid Fund (Mauritius) Ltd. - an affiliate of Fidelity International,

Corporation Bank, Union Bank of India, Canara Bank, Bank of India, Bank of

Baroda, HDFC Bank,, SBI Life Insurance Co. Ltd., ICICI ventures, IL & FS,

Merrill Lynch, and New York Stock Exchange.

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CHAPTER 5

OTC EXCHANGE OF INDIA

Type Stock Exchange


Founded 1990

Owner OTC Exchange of India

Key people Mr. Praveen Mohnot, MD

Currency Indian rupee

OTC Exchange of India (OTCEI) also known as Over-the-Counter Exchange of

India based in Mumbai, Maharashtra. It is the first exchange for small companies.

It is the first screen based nationwide stock exchange in India. It was set up to

access high-technology enterprising promoters in raising finance for new product

development in a cost effective manner and to provide transparent and efficient

trading system to the investors. OTCEI is promoted by the Unit Trust of India, the

Industrial Credit and Investment Corporation of India, the Industrial Development

Bank of India, the Industrial Finance Corporation of India and others and is a

recognized stock exchange under the SCR Act.

5.1 History

OTC Exchange of India was founded in 1990 under the Companies Act 1956 and

got recognized by the Securities Contracts Regulation Act, 1956 as a stock

exchange.

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CHAPTER 6

INTER CONNECTED STOCK EXCHANGE OF INDIA

Type Stock Exchange


Founded 1998

Owner Inter-connected Stock Exchange of India Limited

Currency Indian rupee ()

Inter-connected Stock Exchange Ltd. (ISE) started its operation in 1998[1] in

Vashi, Mumbai. It is a national-level stock exchange, providing trading, clearing,

settlement, risk management and surveillance support to its trading members. It has

841 trading members, who are located in 18 cities. These intermediaries are

administratively supported through the regional offices at Delhi, Kolkata, Patna,

Ahmedabad, Coimbatore and Nagpur, besides Mumbai.

6.1 Platform Exchange Network, India

Branch Networks of Interconnected Stock Exchange of India

The ISE is promoted by 12 regional stock exchanges namely at Bangalore,

Bhubaneswar, Chennai, Cochin, Coimbatore, Guwahati, Indore, Jaipur, Kanpur,

Mangalore, Magadha and Vadodara. The participating exchanges of ISE have

4,500 members and listed securities. It is a stock exchange of stock exchanges,

members of the stock exchanges being traders on the ISE.

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6.2History

Establishment of National Stock Exchange of India Ltd., (NSE) in 1994 with an

all-India spread and expansion of operations of Bombay Stock Exchange (BSE)

throughout the country, both of which have their trader work stations at over 400

centers in the country today, have led to the virtual extinction of all the 19

Regional Stock Exchange (RSEs) spread across the length and breadth of the

country. The share of 19 RSEs, which was as much as 45.6 per cent of the total all-

India turnover of Rs. 2.39 lakh crore in 1995-96, declined progressively year after

year and in 2001-02, it was just 8.4 per cent of the total volume of Rs. 8.96 lakh

crore. At present, there is virtually no trading at any of the RSEs. Trading in the

cash segment is thus confined to NSE and BSE only, with the share of the latter,

which used to account for over 70 percent of the all-India volume of trading till

1995, is also progressively declining. Currently, BSE accounts for about 30 per

cent of the aggregate volume of trading on NSE and BSE in the cash segment. In

the derivatives segment, while NSE clocks in about Rs. 2000 crore daily, the

turnover on BSE has been progressively declining virtually to the zero level. The

RSEs of the country and their members had spent over Rs. 200 crore in automating

their trading, clearing and settlement systems, largely driven by regulatory

compulsions, sadly to witness them lying idle at present.

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6.3 Establishment of Inter-connected Stock Exchange

It was the dwindling fortunes of RSEs that brought them together to establish the

Inter-connected Stock Exchange of India Ltd. (ISE). At a meeting of the

Federation of Indian Stock Exchanges held in October 1996, a Steering Committee

was formed to evolve an Inter-Connected Market System. As a result, ISE, which

was promoted by 14 regional stock exchanges of the country (excluding Calcutta,

Delhi, Ahmedabad, Ludhiana and Pune Stock Exchange, apart from NSE, BSE and

OTCEI) was incorporated on ISE by SEBI under the Securities Contracts

(Regulations) Act, 1956 on November 18, 1998; ISE commenced trading on

February 26, 1999. ISE was launched with an objective of converting small,

fragmented and illiquid markets into large, liquid national-level markets. This was

a unique experiment, with a highly automated trading, clearing and settlement

systems backed by state-of-the-art computers. ISE is also a professionally managed

stock exchange with the Chairman of the Exchange being also a Public

Representative Director from its inception. Unfortunately for the RSEs,

particularly small brokers, the ISE experiment did not succeed. The daily turnover,

which used to be Rs. 1 to 2 crore in the first six months, gradually declined to

virtually zero level. Failure of ISE was, due to the bigger brokers of the

participating RSEs failing to support any interest in trading on ISE due to

commercial considerations. As a result, it becomes virtually impossible for ISE to

create any worthwhile liquidity in its markets in competition with the breadth and

depth of NSE and BSE. Markers continued to be fragmented as the participating

RSEs did not close down their regional segments. All the while the small

fragmented and illiquid market failed to emerge. ISE has also not succeeded in

getting companies listed on it despite the stipulation by SEBI that the State of

Maharashtra constituted the regional area for ISE due to lack of regulatory support

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for making it applicable to over 3,000 already listed companies in the State of

Maharashtra.

