K.J.

SOMAIYA COLLEGE OF ARTS AND COMMERCE,

VIDYAVIHAR (EAST), MUMBAI – 400077

A PROJECT ON
“BOMBAY STOCK EXCHANGE”
Submitted By
DARSHANA SANJAY GAWANKAR
(T.Y.B.COM- FINANCIAL MARKETS)
6TH SEMESTER, ROLL NO. 19
Submitted To
UNIVERSITY OF MUMBAI
Project Guide
PROF. MILIND SARAF
ACADEMIC YEAR (2015 - 16)

In Partial Fulfillment of the Requirements

For The Award of the Degree of
Bachelor of Commerce – Financial Markets

1
 CERTIFICATE

This is to certify that Miss DARSHANA SANJAY GAWANKAR studying

in T.Y.B.COM (FINANCIAL MARKETS) SEMESTER-VI, Roll No:19, for
the ACADEMIC YEAR( 2015 – 2016) at K. J. SOMAIYA COLLEGE OF
ARTS AND COMMERCE have successfully completed the project on
“BOMBAY STOCK EXCHANGE” under the guidance of PROF.
MILIND SARAF. To the best of the knowledge information submitted in
the project is original and authentic.

______________________ _________________________

PROF. MILIND SARAF EXTERNAL EXAMINER

(PROJECT GUIDE)

_________________________ _________________________

PROF. HARESH PARPIANI DR.(SMT).SUDHA Y. VYAS

(BFM CO-ORDINATOR) (PRINCIPAL)

2
 DECLARATION

I MISS DARSHANA SANJAY GAWANKAR student of T.Y.B.COM (FINANCIAL

MARKET) SEMESTER - VI, ROLL NO. 19, of academic year 2015 - 16 at K. J.

SOMAIYA COLLEGE OF ARTS AND COMMERCE hereby declare that I have

completed my project on "BOMBAY STOCK EXCHANGE".

Wherever the data information have been taken from any book or other

sources the same have been mentioned in the bibliography. The information

submitted is true and original to best of my knowledge.

DATE:

PLACE: ___________________________

SIGNATURE OF STUDENT

DARSHANA SANJAY GAWANKAR

ROLL NO. 19

3
 ACKNOWLEDGEMENT

I have a great pleasure in presenting my project on

“ BOMBAY STOCK EXCHANGE ”.

I wish to express my deep sense of gratitude to PROF. MILIND SARAF

internal core faculty , for the help , cooperation and guidance for the
project.

I would also thanks to our principal DR.(SMT).SUDHA Y.VYAS who

allowed to perform this project and my professors for there motivation
support.

I also indebted to all my family members and friends for their constant
help and support.

__________________

SIGNATURE OF STUDENT

DARSHANA SANJAY GAWANKAR

Roll no.19

4
 INDEX

Sr.No. Particulars Pg.No.

1. Introduction 7
2. Mission 10
3. Importance 13
4. Significance 14
5. Features 15
6. Functions 16
7. Listing procedure on BSE 18
8. Guidelines for listing 20
9. Terms of listing 22
10. List of top 30 companies 23
11. Guidelines for company listing 25
12. Benefits of listing 26
13. History of indian capital market 32
14. Concept of stock exchange 37

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 15. Powers of BSE 39
16. About BSE 46
17. Types of market in BSE 48
18. Bull and bear market 50
19. Insider trading 51

Sr.No. Particulars Pg.No.

20. BOLT 52
21. Scmas of BSE 55
22. Objectives 59
23. BSE (SENSEX) 64
24 Highlights 69
25. BSE Management, Network 74
26. Conclusion 79
27. Bibliography 80

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7
INTRODUCTION

8
The Bombay Stock Exchange (BSE) is Asia's oldest stock exchange. Based in Mumbai,
India, BSE was established in 1875 as the Native Share & Stock Brokers' Association. Prior
to that brokers and traders would gather under banyan trees to conduct transactions. 

BSE functions as the first-level regulator in the securities market, providing monitoring and
surveillance mechanisms that are able to detect irregularities and manipulations in stock
prices. The Exchange also provides counter-party risk management in all transactions that
take place on its trading platform through its clearing and settlement services. Shares of more
than 5,000 companies are traded on BSE. In addition to equity and debt, the Exchange allows
for trading of mutual fund units and derivatives.

Bombay Stock Exchange was recognized as an exchange under the Securities Contracts
(Regulation) Act in 1957. Its benchmark index, the Sensitive Index (Sensex) was launched in
1986. In 1995, the BSE launched its fully automated trading platform called BSE On-Line
Trading system (BOLT) which fully replaced the open outcry system.

BSE (formerly known as Bombay Stock Exchange Ltd.), is Asia's first & fastest Stock
Exchange with the speed of 200 micro seconds and one of India's leading exchange groups.
Over the past 140 years, BSE has facilitated the growth of the Indian corporate sector by
providing it an efficient capital-raising platform. BSE is a corporatized and demutualized
entity, with a broad shareholder-base which includes two leading global exchanges, Deutsche
Bourse and Singapore Exchange as strategic partners. BSE provides an efficient and
transparent market for trading in equity, debt instruments, derivatives, mutual funds. It also
has a platform for trading in equities of small-and, medium enterprises (SME). 

More than 5500 companies are listed on BSE making it world's No. 1 exchange in terms of
listed members. The companies listed on BSE command a total market capitalization of USD

9
1.68 Trillion as of March 2015. It is also one of the world's leading exchanges (5th largest in
March 2015) for Index options trading (Source: World Federation of Exchanges). 
BSE also provides a host of other services to capital market participants including risk
management, clearing, settlement, market data services and education.

It has a global reach with customers around the world and a nation-wide presence. BSE
systems and processes are designed to safeguard market integrity, drive the growth of the
Indian capital market and stimulate innovation and competition across all market segments. It
is also the first Exchange in the country and second in the world to receive Information
Security Management System Standard BS 7799-2-2002 certification for its On-Line trading
System (BOLT). It operates one of the most respected capital market educational institutes in
the country (the BSE Institute Ltd.).

BSE also provides depository services through its Central Depository Services Ltd. (CDSL)
arm. BSE's popular equity index - the S&P BSE SENSEX - is India's most widely tracked
stock market benchmark index. It is traded internationally on the EUREX as well as leading
exchanges of the BRCS nations (Brazil, Russia, China and South Africa). 

BSE has won several awards and recognitions that acknowledge the work done and progress
made like India Innovation Award for the Big Data implementation , ICICI Lombard & ET
Now Risk Management BFSI Company 2013, SKOCH Order of Merit Certificate was
awarded to BSE for E -Boss for qualifying amongst India's Best 2013, The Golden Peacock
Global CSR Award for its initiatives in Corporate Social Responsibility, NASSCOM -
CNBC-TV18's IT User Awards, 2010 in Financial Services category, Scotch Virtual
Corporation 2010 Award in the BSE Star MF category and Responsibility Award (CSR) by
the World Council of Corporate Governance. Its recent milestones include the launching of
BRICSMART indices derivatives, BSE-SME Exchange platform, S&P BSE GREENEX to
promote investments in Green India.

MISSION:

10
As a Centre of learning, BSE mission is to promote an open learning environment that brings
together people, cultures and ideas from around the world, changing lives and helping
transform organizations through innovative learning programs.

Through our learning programs, they develop responsible, thoughtful leaders and
entrepreneurs who create value for their organizations and their communities.

HISTORY

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The predecessor of today’s Budapest Stock Exchange (BSE) started its operation on 18
January 1864 in Pest. Although the institution was set up as a stock exchange, four years after
its foundation it acquired the Grain Hall, the center of grain trading, thus becoming the newly
created Budapest Stock and Commodity Exchange (BSCE). Starting from 1889 stock prices
of the companies listed on the Budapest Stock Exchange were also published in Vienna,
Frankfurt, London and Paris, affirming the international importance of the BSE. From the
1890s Hungarian government bonds were regularly traded on the stock exchanges of London,
Paris, Amsterdam and Berlin.

Following World War II, after the nationalization of the majority of private Hungarian firms,
the government officially dissolved the Budapest Stock and Commodity Exchange, and the
exchange’s assets have become state property.

After the re-establishment, on 21 June, 1990, the Budapest Stock Exchange reopened its
doors with 41 founding members and to trade, IBUSZ.

The open-outcry system of the physical trading floor that characterized the cash market has
been functioning with partial electronic support until 1995. From 1995 securities trading took
place concurrently on the trading floor and in a remote trading system, when in 1998 the new
Multi-Market Trading System (MMTS), based entirely via a remote trading was launched.
The traditional “battlefield rumble” of the physical trading floor ceased within a year by
September 1999, at which time physical trading was entirely replaced by the electronic
remote trading platform. In April, 2000, after twelve years of operations as an independent
legal entity, the new BSE Council decided to convert to a business association in order
to strengthen the BSE's competitive position.

