Stock Exchange Market:
A stock exchange is a highly organized financial market where second-hand securities can buy and sell.
Its main function is to create a link between the buyers and sellers of securities so that investments can change hands in the quickest, cheapest and fairest manner.
The securities traded on a stock exchange consist of shares, debentures, and bonds issued by companies, corporations and government bodies to the public.
Under the securities contract Regulation act 1956, the term stock exchanges have been defined as “An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, directing and controlling business in purchasing, selling and managing insecurities.
A stock exchange is a market where dealing in the listed securities are made by the members of the exchanges on their own behalf or on behalf of others.
Listing of securities means the enlistment of securities in the approval list of securities of the stock exchanges after fulfilling certain legal formalities. Government securities may not be listed.
Features Of stock exchange market:
The important of stock exchanges are as follows :
A) Stock exchanges are a market where dealing takes place in shares, debentures, and bonds issued by the companies, corporations, governments, etc.
B) Only those securities could be traded that are included in the official list of stock exchanges. It also deals in government securities.
C) Stock exchanges are also called the stock market or the securities market.
D) The purpose of establishing a stock exchange is to assist, regulate and to control the business in securities.
E) Stock exchanges are an organization in the form of an association or a company or a body of individuals.
F) It is a common meeting place of buyers and sellers of second-hand securities.
G) In stock exchanges, brokers serve as a link between the buyers and sellers.
H) Stock exchanges frame their rules and regulations.
I) The area of operation of a stock exchange or geographical jurisdiction is defined.
Functions of Stock Exchange Market:
The important functions performed by a stock exchange are as follows :
A) Ready market and liquidity :
Stock exchanges provide a ready and continuous market where investors can convert their money into securities easily and quickly.
It provides a convenient meeting place for buyers and sellers of securities. Regular dealing in securities ensures increased liquidity of the securities.
B) Evaluation of securities:
Stock exchanges help in determining the prices of various securities that reflect their real worth.
It enables the correct appraisal of securities. The forces of demand and supply act freely in the stock exchanges and help in the valuation of securities.
The prices at which transactions take place are recorded and made public in the form of market quotations to enable the investors to know current market prices of various securities.
C) Mobilization Of Savings :
Stock exchanges ensure helps in mobilizing surplus funds of individuals and instructions for investment in securities.
In the absence of facilities for the quick and profitable disposal of securities, such funds may remain idle.
D) Protection Of Investors:
Stock exchanges ensure fair dealing and safety of dealing.
In the way, the stock exchange serves as the watch-dog of the investor’s interests.
The members of the stock exchanges have to operate under certain rules and regulations which seek to check the exploitation of ignorant investors.
E) Capital formation :
Stock exchange not only mobilizes the old savings but also induces the public to save money.
It provides an avenue for investment in various securities that yield higher returns. Thus, stock exchanges facilities capital formation in the country.
It helps in the rational allocation of available funds and directs the flow of savings into most productive channels.
F) Regulation Of Corporate Sector :
Stock exchanges frame their rules and regulations. Every company which wants it’s securities to be dealt in at the stock exchanges has to follow the rules framed by the stock exchanges in his regard.
In this way, stock exchanges practice a solid effect on the working and the executives of organizations.
G) Clearinghouse of information:
A stock exchange is a medium of useful business information.
Many stock exchanges publish directories which provide data on the general economic and business trends.
Such information influences the decision making of business concerns, investors, etc.
Services Of Stock exchange market:
The services of stock exchanges can be studied under the following heads :
Services to Companies or Corporate sector
A. A company whose shares are listed on a stock exchange enjoys a reputation in the capital market.
B) The attractiveness of shares is guaranteed and as a result, the organization appreciates a wide market for its shares.
C) Stock exchanges help to minimize fluctuations in the prices of securities. The forces of demand and supply interact freely on the stock exchanges.
D) New companies can raise funds easily from the capital market because of indirect support provided by the stock exchanges.
Services To Investors
A) Stock exchanges ensure the liquidity of investment by ready marketability of securities.
B) Stock exchanges make scrutiny before listing of securities. Thus, stock exchanges ensure safe and fair dealing in securities.
C) Price quotations of stock exchanges help the investors to know the market value of their investors.
D) Stock exchanges serve as a clearinghouse of information and provide guidance to investors. The investors are spared from the risk of interest in unsound organizations.
E) The facility of quick disposal of securities at the stock exchanges helps to diversify investment and risk.
Services to community Or society
A) Stock exchanges generate economic growth by encouraging investors to invest their savings in securities. It encourages capital information in the country.
B) Stock exchanges provide a forum for raising public debt which is required for projects of national importance.
C) Stock exchanges help in the process of economic development of the country. The rapid increase in the growth of the corporate sector in recent decades has been possible because of the facilities provided by the stock exchanges.
D) Stock exchanges help in the optimum utilization of scarce financial resources.
Stock Exchange Market In India
Under the securities contract regulation act 1956, dealings insecurities can take place only at the recognized stock exchanges. A list of prominent stock exchanges in India is given below :
- Ahmadabad stock exchanges Market
- Bangalore stock exchange Market
- Bhubaneshwar stock exchange Market
- Chennai stock exchange
- Cochin stock exchange
- Coimbatore stock exchange
- Cuttack stock exchange
- Delhi stock exchange
- Guwahati stock exchange
- Hyderabad stock exchange
- Indore stock exchange
- Jaipur stock exchange
- Kanpur stock exchange
- Kolkata stock exchange
- Ludhiana stock exchange
- Mumbai stock exchange
- national stock exchange
- Over the counter exchange of India.
- Patna stock exchange
- Pune stock exchange
The rules, regulations, and by-laws of different stock exchanges are by and large similar so as to conform with the draft rules framed under the Act from the point of view of the investment business, Mumbai (known as Dalai street) and Kolkata stock exchanges are dominant among all the stock exchanges in the country. In addition, to be noted, the NSEI and OTCEI have nationwide coverage.
What is the full form of OTCEI?
The full form of OTCREI is over the counter exchange of India.
What is NBFI?
NBFI is a heterogeneous group doing diverse business in the financial system of the country.
What is the full form of SEBI?
SEBI means securities and exchange board of India. In India, stock exchanges operate as per guidelines issued by the SEBI.
What is the full form of NBFIs?
The full form of NBFIs is Non-Bank financial institutions.
What is an investment institution?
These include LIC, GIC, UTI and mutual funds. It includes those financial institutions which mobilize savings of the public at large through the various scheme and invest these funds in corporate and government securities.