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CHAPTER 7

MADRAS STOCK EXCHANGE

The Madras Stock Exchange is a stock exchange in Madras, (Chennai), and India.

The Madras Stock Exchange (MSE) is the fourth Stock Exchange to be established

in the country, and the first in South India. It had a turnover (2001) of Rs 109

crores (25 million USD), but is a fraction (below 0.1percent) of the turnover

generated by the Bombay Stock Exchange and National Stock Exchange of India.

In 1996, the MSE was fully computerized and online trading became operational,

as the MSE was connected to 120 broking offices in and around Chennai through

Wide Area Networking. The MSE has about 120 live members and 1,785

companies listed. The exchange follows the Rolling Settlement system, as per the

January 2000 SEBI (Securities Exchange Board of India) Guidelines and a

proactive Grievance Cell is operational. By this system, investors can log in their

complaints, for which a number will be given for further reference, through which

investors can keep track of the action taken by the exchange as regards their

complaint. A subsidiary company - MSE Financial Services Ltd, has been

established. A member of the Bombay Stock Exchange, MSE Financial Services

will help create greater broker and investor flexibility through multi-market access.

Hereafter the members will be able to trade in both BSE and MSE. This will be

followed up with National Stock Exchange (NSE) membership. Live trading at the

MSE takes place from 10.00 am to 3.30 pm.

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CHAPTER 8

AHMEDABAD EXCHANGE STOCK

Ahmedabad Stock Exchange or ASE is the second oldest exchange of India located

in the city of Ahmedabad in the western part of the country. It is recognized by

Securities Contract (Regulations) Act, 1956 as permanent stock exchange. It has

adopted a Swastika in its logo which is one of the most auspicious symbols of

Hinduism depicting wealth and prosperity.

8.1 History

Ahmedabad Stock Exchange Limited is a premier national equities exchange that

plays a key role in the Indian securities markets. Serving individual and

institutional investors from around the world, its primary business is the trading of

approximately 2000 nationally listed equities. The Exchange also trades over 200

high growth companies that are solely listed on the ASE or dually listed with

another exchange.

The Stock Exchange-Ahmedabad, constituted as a Public Charitable Trust in

1894, is the second oldest exchange of India. It is recognized by Securities

Contract (Regulations) Act, 1956 as permanent stock exchange.

History of Stock Exchanges in India traces back to the nineteenth century with the

establishment of the Bombay Stock Exchange in 1875 followed by Ahmedabad

Stock Exchange in 1894. In the world map of bourses, the Stock Exchange -

Ahmedabad holds a unique place with its initial functioning starting under banyan

tree and has progressed year after year therefrom.

T.Y.BFM –Vth SEM


Earlier, all the Stock Exchanges in India functioned under the framework of

Bombay Securities Contracts Act, 1925. The Securities Contract Regulations Act,

1956 was enacted thereafter and all the Stock Exchanges in India were required to

get recognition from the Ministry Of Finance. At this juncture, the eventual

process of merger took place and Gujarat Share & Stock Exchange, Indian Share

and General Exchange Association and Bombay Share and Stock Exchange, Share

and Stock Brokers Association merged with the Ahmedabad Share and Stock

Brokers Association. The membership of the merged entity was 463. In 1982, The

Stock Exchange- Ahmedabad got the permanent recognition from the Government

Of India

The 80s and 90s saw major focus on building up requisite infrastructure and

bringing about rapid progress in the area of computerization in the exchanges as

whole. Recognizing and appreciating the necessity of computerization and putting

emphasis on screen based trading the Stock Exchange-Ahmedabad went live on

Dec. 12, 1996.

Today, The Stock Exchange-Ahmedabad is one of the oldest bourses with 333

trading members is serving the investors with its transparent trading system

which among the best in India.

8.2 Vision

“Build permanent relationship with the investors’ by investing in total quality for

investor’s delight.”

“improving the quality of life in the communities we operate in.”

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We look at the finance sector in a different way. Giving it altogether a different

dimension. ‘innovations’ can we say! This in a nutshell best describes the

corporate vision of Ahmedabad stock exchange limited.

Ahmedabad stock exchange limited aims to attain paramount market position. At

Ahmedabad stock exchange limited, we shall continuously endeavor to seek

challenges of meeting the requirements of our investors, by acquiring and

deploying modern technologies, processes and resources.

We are a conglomerate committed to significantly enhance value for all our stake

holders by:

• fostering a spirit of continuous learning and innovation.

• having people who practice values and high standards of behavior.

• seeking sustained and dynamic growth and securing long-term success.

• taking responsible care of the surrounding environment

8.3 Current governing board

The governing board of ASE comprises elected directors as well as directors

appointed by SEBI. The governing board meets every 15 days to review the

working of the stock Exchange. The executive director is the administrative head

of the ASE.

P.K.Ghosh - Non-Member Director

Babubhai P. Patel - Non-Member Director

Yogesh Doshit - Non-Member Director

Ashok Chhajed - Non-Member Director

Vijay Ranchan - Non-Member Director

Manish Bhatt - Non-Member Director

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N. K. Bhola - Sebi Nominee

G. H. Dalal - Member Director

Anil Shah - Member Director

V. V. Rao - Executive Director

T.Y.BFM –Vth SEM


CHAPTER 9

Cochin Stock Exchange

The Cochin Stock Exchange Limited (CSE) is a capital stock market in Kochi,

Kerala in India. Incorporated in 1978, it has now over 350 Indian companies listed.