The year 2004 brought some decisive events in the life of the exchange. A major
restructuring took place in the ownership structure of the BSE, involving the purchase of a
majority stake in the exchange by Austrian banks, together with Wiener Börse and
Österreichische Kontrollbank AG.

12
Due to the integration of the activities of the Budapest Stock Exchange and of the Budapest
Commodity Exchange, as of 2 November 2005, commodity trading was also merged into the
BSE.

Since 14 January 2010, the BSE is a subsidiary of the CEESEG AG holding company that
owns 50.45% of the BSE.  The joint average monthly turnover of the Group is around two-
thirds of equity turnover in the CEE region (July 2009). From one single source, the Group
offers both information and easy access to four attractive markets with long-term growth
potential.

In December 2013, on the occasion of the exchange’s new trading platform launch the stock
exchange trading was ceremonially opened by Mr. Mihály Varga, Minister for National
Economy. That day the new Xetra trading system replaced the system that has been in use for
15 years. With the introduction of the new platform companies listed on the Hungarian
exchange are linked to the traders and investors of 18 European countries while Hungarian
investment providers and investors have direct access to thousands of new instruments,
thereby the possibility of further market expansion opens up.

The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to 1855,
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".

On 31 August 1957, the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act. In 1980, the exchange moved to
the Phiroze Jeejeebhoy Towers at Dalal Street, Fort area. In 1986, it developed the BSE
SENSEX index, 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
developed by CMC Ltd in 1995. It took the exchange only fifty days to make this transition.

IMPORTANCE OF BOMBAY STOCK EXCHANGE

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1. SERVE MARKET:

The need & importance of any stock exchange is the Primary Market. That is to raise finance
for corporations, governments and Local Authorities. Once listed on a stock exchange via an
IPO then a flourishing secondary market (where shares and bonds are traded between
individuals) enables the Primary Market to exist. So the secondary market helps the Primary
market and vice versa. A stock exchange also has other functions. That is a settlement
system, timely dissemination of price sensitive information and a pricing and trade reporting
system. It also provides a legal and non-legal regulatory system for its members, market
participants and listed companies.

2. TO PROVIDE EFFICIENT AND TRANSPERANT TRADING:

BSE provides an efficient and transparent market for trading in equity, debt instruments,
derivatives, mutual funds. It also has a platform for trading in equities of small-and-medium
enterprises (SME). More than 5000 companies are listed on BSE making it world's No. 1
exchange in terms of listed members.

3. SHOWS THE VALUE OF COMPANY:

Stock exchange is very much needed for the economy of any country it tells us about the
growth of economy all the reputed companies of any country listed on stock exchange. And
stock exchange tell us the value of company is decreasing or increasing.

SIGNIFICANCE OF BSE (BOMBAY STOCK EXCHANGE):

14
(i) It affords liquidity to their holdings.

(ii) It affords them to obtain the best prices for the securities they want to sell off.

(iii) It helps them to avoid the botheration of canvassing from door to door to sell the
securities. A mere telephonic or verbal order to a stock broker will help them to buy or sell a
listed security.

(iv) Transactions on the Stock Exchange are done by auction bids, so there is no hide or seek
about the price at which the investor buys or sells the share.

(v) The Stock Exchange quotation helps the investors to keep themselves abreast of the price
changes of the securities owned or held by them.

(vi)The investors get maximum protection in regard to their holdings, because the Stock
Exchange rules and regulations have been formulated with the end in view.

(vii) Listing gives an added collateral value to the securities held by investors, for banks in
making loans and advances prefer a security quoted on the Stock Exchange.

(viii) Listing is also advantageous in the matter of income-tax, wealth-tax, estate duty and
other taxes payable by shareholders in their capacity as assesses. However, from the
foregoing discussion, it should not be concluded that the Stock Exchange vouches for the
listed securities.

In fact, price determination and value judgments involve constant scrutiny and assessment of
each company from business, financial, accounting, legal and technical points of view, and
these are primarily the functions of the buyers and sellers in the market. The Stock Exchange
cannot and does not stand sponsor for the listed securities or guarantee their investment
value; but it does ensure continuing sponsorship and assistance in the establishment arid
development of sound and progressively higher standards of corporate practice and
procedure. For these reasons, listing carries the hallmark of prestige and confers on the listed
company, its securities and its shareholders a privileged position.

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 SALIENT FEATURES OF BSE (Pre open session)

 All executable orders for a particular stock will match at one market opening price.

 Orders are collected in the order entry period & execution occurs in the order matching
period.

 Duration of Pre-open session - 15 minutes from 9:00am – 9:15am.

 Limit orders will get priority over market orders at the time of execution of trades.

 All orders shall be disclosed in full quantity, i.e. orders where revealed quantity function
is enabled, will not be allowed during the pre-open session.

 Unexecuted, eligible orders will be moved to the continuous session.

 In the event of no trades in the pre-open session, the orders entered in the pre-open
session will be moved to the continuous trading session on time priority basis. The price of
the first trade during the continuous trading session will be taken as the opening price.

 Indicative opening price & match able quantity for each stock and indicative S&P BSE
SENSEX will be disseminated at regular intervals of order entry period.

 At the end of the matching period, the system will compute & disseminate the opening
values for all stocks, S&P BSE SENSEX and other indices.

 Uniform price band of 20% will be applicable to all eligible stocks during the pre-open
session.

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 FUNCTIONS OF STOCK EXCHANGE ARE AS FOLLOWS:

1. PROVIDING LIQUIDITY AND MARKETABILITY TO EXISTING

SECURITIES:

Stock exchange is a market place where previously issued securities are traded. Various
types of securities are traded here on regular basis.

Whenever required, an investor can invest his money through this market into securities and
can reconvert this investment into cash. Availability of ready market for sale and purchase of
securities increases their marketability and enhances liquidity.

2. PRICING OF SECURITIES:

A stock exchange provides platform to deal in securities. The forces of demand and supply
work freely in the stock exchange. In this way, prices of securities are determined.

3. SAFETY OF TRANSACTIONS:

Stock exchanges are organized markets. They fully protect the interest of investors. Each
stock exchange has its own laws and bye-laws. Each member of stock exchange has to follow
them and if any member is found violating them, his membership is cancelled.
For instance, if any broker working in stock exchange charges more commission than
stipulated from any investor or misleads him in any other way, then the management
committee of the stock exchange can fine the broker and even his membership can be
cancelled.

4. CONTRIBUTES TO ECONOMIC GROWTH:

A stock exchange provides liquidity to securities. This gives the investor a double benefit-
first, the benefit of the change in the market price of securities can be taken advantage of, and
secondly, in case of need for money they can be sold at the existing market price at any time.
These advantages provided by the share market encourage the people to invest their money in
securities.

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5. SPREADING EQUITY CULT:

Share market collects every type of information (more particularly about their economic
condition) in respect of the listed companies. Generally, this information is published or in
case of need anybody can get it from the stock exchange free of any cost.

In this way, the stock exchange guides the investors by providing various types of
information. Consequently, the number of shareholders in companies is increasing
continuously. Thus, the stock exchanges are playing a vital role in ensuring wider share
ownership.

6. PROVIDING SCOPE FOR SPECULATION:

When securities are purchased with a view to getting profit as a result of change in their
market price, it is called speculation. It is allowed or permitted under the provisions of the
relevant Act. It is accepted that in order to provide liquidity to securities, some scope for
speculation must be allowed. The share market provides this facility.

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LISTING PROCEDURE ON BSE:

THE 5 P'S OF LISTING PROCESS ON BSE :

PLANNING:

The Issuer Company consults and appoints the Merchant Banker/s in an advisory capacity.

PREPARATION:

The Merchant Banker prepares the documentation for filing after:

 conducting due diligence regarding the Company i.e checking the documentation
including all the financial documents, material contracts, Government Approvals,
Promoter details etc.
 and planning the IPO structure, share issuances, and financial requirements

PROCESS:

Application procedure:
 Submission of DRHP/Draft Prospectus - These documents are prepared by the
Merchant Banker and filed with the Exchange as well as with SEBI as per
requirements.
 Verification & Site Visit - BSE verifies the documents and processes the same. A
visit to the company's site shall be undertaken by the Exchange official .The
Promoters are called for an interview with the Listing Advisory Committee.
 Approval - BSE issues an In Principle approval on the recommendation of the
Committee, provided all the requirements are compiled by the Issuer Company. 
Filing of RHP/Prospectus - Merchant Banker files these documents with the ROC
indicating the opening and closing date of the issue. 
Once approval is received from the ROC, they intimate the Exchange regarding the
opening dates of the issue along with the required documents.

