CHAPTER - 3
What are stock market exchanges?
Stock market exchange is a market that facilitates the buying & selling of financial instruments. The securities issued by companies in the primary market (IPOs) are traded on stock exchanges. Therefore, stock market exchanges are secondary markets.
There are nine stock exchanges registered with SEBI. The popular stock exchanges in India are– NSE, BSE, Indian Commodity Exchange Ltd., Multi Commodity Exchange of India Ltd., National Commodity & Derivatives Exchange Ltd.
BSE was established in 1875 & is the oldest stock exchange.
1. It is the first level regulator in the capital market.
2. It monitors a system that may detect manipulations in the stock market.
3. BSE provides a platform for companies to raise funds by issuing equity and debt securities.
4. BSE facilitates trading & investment in equity,debt, derivatives,mutual fund,IPOs,currencies & Exchange traded funds(ETFs).
Established in 1992, NSE is the largest financial exchange in the Indian market. In simple words, it is the largest market where you can buy & sell securities. In 1994, it introduced electronic trading in the Indian stock exchange market. Role of NSE in a nutshell:
1. NSE provides a platform to companies for raising capital (including foreign companies).
2. NSE facilitates trading & investment in equity,debt, derivatives,mutual fund,IPOs,currencies & Exchange traded funds(ETFs)
3. NSE ensures that trading, clearing members & listed companies follow the rules of exchange.
4. To meet the global standards set for financial exchange markets.
5. NSE offers quick clearing & settlement services.
6. NSE works towards providing a fair, transparent & efficient securities market to investors
7. Makes sure that all the investors through proper communication
The National Commodities & Derivatives Exchange is a commodities exchange dealing primarily in agricultural commodities. It was established in 2003. Agriculture is one of the fast-growing sectors in India & contributes nearly 20% of the GDP. Therefore, NCDEX plays a vital role in India’s agricultural sector.
1. By establishing & maintaining an online future market for crops, NCDEX has helped make the market transparent.
2. NCDEX enables the farmers in price discovery, thus eliminates the middle persons.
3. NCDEX has also raised quality awareness by standardizing product quality through contracts.
4. It helps farmers to hedge against risks & anticipated losses.
Multi-commodity Exchange is the largest commodity derivative in India which was established in 2003.MCX facilitates a platform where commodities are traded among buyers & sellers. In simple terms, on MCX, traders buy & sell goods.
MCX works in different units like trading and surveillance, clearing and settlement, delivery, warehousing, and logistics divisions. The major commodities traded on MCX are base metals, bullions, energy & agro commodities.
The future market helps in predicting the prices of various goods. MCX helps in cash settlements or physical settlement of contracts, or in simple words, delivery of goods