CSBL a wholly owned subsidiary of CSE is a member of NSE and BSE.

COCHIN STOCK EXCHANGE LTD. is one of the premier Stock Exchanges

in India, established in the year 1978. The exchange had a humble beginning with

just 5 companies listed in 1978 -79, and had only 14 members. Today the

Exchange has more than 508 members and 240 listed companies. In 1980 the

Exchange computerized its offices. In order to keep pace with the changing

scenario in the capital market, CSE took various steps including trading in

dematerialized shares. CSE introduced the facility for computerized trading -

"Cochin Online Trading (COLT)" on March 17, 1997. CSE was one of the

promoters of the "Interconnected Stock Exchange of India (ISE)". The objective

was to consolidate the small, fragmented and less liquid markets into a national

level integrated liquid market. With the enforcement of efficient margin system

and surveillance, CSE has successfully prevented defaults. Introduction of fast

track system made CSE the stock exchange with the shortest settlement cycle in

the country at that time. By the dawn of the new century, the regional exchanges

faced a serious challenge from the NSE & BSE. To face this challenge CSE

promoted a 100% subsidiary called the "Cochin Stock Brokers Ltd. (CSBL)" and

started trading in the National Stock Exchange (NSE) and Bombay Stock

Exchange (BSE).

CSBL is the first subsidiary of a stock exchange to get membership in both NSE &

BSE. CSBL also became a depository participant in the Central Depository

T.Y.BFM –Vth SEM


Services Ltd.. The CSE has been playing a vital role in the economic development

of the country in general, and Kerala in particular and striving hard to achieve the

following goals:

• Providing investors with high level of liquidity whereby the cost and time

involved in the entry into and exit from the market are minimized.

• Bringing in high tech solutions and make all operations absolutely transparent.

• Building infrastructure for capital market by turning CSE into a financial super

market.

• Serve the investors of the region.

• Professional stock broking and investment management.

• Imparting Capital Market knowledge to all intermediaries on a continuous basis.

9.1 Facility

Computerized trading was introduced in 1997.The major back office system

software used is NESS and BOSS respectively for NSE and BSE. The trading

software used in CSBL is Multex. Traders are provided Meta Stock and ERS

software, trading terminals and optical fiber connections. DP holdings are

maintained by demat services like CDSL.

The new millennium saw the stock exchange building being shifted from the old

structure in downtown Cochin to a brand new building in the Kaloor area in

northern Kochi.

9.2 Demutualization Scheme

The securities scam of the early nineties led the SEBI regulations on stock

exchanges requires separation of ownership and trading rights and made it

T.Y.BFM –Vth SEM


mandatory for majority ownership rests with the public, those without any trading

rights.

9.3 Trading

Trading hours historically used to begin late in the afternoon enabling access to

traders from other regions of the state. Base Minimum Capital required to be

maintained is Rs. 2 lakhs.

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CHAPTER 10

HYDERABAD STOCK EXCHANGE

The Hyderabad Stock Exchange (HSE) was a stock exchange established in 1941

located in Hyderabad, India. The exchange was disbanded in 2007.

10.1 History

In November 1941, some leading bankers and brokers formed the share and stock

Brokers Association. In 1942, Mr. Gulab Mohammed, the Finance Minister,

formed a committee for the purpose of constituting rules and regulations of the

Stock Exchange. Sri Purushothamdas Thakurdas, president and founding member

of the Hyderabad Stock Exchange performed the opening ceremony of the

exchange on November 14, 1943 under Hyderabad Companies Act. Mr. Kamal

Yar Jung Bahadur was the first president of the exchange. The HSE started

functioning under Hyderabad Securities Contract Act of No. 21 of 1352 under

H.E.H. Nizam’s government as a company limited by guarantee. It was the 6th

Stock Exchange recognized under Securities Contract Act, after the Premier Stock

Exchanges, Ahmedabad, Bombay, Calcutta, Madras, and Bangalore Stock

Exchange. All deliveries were completed every Monday or the next working day.

The HSE was first recognized by the Government of India on 29 September, 1958

as Securities Regulation Act was made applicable to twin cities of Hyderabad and

Secunderabad from that date. In view of substantial growth in trading activities,

and for the yeoman services rendered by the exchange, the exchange was bestowed

with permanent recognition with effect from 29 September, 1983.

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10.1 De-Recognition of Stock Exchange

Securities and Exchange Board of India (SEBI) had notified The Hyderabad Stock

Exchange Ltd. (Corporatization and Demutualization) Scheme, 2005 on August

29, 2005. The Hyderabad Stock Exchange Ltd. has failed to dilute 51percent of its

equity share capital to the public other than shareholders having trading rights on

or before August 28, 2007. Consequently, in terms of section 5(2) of the Securities

Contracts Regulation Act, 1956 (SCRA), the recognition granted to HSE was

withdrawn with effect from August 29, 2007. After derecognization by SEBI, the

company name has been changed to "Hyderabad Securities and Enterprises Ltd"

The number of members of the Exchange was 55 in 1943, 117 in 1993 and

increased to 300 with 869 listed companies having paid up capital of Rs.19128.95

crores as of March 31, 2000. The business turnover also substantially increased to

Rs. 1236.51 crores in 1999-2000. The Exchange had a very smooth settlement

system.