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PUBLIC OFFERING:

The Initial Public Offer opens and closes as per schedule. After the closure of IPO, the
Company submits the documents as per the checklist to the Exchange for finalization of the
basis of allotment.

POST LISTING:

BSE finalizes the basis of allotment and issues the Notice regarding Listing and Trading.

20
 GUIDELINES FOR LISTING

CAPITAL :

The post issue face value capital should not exceed Rs. Twenty-five crores.

TRADING LOT SIZE :

The minimum application and trading lot size shall not be less than Rs. 1,00,000/-

 The minimum depth shall be Rs 1,00,000/- and at any point of time it shall not be
less than Rs 1,00,000/-
 The investors holding with less than Rs 1,00,000/- shall be allowed to offer their
holding to the Market Maker in one lot.
 However in functionality the market lot will be subject to revival after a stipulated
time.

PARTICIPANTS:

The existing Members of the Exchange shall be eligible to participate in SME

Platform.

UNDERWRITING:

The issues shall be 100% underwritten and Merchant Bankers shall underwrite 15%

in their own account.

21
LISTING OF COMPANIES:

The process of equity listing on the Exchange consists of several steps. Its time requirement
and complexity also depend on the type of listing the company intends to realize Simple
listing on the Exchange, without a capital increase (issue of new shares) or public offering of
existing shares (exit). In this case, when the company appears on the market, it creates a
future possibility for flexible funding. At the same time, it “learns" how to comply with
requirements associated with maintaining its shares on the Exchange, while allowing the
company to continuously test company performance in the public markets. Performing well
during this presence on the Exchange improves a company’s conditions for raising future
funds. A firm may benefit from this option when it does not need additional capital at the
time of the listing, or when the firm’s owners intend to sell their stakes or a portion thereof
only in the medium or long term. On the other hand, going public on an Exchange
undoubtedly creates a challenge that the company has to cope with even in the period
preceding raising the actual funds or prior to exit. 

“Traditional public offering” is a listing where the admission to the Exchange is coupled with
the offer of a share package to the public, i.e. either the issue of new shares or sale by owners
or a combination of the two.

LISTING PROCESS:

1. Decision about listing on the Exchange.

2.  Selection of the contributors.
3.  Preparations for listing on the Exchange.
4. Preparation of a prospectus.
5. Compilation of the listing documentation.
6.  Official submission of the listing documentation to the Exchange (application for listing).
7.  Public notice of new listing applications.
8. Review of the application.
9.  Publications on the Exchange website regarding the listing.
10. Decision of listing.

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  TERMS OF LISTING ON THE EXCHANGE:

 The security to be listed shall be negotiable.

 The issuer shall accept the exchange rules as binding upon itself and shall accept and
comply with the terms set forth in of keler rules.
 The issuer shall accept depository receipts issued by keler zrt. In its capacity of a
depository or with reference thereto as a certificate of title to the issuer’s securities.
 The issuer shall undertake the commitment that in the event securities incorporating
identical rights with securities on the trading list are issued as part of capital increase or a tap
issue, it shall initiate, in line with the provisions of the listing regulations, the listing of the
new security within that series;
 An exchange prospectus prepared for the listing on the exchange shall be made available,
supplied with the approval of the appropriate authority;
 The company shall operate as a public limited company or at least the respective decision
(general meeting resolution)about the listing must have been made;
 If an investment firm is involved in the listing, the applicant and the investment firm shall
submit a joint declaration, stating that during the listing procedure, the investment firm is
acting on behalf of the applicant;
 The company shall obtain a statement by Keller ltd. Specifying that the security is
accepted for account keeping and recording, as well as for settlement with the exchange.
 Circle of owners;
 Name and address of the share registrar of the issuer.
The prospectus prepared for the listing on the exchange.
 The statutes of the company.
 Information on the language approved by the supervisory authority (English or
Hungarian) for the fulfillment of reporting obligations during the period of continued trading
of the company’s securities.
 The ownership structure.
 The name and address of the registrar of shares.

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 LIST OF TOP 30 COMPANIES OF BSE (BOMBAY STOCK
EXCHANGE)

1. ACC
2. AMBUJA CEMENT LTD.
3 .BHARTI AIRTEL
4. CILPA.

5. DR.REDDY LABORATORIES.
6. BHEL.
7. DLF.
8. GRASIM.
9. HDFC
10. HINDALCO INDUSTRIES.
11. HINDUSTAN LEVER LTD.
12. ICICI BANK.
13. INFOSYS.
14. ITC LTD.

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15. LARSEN AND TOURBO.
16. MARUTI SUZUKI.
17. OIL AND NATURAL GAS CORPORATIONS.
18. NATIONAL THERMAL POWER CORPORATION.
19. (NTPC).
20. RANBAXY LAB.
21. RELIANCE INDUSTRY
22. RELIANCE COMMUNICATION.
23. STATE BANK OF INDIA.
24. TATA CONSULTANCY SERVICES.
25. TATA MOTORS.
26. TATA STEEL.
27. WIPRO.
28. MAHINDRA AND MAHINDRA.
29. BAJAJ AUTO.
30. RELIANCE ENERGY.

25
GUIDELINES FOR COMPANY LISTING

Listing means admission of securities to dealings on a recognised stock exchange. The

securities may be of any public limited company, Central or State Government, quasi-
governmental and other financial institutions/corporations, municipalities, etc. 

 THE OBJECTIVES OF LISTING ARE MAINLY TO : 

 provide liquidity to securities;

 mobilize savings for economic development;
 protect interest of investors by ensuring full disclosures.

The BSE Limited has a dedicated Listing Department to grant approval for listing of
securities of companies in accordance with the provisions of the Securities Contracts
(Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956,
Guidelines issued by SEBI and Rules, Bye-laws and Regulations of BSE. 

BSE has set various guidelines and forms that need to be adhered to and submitted by the
companies. These guidelines will help companies to expedite the fulfillment of the various
formalities and disclosure requirements that are required at various stages of 

 Public Issues
o Initial Public Offering
o Further Public Offering
o Preferential Issues
o Indian Depository Receipts

26
 o Amalgamation
o Qualified Institutions Placements.

BENEFITS OF LISTING IN BSE:

Listing provides an exclusive privilege to securities in the stock ex¬change. Only listed
shares are quoted on the stock exchange. Stock exchange facilitates transparency in
transactions of listed securities in perfect equality and competitive conditions. Listing is
beneficial to the company, to the investor, and to the public at large

. 
THE IMPORTANT ADVANTAGES OF LISTING ARE LISTED BELOW

 FUND RAISING AND EXIT ROUTE TO INVESTORS:

Listing provides an opportunity to the corporates / entrepreneurs to raise capital to fund

new projects/undertake expansions/diversifications and for acquisitions. Listing also
provides an exit route to private equity investors as well as liquidity to the ESOP-holding
employees.

27
  
 READY MARKETABILITY OF SECURITY:

Listing brings in liquidity and ready marketability of securities on a continuous basis

adding prestige and importance to listed companies.
 

 ABILITY TO RAISE FURTHER CAPITAL:

 
An initial listing increases a company's ability to raise further capital through various
routes like preferential issue, rights issue, Qualified Institutional Placements and
ADRs/GDRs/FCCBs, and in the process attract a wide and varied body of institutional
and professional investors. 

 SUPERVISION AND CONTROL OF TRADING IN SECURITIES:

The transactions in listed securities are required to be carried uniformly as per the rules
and bye-laws of the exchange. All transactions in se¬curities are monitored by the
regulatory mechanisms of the stock exchange, preventing unfair trade practices. It
improves the confidence of small investors and protects them.

 FAIR PRICE FOR THE SECURITIES:

The prices are publicly arrived at on the basis of demand and supply; the stock exchange
quotations are generally reflective of the real value of the security. Thus listing helps
generate an independent valuation of the company by the market.

 TIMELY DISCLOSURE OF CORPORATE INFORMATION:

The listing agreement signed with the exchange provides for timely dis¬closure of
information relating to dividend, bonus and right issues, book clo¬sure, facilities for
transfer, company related information etc by the company. Thus providing more
transparency and building investor confidence.
 
 COLLATERAL VALUE OF SECURITIES:

28
 Listed securities are acceptable to lenders as collateral for credit facili¬ties. A listed
company can also borrow from financial institutions easily as it is rated favorably by
lenders of capital; the company can also raise additional funds from the public through
the new issue market with a greater degree of assurance .

