Capital markets refers to the institutional arrangement for long term sources of finance. It provides long term funds to the individuals, business enterprises and government.

1. Capital Market
Submitted To : Ms Shivani
Submitted By : Geetanjali
Class. : M.com final
Roll no. : 2022105

2. Stock Exchange
Introduction: Stock exchanges are organised and regulated markets for various
securities issued by corporate sector and other institutions. The stock exchanges enable
free purchase and sale of securities as commodity exchange allow trading in commodities.
Meaning of Stock Exchange : Stock Exchange is a body of persons whether
incorporated or not, formed with a view to helping,regulating and controlling the
business of buying and selling the securities.
Definition of Stock Exchange: According to Pyle, “security exchanges are market places
where securities that have been listed thereon may be bought and sold for either
investment or speculation”.

3. Characteristics of Stock Exchange
• Marketplaces for buying and selling stocks.
• Regulated for fair trading.
• Accessible to public and institutions.
• Provide liquidity for quick trades.
• Offer transparency with public information.
• Often use electronic trading system.
• Globally connected for international trade.

4. Functions of Stock Exchange
• The stock exchange play important role in the economic development of
the country. It's main functions are as follows:
• Ensure liquidity of capital.
• Continuous market for securities.
• Mobilising surplus savings.
• Helpful in raising new capital.
• safety in dealings.
• listing of securities
• Platform for public debt.

5. Benefits of Stock Exchanges
• The Stock exchanges provide a number of services to investors,
companies and communities at large. These benefits are described
as follows:
• Benefits to Investors :
• Provide liquidity of investment.
• Impart negotiability to securities
• Assures safety
• Minimises risk of investment
• Educates prospective investors

6. Benefits to company Benefits to Community
• Enhance the credit standing of
company.
• Widens the market
• Reduces the danger of group
opposition to management.
• minimises price fluctuations of
securities.
• Enjoy several tax advantages.
• Stimulates investment in
industry.
• Helps the government in
Raising necessary finance.
• Assist in better utilisation of
capital.
• Smothens the process of capital
formation.

7. Organisation of Stock Exchanges in India
• Stock exchanges in India are organized as follows:
• Regulatory Body: The Securities and Exchange Board of India (SEBI) is the
primary regulatory authority overseeing stock exchanges and ensuring fair
and transparent trading practices.
• Stock Exchanges: India has two major stock exchanges: the National Stock
Exchange (NSE) and the Bombay Stock Exchange (BSE). These exchanges
provide the platform for buying and selling stocks.
• Listed Companies: Thousands of companies, both public and private, are
listed on these exchanges. Publicly listed companies offer shares to the
public, which can be traded on these exchanges.

8. • Market Participants: Various participants, including retail investors,
institutional investors, brokers, and market makers, engage in trading
activities on these exchanges.
• Trading Mechanisms: Trading can take place through various
mechanisms, such as the regular market, the futures and options
segment, and the commodity derivatives segment.
• Clearing and Settlement: Stock exchanges have clearing corporations
responsible for clearing and settling trades, ensuring that ownership
changes and funds transfer correctly.
• Market Indices: Both NSE and BSE maintain key market indices like
the Nifty 50 and Sensex, respectively, which serve as indicators of
overall market performance.

9. • Market Surveillance: Stock exchanges have surveillance mechanisms
in place to detect and prevent market manipulation and fraud.
• Trading Hours: Typically, trading hours are on weekdays from morning
to afternoon, with pre-opening and post-closing sessions.
• Market Data and Information: Real-time market data, financial
information, and corporate announcements are made available to
market participants and the public.
• This organized structure ensures the smooth functioning and integrity
of the Indian stock markets, making them an essential component of
the country's financial ecosystem.

10. Major Stock Exchanges in India
Bombay
Stock
Exchange
National
Stock
Exchange
Over the
Counter
Exchange of
India

11. Bombay Stock Exchange
Bombay Stock Exchange was established in 1875 as a voluntary non- profit making
association at Mumbai. It is Asia's oldest stock exchange and is a major stock
exchange in India. The exchange has mechanism to redress grievances of investors
as well as members. It provides informative inputs to the investing public.
Management. A Governing Board comprising of 9 elected directors (one- third to
retire every year by rotation) an Executive Director, three Government nominees, a
Reserve Bank of India nominee and five public nominees regulate the working of the
exchange. However, as per SEBI orders issued in March, 2001, the elected directors
have been restrained from acting and Governing Board presently comprises of only
10 directors. The Executive Director acts as the Chief Executive Officer and is
responsible for the day to day administration of the exchange.