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CHAPTER 11

CALCUTTA STOCK EXCHANGE ASSOCIATION LIMITED

Type Stock Exchange

Location Kolkata, India

Founded 1908

Owner the Calcutta Stock Exchange Association Limited

Key people Dipankar Chatterji (Chairman)

Molly Thambi (CEO)


No. of listings 3,500

Market Cap 1, 40,141 Crores (2009)

Indexes CSE 40

CSE 50

Website www.cse-india.com

11.1 History

Calcutta Stock Exchange (CSE) located at the Lyons Range, Kolkata, India, was

incorporated in 1908 and is the second largest bourse in India. In 1830, the bourse

activities in Kolkata used to conduct under a neem tree. The earliest record of

dealings in securities in India is the British East India Company’s loan securities.

In 1908, the stock exchange was incorporated and had consisted of 150 members.

T.Y.BFM –Vth SEM

http://www.cse-india.com/


The present building at the Lyons Range was constructed in 1928. The Calcutta

Stock Exchange has been granted permanent recognition by the Central

Government with effect from April 14, 1980 under the relevant provisions of the

Securities Contracts (Regulation) Act, 1956. The Calcutta stock exchange followed

the familiar outcry system for stock trading up until 1997, when it was replaced by

an electronic (e Trading) system known as C-STAR (CSE Screen Based Trading

And Reporting).

Alliance. Bombay Stock Exchange (BSE) has made a strategic investment in

Calcutta Stock Exchange, acquiring 5percent of its shares.

11.2 Committee

The Calcutta Stock Exchange Limited

Public representatives

V.P.Ramachandran, IAS(Retd.)

Biswajit Choudhuri

Tallen Kumar, IAS

D.Chakraborty, IRS(Retd.)

Abhirup Sarkar

D.Paul, WBHJS(Retd.)

D.Basu, WBHJS(Retd.)

B.P.Dasgupta, WBHJS(Retd.)

Senior executives

B Madhav Reddy - MD & CEO

Satyabrata Sahoo - GM

M.A.V Raju - DGM Admin & HR

P. S. Mohapatra - DGM-Information Technology

D. Chakraborty - DGM

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Abha Bafna - Secretary

A Santra - Manager-Surveillance

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CHAPTER 12

BANGLORE STOCK EXCHANGE

Bangalore Stock Exchange (BgSE) is a public stock exchange based in Bangalore,

India. It was founded in 1963 and currently has 595 regional and non-regional

companies listed. In September 2005, the BgSE announced plans to go public by

divesting at least 51percent of its ownership. The stock exchange is managed by a

Council of Management, consisting of members appointed by the Securities and

Exchange Board of India. First stock exchange in South India to start electronic

trading of securities in 1996.Some of the companies that trade on the BgSE include

Infosys, Wipro, United Breweries and Bharat Electronics Limited.

The Bangalore Stock Exchange Limited (BgSE) is a self-regulatory organization

located in the garden city of India. The Exchange is managed by the Governing

Board consisting of members nominated by Securities Exchange Board of India

(SEBI), Public Representatives, Elected members and an Executive Director. The

Exchange has been serving the investor community continuously since its

inception in the year 1963.Over the decades, it has been a journey of progress to

the Exchange from the pith to the pinnacle, from the alcove to the acme and, has

emerged as a premier Exchange in India. The continuous change alone is the

changeless law. As the saying goes, to keep pace with the fast changing technology

and financial system, the Exchange went On-line in 1996. The Exchange has come

a long way since the launch of BEST (Bangalore Electronic Securities Trading),

it’s On-line trading system on 29 July 1996.

Empowerment of the investors in the market has been the focus of the Exchange.

Information needs of market participants are met through the Service Centers

established by the Exchange at various places in Karnataka. In addition to this,

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Investment Education Centre at Bangalore plays a vital role in enhancing the

knowledge base of the participants through several short and long duration

programs. Members The Exchange has 241 members serving the diverse needs of

investors. The corporate members constitute more than 25percent of the total

membership of the Exchange. Members operate within the overall framework of

policies and practices developed over a period of time by the Exchange.

Listing the securities listed at the Exchange includes a number of innovative and

seasoned corporates from different sectors of industry. As on 31 March 2006, the

number of companies listed on the Exchange are 384 consisting of 186 regional

and 198 non regional companies. Investor Services Centre With a view to support

the investors to resolve their grievances expeditiously, Exchange has established an

Investor Services Committee composed of Public Representatives, members and

Executive Director, who oversee the functioning of the Cell and they take

appropriate steps for amicable settlement. To enable the investors at other places to

have access to various services, Centers have been set up at Davangere, Hassan,

Hubli, Mysore, Madkeri, Mangalore Shimoga and Tumkur.

Investor Information Centre the Exchange has established a well-equipped Library

and Investor Information Centre to cater to varied information needs of investors,

corporates members and others. The Centre has a collection of wide range of

books, periodicals, journals, annual reports, and prospectus and research

publications relating to Capital markets. Circulars, notifications issued by

authorities are available. Draft prospectus, offer documents and other related

information are displayed regularly.

In addition, information on over 4000 companies is available in the corporate data-

bank for investors, corporates and members to help them in investment decision

making process. This data bank consists of details of promoters, previous public

issues, track record, digital form annual reports, and financial performance of

T.Y.BFM –Vth SEM


companies. Fundamental analysis and Technical analysis, other general

information on industry, sector and economic scenario etc., are available.