 BETTER CORPORATE PRACTICE:

Since the violation of the listing agreement entails the de-listing/suspension of securities
from the rings of the exchange, the listed companies are ex¬pected to follow fair
practices to the advantage of investors and public.

 BENEFITS TO THE PUBLIC:

The data daily culled out by the stock exchange in the form of price quotations and
others; provide valuable information to the public which can be used for project and
research studies. The stock exchange prices can be an index of the state of the economy.
Financial institutions, NRl, individual investor’s etc. can take wise decisions before
making investments

 SUBDIVISION AND CONSOLIDATION OF HOLDINGS:

Stock exchange bye-laws provide for explicit rules for sub division and consolidation of
securities as desired by the investors.

29
ROLE OF STOCK EXCHANGE IN THE DEVELOPMENT OF
INDIAN CAPITAL MARKET:A STUDY OF BOMBAY STOCK
EXCHANGE.

Capital occupies a position so dominant to the economic theory of production and

distribution that it is natural to assume that it should occupy at least an equally important
place in the theory and practice of economic growth. The subject whether approached
historically or analytically or from the standpoint of policy, it is the process of capital
accumulation that occupies the front of the stage. It is usually implied that economic growth
and capital accumulation with a high positive and significant correlation and additions to the

30
stock of capital can provoke and facilitate faster rate of growth even under the circumstances
which can be described as shortage of capital.

The aforesaid correlation between the process of economic growth and capital accumulation
inspired the earlier theorists of economic development and even in the works of modern
economists output is still assumed to be limited by capital whether there is abundant labour or
not. A high rate of capital formation usually results in rapid growth in the production and
income, but more capital formation by itself will not bring a corresponding acceleration in the
growth of production. It also depends to a large extent on the manner in which the capital is
utilized.

Capital market means the market for all the financial instruments, short term and long term as
also commercial, industrial and government paper.  The capital market deals with capital. The
capital market is a market where borrowing and lending of long term funds takes place.
Capital markets deal in both debt and equity. The governments both central and state raise
money in the capital market, through the issue of government securities. Capital markets refer
to all the institutes and mechanisms of raising medium and long-term funds, through various
instruments available like shares, debentures, bonds etc.

Corporate both in the private sector as well as in the public sector raise thousands of crores of
rupees in these markets. The government, through Reserve Bank of India, as well as financial
institutions also raise a lot of money from these markets.  Example of a well-developed
markets are – The Global depository and American depository.

THERE ARE TWO IMPORTANT OPERATION CARRIED ON IN

THESE MARKETS:

1. The raising the new capital 

2. Trading in securities already issued by the companies.

THE IMPORTANT CONSTITUENTS OF THE CAPITAL MARKET ARE:

1. The stock exchanges 

2. Banks

31
3. The investment trusts and companies 
4. Specialised financial institutions or development banks. 
5. Mutual funds 
6. Post office saving banks
7. Non banking financial institutions 
8. International financial investors and institutions.

The supply in this market comes from saving from different sectors of the
economy. these come from the following sources: 

1. Individuals 
2. Corporates
3. Governments 
4. Foreign countries 
5. Banks
6. Provident funds 
7. Financial institutions.

Moreover the establishment of National Stock Exchange and Bombay Stock Exchange has
been turning point in the working of capital markets. Recently the RBI has allowed
participation of individuals in the government securities markets. This move is likely to open
new avenues for investment to individuals. Moreover the Finance Ministry has announced the
removal of income tax on dividend in the hands of the receiver and no capital gains tax on
investments made in equity after 1.3.03 and held for one year.

32
HISTORY OF THE INDIAN CAPITAL MARKET

The history of the capital market in India dates back to the eighteenth century when East
India Company securities were traded in the country. Until the end of the nineteenth century,
securities trading was unorganized and the main trading centres were Bombay (now Mumbai)
and Calcutta (now Kolkata). Of the two, Bombay was the chief trading centre wherein bank
shares were the major trading stock. During the American Civil War (1860-61), Bombay was
an important source of supply for cotton.  Hence, trading activities flourished during the
period, resulting in a boom in share prices. This boom, the first in the history of the Indian
capital market, lasted for a half a decade. The bubble burst on July 1, 1865, when there was
tremendous slump in share prices.

Trading was at that time limited to a dozen brokers: their trading place was under a banyan
tree in front of the Town Hall in Bombay. These stockbrokers organized an informal
association in 1875-Native Shares and Stock Brokers Association, Bombay. The stock

33
exchanges in Calcutta and Ahmedabad, also industrial and trading centres, came up later. The
Bombay Stock Exchange was recognized in May 1927 under the Bombay Securities
Contracts Control Act, 1925.

The capital market was not well organized and developed during the British rule because the
British government was not interested in the economic growth of the country. As a result,
many foreign companies depended on the London capital market for funds rather than on the
Indian capital market.

In the post-independence period also, the size of the capital market remained small. During
the first and second five-year plans, the government's emphasis was on the development of
the agricultural sector and public sector undertakings. The public sector undertakings were
healthier than the private undertakings in terms of paid-up capital but their shares were not
listed on the stock exchanges. Moreover, the Controller of Capital Issues (CCI) closely
supervised and controlled the timing, composition, interest rates, pricing, allotment, and
floatation costs of new issues. These strict regulations demotivated many companies from
going public for almost four and a half decades.

In the 1950s, Century Textiles, Tata Steel, Bombay Dyeing, National Rayon, and Kohinoor
Mills were the favorite scrips of speculators. As speculation became rempant, the stock
market came to be known as 'Satta Bazaar'. Despite speculation, non-payment or defaults
were not very frequent. The government enacted the Securities Contracts (Regulation) Act in
1956s was also characterized by the establishment of a network for the development of
financial institutions and state financial corporations.

The 1960s was characterized by wars and droughts in the country which led to bearish trends.
These trends were aggravated by the ban in 1969 on forward trading and 'badla', technically
called 'contracts for clearing.' 'Badla' provided a mechanism for carrying forward positions as
well as borrowing funds. Financial institutions such as LIC and GIC helped to revive the
sentiment by emerging as the most important group of investors. The first mutual fund of
India, the Unit Trust of India (UTI) came into existence in 1964.

In the 1970s, badla trading was resumed under the disguised form of 'hand-delivery
contracts-A group.' This revived the market. However, the capital market received another
severe setback on July 6, 1974, when the government promulgated the Dividend Restriction

34
Ordinance, restricting the payment of dividend by companies to 12 per cent of the face value
or one-third of the profits of the companies that can be distributed as computed under section
369 of the Companies Act, whichever was lower. This led to a slump in market capitalization
at the BSE by about 20 per cent overnight and the stock market did not open for nearly a
fortnight. Later came a buoyancy in the stock markets when the multinational companies
(MNCs) were forced to dilute their majority stocks in their Indian ventures in favour of the
Indian public under FERA, 1973. Several MNCs opted out of India. One undred and twenty-
three MNCs offered shares were lower than their intrinsic worth. Hence, for the first time, the
FERA dilution created an equity cult in India. It was the spate of FERA issues that gave a
real fillip to the Indian stock markets. For the first time, many investors got an opportunity to
invest in the stocks of such MNCs as Colgate, and Hindustan Liver Limited. Then, in 1977, a
little-known entrepreneur, Dhirubhai Ambani, tapped the capital market. The scrip, Reliance
Textiles, is still a hot favourite and dominates trading at all stock exchanges.

The 1980s witnessed an explosive growth of the securities market in India, with millions of
investors suddenly discovering lucrative opportunities. Many investors jumped into the stock
markets for the first time. The government's liberalization process initiated during the mid-
1980s, spurred this growth. Participation by small investors, speculation, defaults, ban on
badla, and resumption of badla continued. Convertible debentures emerged as a popular
instrument of resource mobilization in the primary market. The introduction of public sector
bonds and the successful mega issues of Reliance Petrochemicals and Larsen and Toubro
gave a new lease of life to the primary market. This, in turn, enlarged volumes in the
secondary market. The decade of the 1980s was characterized by an increase in the number of
stock exchanges, listed companies, paid up-capital, and market capitalization.

The 1990s will go down as the most important decade in the history of the capital market of
India. Liberalisation and globalization were the new terms coined and marketed during this
decade. The Capital Issues (Control) Act, 1947 was repealed in May 1992. The decade was
characterized by a new industrial policy, emergence of SEBI as a regulator of capital market,
advent of foreign institutional investors, euro-issues, free pricing, new trading practices, new
stock exchanges, entry of new players such as private sector mutual funds and private sector
banks, and primary market boom and bust.