12. • Working: The members of the stock exchange can trade in the exchange. The
members can trade on behalf of outsiders. If a member trades on his own
account then transactions can be only among stock exchange members. The
shares of listed companies only can be traded at the exchange.
• Bombay Stock Exchange allows following category of persons for trading:
• (I) The commission broker
• (ii) The floor broker
• (iii) The tarawaniwala, akin to a jobber or specialist
• (iv) The dealer in non-cleared securities
• (v) The odd-lot dealer
• (vi) The dealer in foreign securities or arbitrageur
• (vii) The security dealer or dealer in government securities

13. National Stock Exchange
• National Stock Exchange was incorporated in November, 1992 with an equity
capital of 25 crores. It is not an exchange in the traditional sense where brokers
own and manage the exchange. NSE is a professionally managed national
market for shares, PSU bonds, debentures and government securities with all
the necessary infrastructure and trading facilities. NSE is an electronic screen
based system where members have equal access and equal opportunity of trade
irrespective of their location in different parts of the country as they are
connected through a satellite network. The system helps to integrate the
national market and provide a modern system with a complete audit trial of all
transactions.

14. Objectives Of NSE
• The following are the objectives of NSE:
• (i) Providing a nation wide trading facility for equities, debt instruments
etc.
• (ii) Ensure equal access to investors all over the country through an
• appropriate communication network.
• (iii) Provide fair, efficient and transparent securities market to investors
• using electronic trading systems.
• (iv) Enable shorter settlement cycles and book entry settlement system.
• (v) Attain current international standards of securities market.

15. Working Of NSE
• The settlement cycle is completed within eight days from
the last day of the trading cycle. The trading period is a
week (Wednesday to Tuesday) and settlement of trade
takes place in the ensuing week. NSE's Clearing
Corporation stands guarantee to all trades done in the
cash market on the exchange and the counter guarantee
of the clearing corporation insures that no default, either
of payment or delivery takes place for trade done or NSE.

16. Over The Counter Exchange of India
• In India certain stock exchanges have monopolised the capital market.
There are a large number of small companies which do not get listing
at stock exchanges. Over the Counter Exchange of India (OTCEI) was
established in October, 1990 with an objective to provide an alternate
market for the securities of smaller companies. The Government of
India has conferred it the status of a recognised stock exchange. This
exchange has been jointly promoted by UTI, ICICI, IDBI, SBI Capital
Markets Ltd. IFCI, GIC and Canbank Financial Services Ltd. OTCEI
promoters have been designated as 'sponsor members' and they
alone are entitled to sponsor a company for listing at this exchange.

17. Features of OCTEI
• The following are the main features of OTCEI:
• 1. It is a ringless and electronic national stock exchange exchange without a
specified trading floor.
• 2. It caters to the needs of the small business which have so far not met the
requirements for listing on stock exchange.
• 3. This exchange has a nation wide reach.
• 4. Small and medium sized companies with a paid up capital between 30 lakhs
and 25 crores can be enlisted.
• 5. OTCEI deals in equity shares, preference shares, bonds, debentures, warrants.
• 6. The trading is by way of negotiated bidding.

18. Advantages of OCTEI
• This exchange has the following advantages:
• 1. There is a transparency in transactions
• 2. The liquidity is ensured and a transaction is normally completed in 7 days.
• 3. A proper scrutiny is done of the scrips by the sponsors so the securities
traded will be good.
• 4. A company needing immediate funds can pledge its equity with the
sponsor so the securities traded will be good.
• 5. A company at one gets nationwide listing.
• 6. The companies listed on OTCEI are subjected to low income tax.

19. Conclusion
• In conclusion, stock exchanges are critical components of
the global financial system. They provide a regulated
marketplace for buying and selling securities, such as
stocks, bonds, and derivatives. Stock exchanges play a
crucial role in the functioning of modern financial markets,
supporting economic growth, investment, and wealth
creation. They provide opportunities for individuals and
organizations to participate in the financial markets, and
their integrity is essential for maintaining market stability
and investor trust.