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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
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another height during early morning trade on September 26, 2007. Within minutes
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.
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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
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
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mechanism, known as 'pre-open session call auction', lasted for 15 minutes (from
9:00-9:15 am).
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 dollarlinked 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-today 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.
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CHAPTER 3
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
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stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE
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 CNBCTV18. 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-toend 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
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National Exchange for Automated Trading (NEAT). For all trades entered into
NEAT system, there is uniform response time of less than one second.
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
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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
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
Location
Mumbai, India
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
Location
Mumbai, India
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 allIndia 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.
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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
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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
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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
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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)
Currency
Indian rupee
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.
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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 databank 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
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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.
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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
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9.
Shri S.P.Kumar
Public Interest Director
10.
Shri Mahesh Sharma
Trading
Member Director
11.
Shri Rakesh Jain
Trading
Member
Director
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CHAPTER 14
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
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network. Focusing on the education of the investors to help in creating a
nation of informed investors.
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 Shareholder
(Chairman)
Director
Mr. H.S.Sidhu
Executive Director
Mr. Anil Srivastava
Mr. Kunal Mehra
Mr. Prashant Gupta
Dr. Subhash Desai
Mr. Uday Raval
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Shareholder
Director
Shareholder
Director
Shareholder
Director
Shareholder
Director
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Mr. Vijay Kumar Gupta
Mr. Vipin Agarwal
Mr. Dinesh Garg
Mr. S.L.Gupta
Mr. B.K.Sabharwal
Mr. V.M.Bhutani
Dr. Dalbir Singh
Dr. Mahendra Nath Verma
Mr. Naveen N.D. Gupta
Justice V. K. Gupta (Retd.)
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Shareholder
Director
Shareholder
Director
Trading
Member
Director
Trading
Member
Director
Trading
Member
Director
Trading
Member
Director
Public
Interest
Director
Public
Interest
Director
Public
Interest
Director
Public
Interest
Director
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CHAPTER 15
UNITED STOCK EXCHANGE OF INDIA
Type Stock Exchange
Location
Mumbai, India
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)
Currency
Indian rupee
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,
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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.
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
Trading Hours
9:00am to 5:00pm
Contract Size
$1000 EUR1000
Available Contracts
GBP-INR
JPY-INR
GBP1000
JPY100000
All monthly maturities from 1–12 months
maturities from 1–12 months
All monthly
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
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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
Calendar Spread Margin 1 month – Rs 400,2 months – Rs 500,3 months – Rs
800,> 4months – Rs 1000
– Rs 1500
1 month – Rs 700,2 months – Rs 1000,>3 months
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 nonmember 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.
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CHAPTER 16
MULTI COMMODITY EXCHANGE STOCK
EXCHANGE
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
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Major Stock Exchange In India
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
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
Last trading day
12 month trading cycle.
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
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Average Daily Volume - 158,501 contracts*
Average Daily Turnover - Rs. 778.07 crore*
Garnered over 50 percent market share in two months of operations
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
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CHAPTER 17
SCAMS IN INDIAN STOCK MARKET
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 shortterm (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,
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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
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
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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
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
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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
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.
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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
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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