Major capital market scams took place in the 1990s. These shook the capital market and
drove away small investors from the market. The securities scam of March 1992 involving
35
brokers as well as bankers was on of the biggest scams in the history of the capital market. In
the subsequent years owing to free pricing, many unscrupulous promoters, who raised money
from the capital market, proved to be fly-by-night operators. This led to an erosion in the
investors' confidence. The M S Shoes case, one such scam which took place in March 1995,
put a break on new issue activity.

The 1991-92 securities scam revealed the inadequacies of and inefficiencies in the financial
system. It was the scam, which prompted a reform of the equity market. The Indian stock
market witnessed a sea change in terms of technology and market prices. Technology brought
radical changes in the trading mechanism. The Bombay Stock Exchange was subject to
nationwide competition by two new stock exchanges-the National Stock Exchange, set up in
1994, and Over the Counter Exchange of India, set up in 1992. The National Securities
Clearing Corporation (NSCC) and National Securities Depository Limited (NSDL) were set
up in April 1995 and November 1996 respectively form improved clearing and settlement
and dematerialized trading. The Securities Contracts (Regulation) Act, 1956 was amended in
1995-96 for introduction of options trading. Moreover, rolling settlement was introduced in
January 1998 for the dematerialized segment of all companies. With automation and
geographical spread, stock market participation increased

36
In the late 1990s, the Information Technology (IT) scrips were dominant on the Indian
bourses. These scrips included Infosys, Wipro, and Satyam. They were a part of the favourite
scrips of the period, also known as 'New Economy' scrips, alongwith telecommunications and
media scrips. The new economy companies are knowledge intensive unlike the old economy
companies that were asset intensive.

The Indian capital market entered the twenty-first century with the Ketan Parekh scam. As a
result of this scam, badla was discontinued from July 2001 and rolling settlement was
introduced in all scrips. Trading of futures commenced from June 2000, and Internet trading
was permitted in February 2000. On July 2, 2001, the Unit Trust of India announced
suspension of the sale and repurchase of its flagship US-64 scheme due to heavy redemption
leading to panic on the bourses. The government's decision to privatize oil PSUs in 2003
fuelled stock prices. One big divestment of international telephony major VSNL took place in
early February 2002. Foreign institutional investors have emerged as major players on the
Indian bourses. NSE has an upper hand over its rival BSE in terms of volumes not only in the
equity markets but also in the derivatives market.

It has been a long journey for the Indian capital market. Now the capital market is organized,
fairly integrated, mature, more global and modernized. The Indian equity market is one of the
best in the world in terms of technology. Advances in computer and communications
technology, coming together on Internet are shattering geographic boundaries and enlarging
the investor class. Internet trading has become a global phenomenon. The Indian stock
markets are now getting integrated with global markets.

37
CONCEPT OF STOCK EXCHANGE

The Securities Contracts (Regulation) Act, 1956, has defined Stock Exchange as an
"association, organization or body of individuals, whether incorporated or not, established for
the purpose of assisting, regulating and controlling business of buying, selling and dealing in
Securities".

Stock exchange as an organized security market provides marketability and price continuity
for shares and helps in a fair evaluation of securities in terms of their intrinsic worth. Thus it
helps orderly flow and distribution of savings between different types of investments. This
institution performs an important part in the economic life of a country, acting as a free
market for securities where prices are determined by the forces of supply and demand. Apart
from the above basic function it also assists in mobilizing funds for the Government and the
Industry and to supply a channel for the investment of savings in the performance of its
functions.

The Stock Exchanges in India as elsewhere have a vital role to play in the development of the
country in general and industrial growth of companies in the private sector in particular and
helps the Government to raise internal resources for the implementation of various
development programmes in the public sector. As a segment of the capital market it performs
an important function in mobilizing and channelising resources which remain otherwise
scattered. Thus the Stock Exchanges tap the new resources and stimulate a broad based
investment in the capital structure of industries.

38
A well developed and healthy stock exchange can be and should be an important institution
in building up a property base alongwith a socialist in India with broader distribution of
wealth and income. Thus Stock Exchange is a vital organ in a modern society. Without a
stock exchange a modern democratic economy cannot exist. The system of joint stock
companies financed through the public investment as emerged has put the vast means of
finances almost to enterpreneurs' needs.

Finance from external sources mainly from the investing public can become possible only
when an institute like Stock Exchange provides opportunities for the conversion of scattered
savings into profitable investments with the promises of a reasonable yield and minimum
element of risk. Such a mechanism as provided by Stock Exchanges is not merely a source of
capital but also a conduit which channelises the savings into investment alongwith a free
movement of capital.

With the probable exception of a totalitarian state no Government will be able to mobilize
resources from the public if the money market in the form of stock exchange does not exist.
The Stock Exchange benefits the entire community in a variety of way. It enables the
producers to raise capital which directly and indirectly gives gainful employment to millions
of people on the one hand and helps consumers to get ;the variety of goods needed by them
on the other. It provides opportunities to savers to store the value either as temporary abode
of purchasing power or as a permanent abode of purchasing power in the form of financial
assets. It also helps the segments of the savers who put their savings in commercial firms and
non-banking financial intermediaries because these institutions avail themselves of the
services of Stock Exchange to invest the money thus collected.

The Stock Exchange comes close enough to a perfectly competitive market allowing the
forces of demand and supply a reasonable degree of freedom to operate as compared to other
markets specially the commodity markets. This segment of the factor market can be
considered as a perfect or a nearly perfect market. Apart from providing a mechanism for
transacting business in stock and shares it generates genuine potential for a new entrepreneur
to take up initiative in the private sector enterprises and allows the expansion of investing
community by offering gainful development of their otherwise sluggish or shy capital. The
Stock Exchange must assume the responsibility of protecting the rights of investors specially
the small investors in the Joint Stock Companies.

39
POWERS THAT CAN BE EXERCISED BY BSE:

The powers of the stock exchange are to be exercised as per provisions in its bye-law. As per
SCRA Act any recognised stock exchange may, subject to the previous approval of the
Securities and Exchange Board of India make bye-laws for the regulation and control of

40
contracts. The bye-laws can provide for the exercise of following powers by the stock
exchange

a. The opening and closing of markets and the regulation of the hours of trade; 

b. Set up a clearing house for the periodical settlement of contracts and differences
thereunder, the delivery of and payment for securities, the passing on of delivery orders and
he regulation and maintenance of such clearing house; 

c. The regulation or prohibition of blank transfers; 

d. The regulation, or prohibition of badlas or carry-over facilities; 

e. The fixing, altering or postponing of days for settlements; 

f. The determination and declaration of market rates, including the opening, closing, highest
and lowest rates for securities 

g. The terms, conditions and incidents of contracts, including the prescription of margin
requirements, if any, and conditions relating thereto, and the forms of contracts in writing. 

h. The regulation of the entering into, making, performance, rescission of contracts,

including contracts between members or between a member and his constituent or between a
member and a person who is not a member, and the consequences of default or insolvency on
the part of a seller or buyer or intermediary, the consequences of a breach or omission by a
seller or buyer, and the responsibility of members who are not parties to such contracts. 

i. The regulation of taravani business including the placing of limitations thereon; 

j. The listing of securities on the stock exchange, the inclusion of any security for the purpose
of dealings and the suspension or withdrawal of any such securities, and the suspension or
prohibition of trading in any specified securities; 

k. The method and procedure for the settlement of claims or disputes, including settlement by

41
arbitration; 

l. The levy and recovery of fees, fines and penalties 

m. The regulation of the course of business between parties to contracts in any capacity; 

n. The exercise of powers in emergencies in trade(which may arise, whether as a result of

pool or syndicated operations or cornering or otherwise) including the power to fix maximum
and minimum prices for securities; 

o. The regulation of dealings by members for their own account; 

p. The separation of the functions of jobbers and brokers; 

q. The limitations on the volume of trade done by any individual member in exceptional
circumstances; 

r. Fixing the obligation of members to supply such information or explanation and to produce
such documents relating to the business as the governing body may require.

42
SENSEX UPDATE CHART

HOW TO MAKE MONEY FROM THE STOCK MARKET OF INDIA?

The Indian markets are a good opportunity to earn some extra money with investing as a
main source of income or as something extra with your main job. You have to have the right
knowledge and practice make insure that you make more money than you lose.  It is better to

43
make sure you know what you are doing before you invest your money. In stead of learning
later after you lose a lot of money. This is mainly for beginners that do not know much about
investing or trading, but they do know a little about stocks.