Investment Education Centre Empowerment of investors through education is the

focus of the Exchange. The Exchange has established an exclusive investment

education center to cater to the needs of the market participants. This Centre

conducts regular and intensive training sessions, seminars and workshops. In

addition to this, the Exchange continuously holds monthly Investors’ Meet at

Bangalore on last Sunday of every month on various current topics and issues.

T.Y.BFM –Vth SEM


CHAPTER 13

Jaipur Stock Exchange

Jaipur Stock Exchange Limited (JSEL) was incorporated on 28th December, 1983

as a company limited by guarantee under the Companies Act, 1956. The prime

object of JSEL was to facilitate, assist, regulate and control the transactions of

business on the Stock Exchange and to establish Clearing House for transactions

by members.

The Ministry of Finance, Stock Exchange Division, and Government of India

recognized JSEL as the 16th Stock Exchange of India on 9th January, 1989 and the

authority to run the trading activities was granted with effect from 21st August,

1989. JSEL started its operations initially at Rajasthan Chamber Bhawan,

M.I.Road, Jaipur. The office of JSEL was shifted to its own premises situated at

Malviya Nagar, Jaipur in 1998.

Initially, JSEL was sanctioned a membership of 500 brokers which was increased

to 600 in the year 1995. The members of the Exchange are providing services to

investors situated in all parts of the State of Rajasthan.

On announcement of the Demutualization Scheme of the Stock Exchange in

Finance Act, 2004 and in pursuance of SEBI Notification No.S.Q.No.1315 (E)

dated 15.09.2005, JSEL was converted into a Company Limited by shares w.e.f.

28thMarch, 2005 with an authorized share capital of Rs.75,00,000/- divided into 75

lacs equity shares of Re.1/- each.

After Demutualization of the Jaipur Stock Exchange Limited, trading membership

and ownership rights stand segregated.

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13.1 Present capital structure

At present, the authorised share capital of the Exchange is Rs.6507800/- consisting

of 6507800 equity shares of Re.1/- each. The Issued, Subscribed and Paid Up

Capital of the Exchange is Rs.29,90,000 consisting of 29,90,000 equity shares of

Re.1/- each. The shares of the company are in physical mode.

13.2 Listing of securities of companies at jsel

Jaipur Stock Exchange Limited presently has 740 listed companies with a paid up

capital of Rs.5688.50 crores of the listed companies. Out of which 135

Companies have their registered office in Rajasthan.

13.3 Trading members

At present, JSEL has 468 trading members and 299 shareholders each holding

10,000 shares of Re.1/- each contributing to Rs.29.90 lacs capital of the Exchange.

13.4 Board Of Directors

The Governing Board of the Exchange at present comprises the following:

Sr.No. Name Category

1. Shri Sunil Malik Chairman

2. Shri Rajendra Kumar Dhall Shareholder Director

3. Shri Mukesh Kumar Agarwal Shareholder Director

4. Shri Vinod Gupta Shareholder Director

5. Shri Amit Gupta Shareholder Director

6. Shri Mohit Verma Shareholder Director

7. Justice (Retd.) Shri N.L.Tibrewal Public Interest Director

8. Shri B L Jaiman Public Interest Director

9. Shri S.P.Kumar Public Interest Director

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10. Shri Mahesh Sharma Trading

Member Director

11. Shri Rakesh Jain Trading Member

Director

CHAPTER 14

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Delhi Stock Exchange Association

The Delhi Stock Exchange (DSE) is located in New Delhi, India. It was

incorporated on June 25, 1947. The exchange is an amalgamation of Delhi Stock

and Share Brokers' Association Limited and the Delhi Stocks and Shares Exchange

Limited. It is India's fifth exchange. The exchange is one of the premiers Stock

Exchange in India. The Delhi Stock Exchange is well connected to 50 cities with

terminals in North India. The exchange has over 3,000 listed companies.It has

received the market regulator's permission from BSE and has become a member.

Now it facilitates the DSE members to trade on the BSE terminals. The exchange

is also considered the same from NSE.

14.1 DSE dematerialized trading

Delhi Stock Exchange has paired up with the National Security Depository Limited

(NSDL), and commenced trading in dematerialised shares. This started September,

1988. However, the option for delivering shares either in physical or demat form

started in November 1998.

14.2 Objective and Mission

Delhi Stock Exchange is launching its Nationwide Trading Platform

with the following objectives: Providing the nationwide online trading

platform in securities across the country. Providing trading access to all

the investors through the most appropriate and cost effective trading

network. Focusing on the education of the investors to help in creating a

nation of informed investors.

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14.3 Governing Body

DSE has the best blend of Directors on its Board from diverse fields, comprising

leading industrialists, academicians, professionals, foreign fund Managers,

bureaucrats, etc., making DSE an efficient and transparent decision making body.

In terms of Demoralization guidelines of SEBI, the composition of Board is

required to have 50% Shareholder Directors, 25% Trading Member Directors, 25%

Public Interest Directors and an Executive Director. At present the Board consists

of 16 directors comprising seven Shareholder Directors, four Trading Member

Directors, four Public Interest Directors and one Executive Director.

