STOCK EXCHANGE AND NBFCs PRESENTED BY:- Manish Kumar Anshul Sharvan Jai sangwan
Stock Exchange is a market in which securities are brought and sold and it is an essential component of a developed capital market .
“ Stock exchange means anybody of individual whether incorporated or not ,constituted for the purpose of assisting ,regulating or controlling the business of buying ,selling or dealing in securities “.
Government securities ;such other instruments as may be declared by the central government to the securities ;and
Right or interest in securities .
“ Stock Exchange is an essential concomitant of the capitalistic system of economy “.
There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter . This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global market for securities.
HISTORY OF STOCK EXCHANGE
In 11th century France the courtiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers.
Some stories suggest that the origins of the term "bourse" come from the Latin bursa meaning a bag because, in 13th century Bruges , the sign of a purse (or perhaps three purses), hung on the front of the house where merchants met.
in the late 13th century commodity traders in Bruges gathered inside the house of a man called Van der Burse, and in 1309 they institutionalized this until now informal meeting and became the "Bruges Bourse". The idea spread quickly around Flanders and neighbouring counties and "Bourses" soon opened in Ghent and Amsterdam.
In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351, the Venetian Government outlawed spreading rumors intended to lower the price of government funds. There were people in Pisa , Verona , Genoa and Florence who also began trading in government securities during the 14th century. This was only possible because these were independent city states ruled by a council of influential citizens, not by a duke.
The Dutch later started joint stock companies , which let shareholders invest in business ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange . It was the first company to issue stocks and bonds . In 1688, the trading of stocks began on a stock exchange in London .
Roles of Stock Exchange
Stock exchanges have multiple roles in the economy , this may include the following: -
Raising capital for businesses
Mobilizing savings for investment
Facilitating company growth
Redistribution of wealth
Creating investment opportunities for small investors
Government capital-raising for development projects
Barometer of the economy
Major stock Exchanges
The main stock exchanges in the world include:
American Stock Exchange
Australian Stock Exchange
Belgrade Stock Exchange
Bermuda Stock Exchange
Bolsa Mexicana de Valores
Bolsa de Valores de Colombia
Bolsa de Valores de Lima
Bombay Stock Exchange
Bucharest Stock Exchange
Budapest Stock Exchange
Casablanca Stock Exchange
Frankfurt Stock Exchange
Ghana Stock Exchange
Helsinki Stock Exchange
Hong Kong Stock Exchange
Istanbul Stock Exchange
Jakarta Stock Exchange
Johannesburg Securities Exchange
Karachi Stock Exchange
Korea Stock Exchange
Kuwait Stock Exchange
Lahore Stock Exchange
London Stock Exchange
Madrid Stock Exchange
Malaysia Stock Exchange
Milan Stock Exchange
Nagoya Stock Exchange
Nigeria Stock Exchange
National Stock Exchange of India
New York Stock Exchange
Osaka Securities Exchange
Philippine Stock Exchange
Santiago Stock Exchange
São Paulo Stock Exchange
Shanghai Stock Exchange
Stockholm Stock Exchange
Taiwan Stock Exchange
Tokyo Stock Exchange
Toronto Stock Exchange
Warsaw Stock Exchange
Zurich Stock Exchange
Listing requirements are the set of conditions imposed by a given stock exchange upon companies that want to be listed on that exchange. Such conditions sometimes include minimum number of shares outstanding, minimum market capitalization, and minimum annual income.
Requirements by stock exchange
London Stock Exchange: The main market of the London stock exchange has requirements for a minimum market capitalization (£700,000), three years of audited financial statements, minimum public float (25 per cent) and sufficient working capital for at least 12 months from the date of listing.
NASDAQ Stock Exchange: To be listed on the NASDAQ a company must have issued at least 1.25 million shares of stock worth at least $70 million and must have earned more than $11 million over the last three years .
New York Stock Exchange: To be listed on the New York Stock Exchange (NYSE), for example, a company must have issued at least a million shares of stock worth $100 million and must have earned more than $10 million over the last three years .
Bombay Stock Exchange: Bombay Stock Exchange (BSE) has requirements for a minimum market capitalization of Rs.250 Million and minimum public float equivalent to Rs.100 Million .
Stock exchanges originated as mutual organizations , owned by its member stock brokers. There has been a recent trend for stock exchanges to demutualize , where the members sell their shares in an initial public offering . In this way the mutual organization becomes a corporation, with shares that are listed on a stock exchange. Examples are Australian Stock Exchange (1998), Euronext (merged with New York Stock Exchange), NASDAQ (2002), the New York Stock Exchange (2005), Bolsas y Mercados Españoles, and the São Paulo Stock Exchange (2007).
Other types of exchanges
In the 19th century, exchanges were opened to trade forward contracts on commodities. Exchange traded forward contracts are called futures contracts. These commodity exchanges later started offering future contracts on other products, such as interest rates and shares, as well as options contracts. They are now generally known as futures exchanges.
Dealing On Stock Exchange
Read Delivery Contract or cash dealing
Speculation On the Stock Exchange
Types Of Speculation:-
Carry Over (Budla) Transaction
Organization Of Stock Exchange
Taravaniwalas and Broker
Types of Market
Odd Lot Market
ROLE OF NBFC’s
All the institutions and organizations, other than commercial banks engaged in the transferring of funds from savers to investors, are known as Non Banking Financial Companies.
NBFCs are financial intermediaries engaged primarily in the business of accepting deposit and making loans and advances, investments, leasing, hire purchase etc. NBFCs are heterogeneous lot. NBFC sector is characterized by a large number of privately owned, decentralized and relatively small sized financial intermediaries.
According to RBI Amendment Act, 1997
A NBFI / NBFC means:
A financial institution which is a company;
Its principal business, the receiving of deposits under any scheme / in any other manner .
Types of NBFI
The Life Insurance Companies
General Insurance Companies
The Unit Trust
Established in 1956
To carry life insurance business in India.
It aims in promoting savings.
To invest profitably the savings collected in the form of payment received from life insurers.
Special attention to cover the economically weaker sections of the society .
upto 1999: Rs. 4,10,907 crore.
2003-04: Rs. 1,98,274 crore.
2004-07: Rs. 3,97,876 crore.
Established in 1973.
Four subsidiaries of GIC
National Insurance Company
New India Assurance Company Ltd.
Oriental Fire and General Insurance Company Ltd.
United India Insurance Company Limited
To mobilize the savings of the community and channeling them into productive investment.
To enable the unit holders to share benefits and prosperity of rapidly growing industrialization in the country.
Was promoted as the first private bank after the commencement of policy of liberalisation.
Now known as Axis Bank
Mutual Funds:- It is an agency that mobilizes investible resources of mostly individuals and invests them in a diversified portfolio of financial assets so as to balance maximization of risks
Was set up in 1964. PSB and financial institutions established Mutual funds in 1987. Private Banks started in 1993.