1.) The first thing you need to do is start learning about the types of stocks and keep in mind
the ones that would be good for you to invest in. Then, compare the stocks you chose with the
stocks that others are choosing. Find out why people are choosing these stocks and decide if
maybe the ones others picked would be a better idea for you.

2.) Next, you need to research and study. Study the stocks that you picked. Learn how the
prices fluctuate. Learn just how high the price gets and how low it gets as well. Start reading
articles on investing. Read about other peoples' views and stories. The more research and
studying you do, the more prepared you will be for stock trading/investing. Doing all of this
research will also give you a good idea about other stocks that you didn't know about before.
You should start watching news and looking at charts to prepare yourself as well.  This will
help you after a while, but don't jump into investing without knowing what you are doing for
sure. Make sure you are ready.

3.) When you are certain that you are ready to invest, this may take a long time, depending on
the type of learner you are. You should be sure to start when the market is in a good place. It
is usually a good idea to begin when the market is slightly advancing. Don't invest when the
market is swinging. When you buy stocks in India, make sure that they have a good trading
volume. Also make sure that they have a higher EPS and a lower PE.  Look at the company
news of the stock you are buying and make sure that they do not have some recent bad news
that will make the stock's value fluctuate too much. The last thing to keep in mind when you
buy stocks is to spread your money around and don't invest everything in just one or two
stocks.

4.) Now that you have purchased the stocks you want, it is time to decide when to sell them.
Stay up to date on the news concerning the companies that you invested in. If any bad or
really good news comes up, you should pay very close attention to that stock. Do not sell the
stock if the stock has very crowded trading volumes. Also do not sell the stock if nothing
much is happening. If it is not falling fast or if it is trading straight, it's not a good idea to sell.
You need to sell the stock if you start losing more that five percent or if you are winning

44
more than seven percent and you need the money badly. Also, pay attention to the conditions
of holding a stock. You need to sell if you go against any of these conditions.

5.) When you have made profit from investing. Try to be smart and do not invest all of your
profits back into another stock. It is never a guarantee that the stock will do what you think it
will. Most of all keep practicing. Never start thinking that you are too good to practice, study,
and research.

BOARD OF DIRECTORS

  Non-Executive Chairman  
     

45
   

Mr. S. Ramadorai
Public Interest Director
   
Vice Chairman 
Tata Consultancy Services Ltd

  Managing Director & CEO  

     

   

  Mr. Ashishkumar Chauhan  

     

   

Dr. Sanjiv Misra Mr. S.H. Kapadia Mr. Sudhakar Rao 

IAS (Retd.) (Former CJI)
Public Interest Public Interest Public Interest
Director Director Director

    

   

Mr. Dhirendra SwarupDr. K. Kasturirangan Mr. Thomas Bendixen

Public Interest Director Public Interest Director Shareholder Director

    

46
  Dr. Krishnaswamy Kasturirangan is appointed as Public Interest 
Director with effect from 23rd January, 2015
 Mr.Dhirendra Swarup is appointed as Public Interest Director with
effect from 3rd November, 2014
 Mr.Andreas Preuss ceased to be Shareholder Director with effect
from 1st August, 2014.
 Mr.Keki Mistry ceased to be Shareholder Director with effect from
14th August, 2014.
 Mr. Thomas Bendixen is appointed as Shareholder Director with
effect from 25th September, 2014.

ABOUT BSE:

BRAND IDENTITY

47
Bombay Stock Exchange has now adopted only its initials as the new
name (BSE), positioning itself better position as a national multi-asset
financial infrastructure institution. BSE’s strategic shift in approach,
attitude and business focus is reflected in its new tag line –experience the
new. 

With renewed zeal and focus on new business opportunities, product and
service innovation, upgrades in technology, increased investor and
member focus, BSE is always pushing the envelope on all fronts. The
ambition is to continually improve and adopt new and better ways of
conducting our business. 

As the first stock exchange in Asia and the pioneer of securities

transaction business, BSE prides itself on being at the forefront of bringing
innovations to the Indian capital markets while creating diverse
investment opportunities for the investor community in India throughout
its long history. 

BSE continues to undertake several initiatives to build on its strong brand,

legacy and market position to create value for its stakeholders and the
financial system. 

48
MILESTONES:

In its 140-year glorious history, BSE has crossed several milestones and
been a driver of several key initiatives and developments in the Indian
capital market.

2011 To 2014
Date BSE Milestones
12th Dec 2014 Market Cap of BSE SME listed companies crosses landmark 10,000 crore
28th Nov 2014 BSE listed cos market cap crosses landmark 100 lakh crore
22th Oct 2014 BSE inks strategic partnership with YES BANK
26th Sept 2014 BSE inks MoU with BNY Mellon
BSE felicitated at The Asian Banker Summit 2014 - BSE Best Managed
27th May 2014
Financial Derivatives Exchange in the Asia Pacific
Launch of Equity Segment on BOLT Plus with Median Response Time of
7th Apr 2014
200 (µs)
04th Apr 2014 BSE SME exceeds USD 1 billion market capitalisation
20th Mar 2014 BSE Launches New Debt Segment
11th Feb 2014 Launch of Institutional Trading Platform on BSE SME
28th Jan 2014 Launch of Interest Rate Futures (BSE –IRF)
28th Nov 2013 Launch of Currency Derivatives (BSE CDX)
19th Feb 2013 BSE enters into Strategic Partnership with S&P Dow Jones Indices
30th Mar 2012 BSE launched trading in BRICSMART indices derivatives
13th Mar 2012 Launch of BSE - SME Exchange Platform
22nd Feb 2012 Launch of S&P BSE-GREENEX to promote investments in Green India
15th Jan 2011 Co-location facility at BSE - tie up with Netmagic
BSE Training Institute Ltd. with IGNOU launched India's first 2 year full
7th Jan 2011
time MBA program specializing in Financial Market
Maharashtra and United Kingdom Environment Ministers launched Concept
17th Nov 2011
Note for S&P BSE Carbon Index

CSR (CORPORATE SOCIAL RESPONSIBILITY)

49
Corporate Social Responsibility (CSR) in BSE is aligned with its tradition
of creating wealth in the community with a three pronged focus on
Education, Health and the Environment. Besides funding charitable causes
for the elderly and the physically challenged, BSE has been supporting the
rehabilitation and restoration efforts in earthquake-hit communities of
Gujarat. BSE has been awarded the Golden Peacock Global - CSR Award
for its initiatives in Corporate Social Responsibility (CSR) by the World
Council of Corporate Governance. 

BSE RELATED CONCEPTS:

TYPES OF MARKET IN BSE:

INDIAN STOCK MARKET TYPES – PRIMARY MARKET

AND SECONDARY MARKET

Primarily there are two types of stock markets – the primary market and
the secondary market. This is true for the Indian stock markets as well.
Basically the primary market is the place where the shares are issued for
the first time. So when a company is getting listed for the first time at the
stock exchange and issuing shares – this process is undertaken at the
primary market. That means the process of the Initial Public Offering or
IPO and the debentures are controlled at the primary stock market. On the
other hand the secondary market is the stock market where existing stocks
are brought and sold by the retail investors through the brokers. It is the
secondary market that controls the price of the stocks. Generally when we
speak about investing or trading at the stock market we mean trading at
the secondary stock market. It is the secondary market where we can
invest and trade in the stocks to get the profit from our stock market
investment.

50
Now these are the broadest classification of the stock markets that is true
for any country as well as India. But the Indian stock markets can be
divided into further categories depending on various aspects like the mode
of operation and the diversification in services. First of the two largest
stock exchanges in India can be divided on the basis of operation. While
the Bombay stock exchange or BSE is a conventional stock exchange with
a trading floor and operating through mostly offline trades, the National
Stock Exchange or NSE is a completely online stock exchange and the
first of its kind in the country. The trading is carried out at the National
Stock Exchange through the electronic limit order book or the LOB. With
the immense popularity of the process and online trading facility other
exchanges started to take up the online route including the BSE where you
can trade online as well. But the BSE is still having the offline trading
facility that is carried out at the trading floor of the exchange at its Dalal
Street facility.

Apart from these classifications there are also different types of stock
market in India and the classification is made on the type of instrument
that is being traded at the market.

BETa Market:

The BETa Market is BSE’s alternative market launched in November

2011. On this market, the largest and most liquid equities of mainly
European companies can be traded under trading the conditions applied on
BSE’s Equities Section. The clearing and settlement of the transactions
executed on the BETa Market is done by KELER Ltd., and KELER CCP
Ltd. guarantees the transactions.