Mr. Pradeep Kumar Jain

(Chairman)

Shareholder

Director

Mr. H.S.Sidhu Executive Director

Mr. Anil SrivastavaShareholder

Director

Mr. Kunal MehraShareholder

Director

Mr. Prashant GuptaShareholder

Director

Dr. Subhash DesaiShareholder

Director

Mr. Uday RavalShareholder

Director

Mr. Vijay Kumar GuptaShareholder

Director

Mr. Vipin Agarwal Shareholder

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Director

Mr. Dinesh GargTrading Member

Director

Mr. S.L.GuptaTrading Member

Director

Mr. B.K.SabharwalTrading Member

Director

Mr. V.M.BhutaniTrading Member

Director

Dr. Dalbir SinghPublic Interest

Director

Dr. Mahendra Nath VermaPublic Interest

Director

Mr. Naveen N.D. GuptaPublic Interest

Director

Justice V. K. Gupta (Retd.)Public Interest

Director

CHAPTER 15

UNITED STOCK EXCHANGE OF INDIA

T.Y.BFM –Vth SEM


Type Stock Exchange


Coordinates 19°3'37N 72°51'35E / ?19.06028°N 72.85972°E

Founded 20 September 2010

Owner United Stock Exchange of India Limited

Key people T.S. Narayanasami (MD & CEO)


Website www.useindia.com

The United Stock Exchange of India (USE) is an Indian stock exchange. It is the

fourth pan India exchange to be launched for trading financial instruments in India

over the last 140 years. USE has received final approval from the market regulator

SEBI to start currency futures trading. USE represents the commitment of ALL 21

Indian public sector banks, private banks and corporate houses to build an

institution of standing. USE also has Bombay Stock Exchange as a strategic

partner. Public Sector Banks that are stakeholders of USE include Allahabad Bank,

Corporation Bank, Punjab National Bank, Andhra Bank, Dena Bank, State Bank of

India, Bank of Baroda, IDBI Bank, Syndicate Bank, Bank of India, Indian Bank,

UCO Bank, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India,

Canara Bank, Oriental Bank of Commerce, United Bank of India, Central Bank of

India, Punjab and Sind Bank, Vijaya Bank. Private Sector Banks like Axis Bank,

Federal Bank, J & K Bank, HDFC Bank. Corporate Institutions such as Jaypee

Capital, MMTC and India Potash are also associated with United Stock Exchange.

USE launched its operations on 20 Sept 2010.

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15.1 Products and services

USE began operations in the future contracts in each of the following currency

pairs:

United States Dollar-Indian Rupee (USD-INR)

Euro-Indian Rupee (EUR-INR)

Pound Sterling-Indian Rupee (GBP-INR)

Japanese Yen-Indian Rupee (JPY-INR)

There would be 12 contracts i.e. one for each of the next 12 months in each of the

above currency pair

Outright contracts as well as calendar spread contracts are available in each pair for

trading.

The contract specifications are mentioned in the table

Underlying USD-INR EUR-INR GBP-INR JPY-INR

Trading Hours 9:00am to 5:00pm

Contract Size $1000EUR1000 GBP1000 JPY100000

Available Contracts All monthly maturities from 1–12 months All monthly

maturities from 1–12 months All monthly maturities from 1–12 months All

monthly maturities from 1–12 months

Initial Margin SPAN based margin system with a minimum of 1.75percent on

the first day of trading and 1percent thereafter 3.5 STD Dev of price range SPAN

based margin system with a minimum of 2.8percent on the first day of trading and

2percent thereafter. 3.5 Std Dev of price range SPAN based margin system

with a minimum of 3.2percent on the first day of trading and 2percent thereafter.

3.5 Std Dev of price range SPAN based margin system with a minimum of

4.5percent on the first day of trading and 2.3percent. 3.5 Std Dev of price range

T.Y.BFM –Vth SEM


Calendar Spread Margin 1 month – Rs 400,2 months – Rs 500,3 months – Rs

800,> 4months – Rs 1000 1 month – Rs 700,2 months – Rs 1000,>3 months

– Rs 1500 1 month – Rs 1500,2 months – Rs 1800,>3 months – Rs 2000 1

month – Rs 600,2 months – Rs 1000,> 3 months – Rs 1500

15.2 Membership

All transactions on USE must be carried out through registered members. All non-

member participants can access the exchange as clients of members. Membership

is therefore granted to market participants with high credibility and an excellent

track record. Members will need to meet all requirements prescribed by the

Securities Exchange Board of India (SEBI) as also the requirements stipulated by

USE itself. This is to ensure that traders are protected against any counterparty risk

and also to help develop and build market confidence.

Two types of membership is available with USE

Trading Membership: Trading Member has the privilege of trading on one’s own

account as well as the accounts of their clients. However, they will not be able to

clear and settle these trades.

Clearing Membership: Clearing Members are entitled to clear and settle trades for

all trading members through the Clearing House of USE, ICCL.

CHAPTER 16

MULTI COMMODITY EXCHANGE STOCK

EXCHANGE

T.Y.BFM –Vth SEM


MULTI COMMODITY EXCHANGE STOCK EXCHANGE (MULTI

COMMODITY EXCHANGE-SX) is an India-wide electronic platform for trading

in currency futures under the regulatory control of Securities and Exchange Board

of India (SEBI) and Reserve Bank of India (RBI). It is jointly promoted by

Financial technologies and MULTI COMMODITY EXCHANGE. It started

operations on the 6th of October 2008.

MULTI COMMODITY EXCHANGE Stock Exchange

Type Private

Industry Business Services

Founded 2008

Headquarters Exchange Square, Suren Road, Chakala, Andheri (East),

Mumbai, India

Key people U Venkataraman, CEO , MD & CEO

Products Currency futures exchange

Website www.MULTI COMMODITY EXCHANGE-sx.com

16.1 Products

MULTI COMMODITY EXCHANGE-SX’s product is a currency futures contract.

It started live operations on 7 October, 2008, by launching monthly contracts in the

USD/INR currency pair. Each USD/INR contract on MULTI COMMODITY

T.Y.BFM –Vth SEM


EXCHANGE-SX has a life of 12 months from the month in which it was launched.

Specifications of the MULTI COMMODITY EXCHANGE-SX USDINR contract

are as stipulated by RBI and Securities SEBI, and are as follows:

Symbol USDINR

Instrument Type FUTCUR

Unit of trading 1 (1 unit denotes 1000 USD)

Underlying The exchange rate in Indian Rupees for a US Dollar

Tick size Tick size Rs.0.25 paise or INR 0.0025

Trading hours Monday to Friday 9.00 a.m. to 5.00p.m.

Contract trading cycle 12 month trading cycle.

Last trading day Two working days prior to the last business day of the expiry

month at 12 noon.

Final settlement day Last working day (excluding Saturdays) of the expiry

month.

The last working day will be the same as that for Interbank Settlements in Mumbai.

16.2 Highlights

MULTI COMMODITY EXCHANGE-SX initiated trading on Oct 7, 2008

Total Turnover - Rs. 43,571.98 crore*

Total number of contracts traded - 8,876,100*

Recorded highest turnover - Rs. 1593.04 crore on Jan 22, 2009

Highest number of contracts traded - 324,885 on Jan 22, 2009

Average Daily Volume - 158,501 contracts*

Average Daily Turnover - Rs. 778.07 crore*

Garnered over 50 percent market share in two months of operations

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Growth of 187percent by clocking an average daily turnover of Rs.1003.38 crore at

the end of 2nd month over average daily turnover of Rs. 349.38 crore for the 1st

month

As on December 31, 2008 since inception Total Volumes – Currency Futures

volume traded on the Indian Exchanges .

16.3 Public representatives

V.P.Ramachandran, IAS(Retd.)

Biswajit Choudhuri

Tallen Kumar, IAS

D.Chakraborty, IRS(Retd.)

Abhirup Sarkar

D.Paul, WBHJS(Retd.)

D.Basu, WBHJS(Retd.)

B.P.Dasgupta, WBHJS(Retd.)

Senior executives

B Madhav Reddy - MD & CEO

Satyabrata Sahoo - GM

M.A.V Raju - DGM Admin & HR

P. S. Mohapatra - DGM-Information Technology

D. Chakraborty - DGM

Abha Bafna - Secretary

A Santra - Manager-Surveillance

Asis Maity- Manager-Market Operation

CHAPTER 17

SCAMS IN INDIAN STOCK MARKET

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17.1 Harshad Mehta Scam

Mehta gradually rose to become a stock broker on the Bombay Stock Exchange

and had an expensive lifestyle. He lived in a 15,000 square feet (1,400 m2)

apartment, which had a swimming pool as well as a golf patch. By 1990, Mehta

had risen to prominence in the stock market. He was buying shares heavily. The

shares which attracted attention were those of Associated Cement Company

(ACC). The price of ACC was bid up to Rs 10,000. When asked, Mehta used the

replacement cost theory as an explanation. .

Through the second half of 1991 Mehta had earned the sobriquet of the ‘Big Bull’,

because he was said to have started the bull run. On April 23, 1992,

journalist Sucheta Dalal exposed Mehta's illegal methods in a column in The

Times of India. Mehta was dipping illegally into the banking system to finance his

buying. The authors explain: “The crucial mechanism through which the scam was

effected was the ready forward (RF) deal. The RF is in essence a secured short-

term (typically 15-day) loan from one bank to another. Crudely put, the bank lends

against government securities just as a pawnbroker lends against jeweler. The

borrowing bank actually sells the securities to the lending bank and buys them

back at the end of the period of the loan, typically at a slightly higher price.” It was

this ready forward deal that Mehta and his accomplices used with great success to

channel money from the banking system.

A typical ready forward deal involved two banks brought together by a broker in

lieu of a commission. The broker handles neither the cash nor the securities,

though that wasn’t the case in the lead-up to the scam. “In this settlement process,

deliveries of securities and payments were made through the broker. That is, the

seller handed over the securities to the broker, who passed them to the buyer, while

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http://en.wikipedia.org/wiki/The_Times_of_India

http://en.wikipedia.org/wiki/The_Times_of_India

http://en.wikipedia.org/wiki/Sucheta_Dalal


the buyer gave the cheque to the broker, who then made the payment to the seller.

In this settlement process, the buyer and the seller might not even know whom they

had traded with, either being known only to the broker.” This the brokers could

manage primarily because by now they had become market makers and had started

trading on their account. To keep up a semblance of legality, they pretended to be

undertaking the transactions on behalf of a bank.

Another instrument used was the bank receipt (BR). In a ready forward deal,

securities were not moved back and forth in actuality. Instead, the borrower, i.e.,

the seller of securities, gave the buyer of the securities a BR. As the authors write,

a BR “confirms the sale of securities. It acts as a receipt for the money received by

the selling bank. Hence the name - bank receipt. It promises to deliver the

securities to the buyer. It also states that in the meantime, the seller holds the

securities in trust of the buyer.”