51
BULL AND BEAR MARKET:

Markets are often described as ‘bull’ or ‘bear’ markets. These names have
been derived from the manner in which the animals attack their opponents.
A bull thrusts its horns up into the air, and a bear swipes its paws down.
These actions are metaphors for the movement of a market: if stock prices
trend upwards, it is considered a bull market; if the trend is downwards, it
is considered a bear market.

The supply and demand for securities largely determine whether the
market is in the bull or bear phase. Forces like investor psychology,
government involvement in the economy and changes in economic
activity also drive the market up or down. These combine to make
investors bid higher or lower prices for stocks.

52
INSIDER TRADING:

53
In your dealings with the stock world, you will often come across the term
'insider trading'. In simple words, the meaning of insider trading is 'the
trading of shares based on knowledge not available to the rest of the
world’. It is illegal to trade after receiving 'tips' of confidential securities
information. 

This applies to corporate personnel as well as traders and brokers. This is

why company management have to report their trades to the exchange. For
example, when corporate officers, directors, or employees trade the
company’s stocks after learning of significant, confidential corporate
developments, it is considered an illegal form of insider trading. This
applies to employees of law, banking, brokerage and printing firms who
were given such information to provide services to the corporation whose
securities they traded. Even government employees, who trade after
learning of such information, are considered to have broken the law on
insider trading. It is a punitive offence.

BOLT (BOMBAY ONLINE TRADING SYSTEM):

54
BSE On-Line Trading System, popularly known as the BOLT System
took its genesis in
the year 1994, as part of the four-phase computerization program to create
an automated trading environment. BOLT system aimed at converting the
Open Outcry System of trading to a Screen-based trading system (SBT).
BSE had the requisite knowledge base and virtue of more than 115 year
track record in the capital markets; BSE embarked on the specified project
in 1991 and seamlessly completed the fourth phase in March 1995. The
expansion of BOLT to cities outside Mumbai was started in 1997.

BOLT is supported on the hardware front by the Tandem Non-Stop

Himalaya System which is specifically designed to cater to the
requirements of the On Line Transaction Processing (OLTP) environment.
BOLT System works on the Tandem NS 16000 & NS 16200 platforms
running on 32 CPUs. The existing set-up, a fault tolerant system with
scalable architecture can handle a maximum of 3500 trades every second
against a daily average of 36 lakh trades a day when BOLT was started.
Further, the average time of execution is 222 orders per second with a
peaking speed of 6000 orders per second.

The BOLT system is order driven. The system comprises of a Tandem

Himalaya NS 16000 & NS 16200 machines acting as backend to more
than 17000 Trader Work Stations (TWS) networked on Ethernet, VSAT
and LAN network.

BOLT is architecture as a two-tier system. TWS is connected directly to

the back-end server. It acts as a communication server as well as the
Central Trading Engine (CTE).In addition to the above, other services like
information dissemination, index computation, position monitoring is also
provided in the system.

In an On-Line Transaction Processing (OLTP) environment, data integrity

is of primordial importance. The Transaction Monitoring Facility (TMF)
in the Tandem ensures data integrity through Non-Stop SQL. The fault

55
tolerance feature is ensured at each level i.e. Process, disk, CPU,
Networking, etc. In case of any server failure, the transaction is
automatically taken over by the other server without affecting data
integrity.

BSE has adopted client-server architecture to enhance performance. The

Client portion ©BSE Training Institute Ltd. 118 of the software residing
in the TWS is based on Windows-SDK. This PC-based TWS keeps the
latest information in memory and responds to queries instantaneously. It
also offloads much of the computing load on the Tandem.

The client-server architecture facilitates broadcast information, which

appears on the screen giving real time prices. All the queries are allowed
locally from the database, thereby substantially reducing the load on the
trading system. The software design ensures that messages sent across
from the BOLT to the TWS are in a compressed form, utilizing lesser
bandwith than under normal form.

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ONLINE TRADING PROCESS AT BSE:

The, Mumbai Exchange has initiated a number of measures aimed at

providing quality products and services and expanding its network using
cutting edge information technology. Five years back, the BSE made its
transition from an 'outcry' system of trading to a completely electronic
trading system.
 BSE has introduced electronic trading system known as BOLT (BSE On
Line Trading). With the following facility
1) This is an order driven facilitates efficient processing; automatic order
matching and faster execution is enabled.
2) Trading system displays on a continuous basis scrip and market-related
information required supporting traders. (Information includes best five
bids and offers, last traded quantity and price, total buy and sell depth
(irrespective of rates), open, high, low and close price, total number of
trades, volume and value, and index movement. Other company-related
information is also displayed)
3) As soon as an order is matched, the confirmation of the trade is
generated on-line.
4) The order matching logic is based on best price and time priority.
5) The BSE On line Trading Platform has a capacity of conducting 2
million trades per day.
6) The latest state of the art technology infrastructure with Trader Work
Stations located in more than 400 cities all over the country.
7) Trading on the BOLT system is conducted from Monday to Friday
between 9: 30 a.m. and 3:30 p.m.
8) Trading can also be conducted through the BSE Internet Trading

57
System - www.bsewebx.com the first Exchange enabled Internet Trading
System.
9) BSE aims to provide trading anywhere and at anytime. With this
endeavour in mind, the exchange continuously upgrades the hardware,
software and networking systems so as to enable it to enhance the quality
and standards of service to its members and other market intermediaries.

SCAMS OF BSE:

HARSHAD MEHTA AND KETAN PAREKH SCAMS:

58
Harshad Mehta: the high-profile stockbroker Harshad Shantilal Mehta
(1954-2002) was an Indian stockbroker who grabbed headlines for the
notorious BSE security scam of 1992. Born in a lower middle-class
Gujarati Jain family, Mehta spent his early childhood in Mumbai where
his father was a small-time businessman. The family relocated to Raipur in
Chhattisgarh after doctors advised Mehta’s father to shift to a drier place
on account of his health.

THE MAKING OF THE 1992 SECURITY SCAM

Mehta, along with his associates, was accused of manipulating the rise in
the Bombay Stock Exchange (BSE) in 1992. They took advantage of the
many loopholes in the banking system and drained off funds from inter-
bank transactions. Subsequently, they bought huge amounts of shares at a
premium across many industry verticals causing the Sensex to rise
dramatically. However, this was not to continue. The exposure of Mehta's
modus operandi led banks to start demanding their money back, causing
the Sensex to plunge almost dramatically as it had risen. Mehta was later
charged with 72 criminal offences while over 600 civil action suits were
filed against him. Significantly, the Harshad Mehta security scandal also
became the flavor of Bollywood with Sameer Hanchate's film Gafla.

THE 1992 SECURITY SCAM AND ITS EXPOSURE

Mehta's illicit methods of manipulating the stock market were exposed on

April 23, 1992, when veteran columnist Sucheta Dalal wrote an article in
India's national daily The Times of India. Dalal’s column read: “The
crucial mechanism through which the scam was effected was the ready
forward (RF) deal. The RF is in essence a secured short-term (typically
15-day) loan from one bank to another. Crudely put, the bank lends
against government securities just as a pawnbroker lends against jewelers.
The borrowing bank actually sells the securities to the lending bank and

59
buys them back at the end of the period of the loan, typically at a slightly
higher price.” In a ready-forward deal, a broker usually brings together
two banks for which he is paid a commission. Although the broker does
not handle the cash or the securities, this was not the case in the prelude to
the Mehta scam. Mehta and his associates used this RF deal with great
success to channel money through banks.

The securities and payments were delivered through the broker in the
settlement process. The broker functioned as an intermediary who
received the securities from the seller and handed them over to the buyer;
and he received the check from the buyer and subsequently made the
payment to the seller. Such a settlement process meant that both the buyer
and the seller may not even know the identity of the other as only the
broker knew both of them. The brokers could manage this method expertly
as they had already become market makers by then and had started trading
on their account. They pretended to be undertaking the transactions on
behalf of a bank to maintain a façade of legality.

Mehta and his associates used another instrument called the bank receipt
(BR). Securities were not traded in reality in a ready forward deal but the
seller gave the buyer a BR which is a confirmation of the sale of
securities. A BR is a receipt for the money received by the selling bank
and pledges to deliver the securities to the buyer. In the meantime, the
securities are held in the seller’s trust by the buyer.

COMPLICIT LENDERS

Armed with these schemes, all Mehta needed now were banks which
would readily issue fake BRs, or ones without the guarantee of any
government securities. His search ended when he found that the Bank of
Karad (BOK), Mumbai and the Metropolitan Co-operative Bank (MCB)
two small and little known lenders, were willing to comply. The two banks
agreed to issue BRs as and when required. Once they issued the fake BRs,
Mehta passed them on to other banks who in turn lent him money, under
the false assumption that they were lending against government securities.