Having figured out his scheme, Mehta needed banks which issued fake BRs, or

BRs not backed by any government securities. “Two small and little known banks

- the Bank of Karad (BOK) and the Metropolitan Co-operative Bank (MCB) -

came in handy for this purpose. These banks were willing to issue BRs as and

when required, for a fee,” the authors point out. Once these fake BRs were issued,

they were passed on to other banks and the banks in turn gave money to Mehta,

assuming that they were lending against government securities when this was not

really the case. This money was used to drive up the prices of stocks in the stock

market. When time came to return the money, the shares were sold for a profit and

the BR was retired. The money due to the bank was returned.

The game went on as long as the stock prices kept going up, and no one had a clue

about Mehta’s modus operandi. Once the scam was exposed, though, a lot of banks

were left holding BRs which did not have any value - the banking system had been

swindled of a whopping Rs 4,000 crore. When the scam was revealed, the

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http://en.wikipedia.org/wiki/Market_makers


Chairman of the Vijaya Bank committed suicide by jumping from the office roof.

He knew that he would be accused if people came to know about his involvement

in issuing cheques to Mehta.

Mehta made a brief comeback as a stock market guru, giving tips on his own

website as well as a weekly newspaper column. This time around, he was working

with owners of a few companies and recommended only the shares of those

companies. This game, too, did not last long.

By the time he died, Mehta had been convicted in only one of the many cases filed

against him.

The Mehta scandal was portrayed in a recent Hindi movie, 'Gafla.

17.2 Ketan Parekh Scam : The Stock And The Bull Story.

Ketan Parekh is a name which rings a bell in our minds as the man behind one of

the biggest scams of Indian stock exchange in 2000-2001. Through this article, I

have explained the modus operandi of the “Ketan Parekh Scam” in a simple

language without any technical jargon so that even a layman can understand. But

before that, let’s get aware about an interesting fact, both Ketan Parkesh &

Harshad Mehta, another big swindler of Indian stock exchange are the

“infamous” alumni of the same school in Gujarat. God knows what is taught in

that school!!!!!

Ketan Parekh-also known as the “Bombay Bull” was a known broker of Indian

stock exchange. Over the years, Ketan built a network of companies mainly

concentrated in Mumbai. According to market sources, although he was a big

broker, he didn’t have enough funds to buy large stocks. He borrowed funds from

various companies and banks for this purpose. He used to raise loan from the banks

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by offering shares as collateral security. The companies in which KP held stakes

included Amitabh Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and

Pritish NandyCommunications. He also had stakes in HFCL, Global Telesystems

(Global), Zee telefilms, Crest Communications, and PentaMedia Graphics . Ketan

selected these companies for investment with help from his research team, which

listed high growth companies with a small capital base. According to media

reports, KP took advantage of low liquidity in these stocks, which eventually came

to be known as the 'K-10' stocks.

The shares were held through KP's company, Triumph International. In July 1999,

he held around 1.2 million shares in Global. KP controlled around 16% of Global's

floating stock, 25% of Aftek Infosys, and 15% each in Zee and HFCL.

He started trading of these shares within the network of his own companies at no

profit no loss with the malafide intention of creating buying pressure for shares of

K-10.Continuous trading by Ketan Parekh within the network of his own

companies make other brokers in the market believe that something is happening

inside K-10. Thus brokers started buying shares of K-10 for themselves and also

urge their clients to buy these shares. The buoyant stock markets from January to

July 1999 helped the K-10 stocks increase in value substantially. HFCL soared by

57% while Global increased by 200%. As a result, brokers and fund managers

started investing heavily in K-10 stocks.

Mutual funds like Alliance Capital, ICICI Prudential Fund and UTI also invested

in K-10 stocks, and saw their net asset value soaring. By January 2000, K-10

stocks regularly featured in the top five traded stocks in the exchanges. HFCL's

traded volumes shot up from 80,000 to 1,047,000 shares. Global's total traded

value in the Sensex was Rs 51.8 billion.

As such huge amounts of money were being pumped into the markets, it became

tough for KP to control the movements of the scrips. Also, it was reported that the

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volumes got too big for him to handle. Analysts and regulators wondered how KP

had managed to buy such large stakes.

At that time Ketan thought of selling his shares but it is said that some senior

officials of Zee telefilms told him to continue trading till the share value reach Rs

1000 mark and thus Ketan continued. He finally sold all his shares of zee at market

price of Rs 1100. Though he earned enormous profits but due to sudden selling of

huge number of shares and consequent fall in trading led to a fall in

the markets and thus share price fall drastically to around 200 again. Investors lost

heavily and many committed suicide. That was what Ketan did.

This scam created a historical impact on financial status of Bombay Stock

Exchange and also on faith of investors in its working. Securities and Exchange

Board of India (SEBI) was highly criticized as being reactive rather than

proactive. The market regulator was blamed for being lax in handling the issue of

unusual price movement and tremendous volatility in shares over an 18-month

period prior to February 2001.

Analysts also opined that SEBI's market intelligence was very poor. Analysts

commented that if the regulatory

authorities had been alert, the huge erosion in values could have been avoided or at

least controlled. Ketan Parekh was sent behind bars immediately though was later

released on bail. Currently he has been prohibited from trading in the Indian stock

exchanges till 2017. One would have thought that after this scam the regulatory

authorities would have become more strict and effective and then we come across

the Satyam scam!!!!!!!!

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major stock exchange in india

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