60
Mehta used the money thus secured to enhance share prices in the stock
market. The shares were then sold for significant profits and the BR
retired when it was time to return the money to the bank.

KETAN PAREKH SCAM:

WHO IS KETAN PAREKH

Ketan Parekh is a former stockbroker based in Mumbai who was

convicted in 2008 for being involved in engineering the technology stocks
scam in India’s stock market in 1999-2001. A chartered accountant by
training, Parekh comes from a family of brokers and is currently serving a
period of disqualification from trading in the Indian bourses till 2017.

Ketan Parekh has been accorded with sobriquets such as the Pentafour
Bull and the One Man Army by the country’s national business
newspapers, while the market simply refers to him as ‘KP’ or associates
him with his firm NH Securities. Parekh is known to have no reluctance in
meeting the press. He is also known to have razor-sharp forecasts on
market developments.

WHAT DISTINGUISHES KETAN PAREKH FROM THE

'BIG BULL' LATE HARSHAD MEHTA

The two have been compared by people to have operated their scams using
similar means and that their backgrounds were similar as well. But the
differences are very conspicuous.

At the outset, Mehta came from a lower middle-class and modest

background, while KP’s family has been engaged as stockbrokers for a
significant time. He is also related to many prominent brokers. Secondly,
when Mehta was operating, the market was still a closed one and was just
beginning to liberalize. It was revealed later that Mehta operated using the
money of other people as his last recourse. Further, Mehta is known to
61
have resorted to aggressive publicity campaigns whereas KP operates
almost clandestinely. The latter has also been successful at creating stories
and selling them aggressively to institutional investors.

OBJECTIVES OF THE BSE:

The BSE is the benchmark index with wide acceptance among individual
Investors, institutional investors, foreign investors and fund managers. The
objectives of
The indexes are:

62
I. TO MEASURE MARKET MOVEMENTS

Given its long history and its wide acceptance, no other index matches the
SENSEX® in reflecting market movements and sentiments. SENSEX® is
widely
used to describe the mood in the Indian Stock markets.

II. BENCHMARK FOR FUNDS PERFORMANCE

The inclusion of Blue chip companies and the wide and balanced industry
Representation in the SENSEX makes it the ideal benchmark for fund
Managers to compare the performance of their funds.

III. FOR INDEX BASED DERIVATIVES PRODUCTS

Institutional investors, money managers and small investors all refer to the
SENSEX® for their specific purposes The SENSEX® is in effect the
proxy for
the Indian stock market. Since SENSEX® comprises of leading
companies in
All the significant sectors in the economy, we believe that it will be the
most
liquid contract in the Indian market and will garner a pre-dominant market
share.

Objectives:

1. Establishing a nationwide trading facility for all types of securities

2. Ensuring equal access to all investors across the country through an
appropriate telecommunication network
3. Providing fair, efficient & transparent securities market using electronic

63
 trading system
4. Enabling shorter settlement cycles and book entry settlements
5. Meeting International benchmarks and standards

WHY LIST A FIRM IN BSE?

Mentioned below are some of the advantages of listing a firm in Bombay Stock Exchange
(BSE):
 Registering in BSE offers a chance to the industrialists to raise fund for new ventures
or acquisition or growth.
 Registering in BSE also offers and an exit itinerary to shareholders who are interested
in investing in private equity.

64
 Registering in BSE assisting in raising an autonomous assessment of the firm to the
market.
 Registering in BSE increases a firm's public portfolio with clients, dealers,
shareholders, media, etc.
 Registering in BSE increases a firm's competence to raise more funds via preferential
subscription, copyright issues, GDRs, etc. In the sue course, the method draws an extensive
unit of professional shareholders.
 Registering in BSE offers enduring liquidity to the investors of the registered unit,
which further helps in expanding its investor's base.
- See more at: http://business.mapsofindia.com/india-market/bse-
stock.html#sthash.nxk7PGFG.dpuf

PROFILE OF BSE:

In the history of 135 years, Bombay Stock Exchange has assisted the expansion of Indian
corporate industry by offering it with adequate fund raising platform from both national and
international market.

At present, BSE is top most stock exchanges in the world in context of the number of firms
cataloged under it. In context of number of business deals managed via its hi-tech trading set-

65
 up, BSE is the 5th most active in the globe. As per WFE 2009 Market Highlights, BSE is
among the 10 major international exchanges in context of market investment of the firms
registered under it. The total amount of investment dominated by the cataloged firms under
BSE as on 31st March, 2010 was USD 1.36 Trillion.

LANDMARKS ACHIEVED BY BSE :

Some of the landmarks achieved by the BSE are mentioned as under:

 The stock exchange procured Marketplace Technologies in the year 2009 to augment its domestic
machinery expansion competence and to permit greater duration to trade for latest products.
 It introduced a treatment display place for company bonds recognized as Indian Corporate Debt
Market(ICDM)
 BSE procured 15% venture in United Stock Exchange (USE) to trigger the expansion of the
exchange and interest rate derivatives
 It introduced BSE Star Mutual Fund buying and selling platform to allow its associates to make
use of the prevailing infrastructure for business deals in the sectoral plans.
 The stock exchange even provides a AMFI Authorization for Mutual Fund Consultants via BSE
Training Institute (BTI)
- See more at: http://business.mapsofindia.com/india-market/bse-stock.html#sthash.nxk7PGFG.dpuf

BSE and Sustainability:

Sustainability in a general sense can be seen as meeting the needs of the present without
compromising the ability of future generations to meet their own needs. Environmentalists
have long warned that our current patterns of economic growth and resource consumption, so
severely threaten the earth's carrying capacity that ecological collapse is likely, if not

66
inevitable. 

BSE being a responsible stock exchange is taking various initiatives in the domain of
sustainability and corporate social responsibility. BSE has launched theme based indices like
S&P BSE Carbonex and S&P BSE Greenex. BSE is also participating in the sustainable
stock exchanges initiative. BSE has signed Memorandum of Understanding with Ministry of
Corporate Affairs to launch corporate social responsibility index. 

BSE - Corporate Social Responsibility Index

:BSE and Indian Institute of Corporate Affairs (IICA - Established by Ministry of Corporate
Affairs), have signed a Memorandum of Understanding (MoU) on September 23, 2013 to
work collaboratively in the domains of business sustainability, Corporate Social
Responsibility (CSR), investor education and other allied areas. 

MAJOR COMPANIES IN BSE:

1. Bharat Heavy Electricals

2. Bharat Petroleum
3. Birla Corporation
4. HDFC Bank
5. Hindustan Motors
6. ICICI Bank
7. Infosys Technologies Limited
8. State Bank of India
9. Tata Motors

BSE (SENSEX):

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SENSEX CALCULATION METHODOLOGY

SENSEX is calculated using the "Free-float Market Capitalization" methodology. As per

this methodology, the level of index at any point of time reflects the Free-float market

value of 30 component stocks relative to a base period. The market capitalization of a

company is determined by multiplying the price of its stock by the number of shares issued
by the company. This market capitalization is further multiplied by the free-float factor to
determine the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often
indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the
Free-float market capitalization of 30 companies in the Index by a number called the Index
Divisor. The Divisor is the only link to the original base period value of the SENSEX.

It keeps the Index comparable overtime and is the adjustment point for all Index adjustments
arising out of corporate actions, replacement of scrips etc. During market hours, prices of the
index scrips, at which latest trades are executed, are used by the
trading system to calculate SENSEX every 15 seconds and disseminated in real time.

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 UNDERSTANDING FREE-FLOAT METHODOLOGY 

Free-float Methodology refers to an index construction methodology that takes into

consideration only the free-float market capitalisation of a company for the purpose of
index calculation and assigning weight to stocks in Index. Free-float market capitalization
is defined as that proportion of total shares issued by the company that are readily
available for trading in the market.

It generally excludes promoters' holding, government holding, strategic holding and other
locked-in shares that will not come to the market for trading in the normal course. In
other words, the market capitalization of each company in a Free-float index is reduced to
the extent of its readily available shares in the market. 

In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001
and Bankex in June 2003. While BSE TECk Index is a TMT benchmark, Bankex is
positioned as a benchmark for the banking sector stocks. Sensex becomes the third index
in India to be based on the globally accepted Free-float Methodology.

THE 30 SENSEX STOCKS ARE:

ACC, Ambuja Cements, Bajaj Auto, BHEL, Bharti Airtel, Cipla, DLF, Grasim Industries,
HDFC, HDFC Bank, Hindalco Industries, Hindustan Lever, ICICI Bank, Infosys, ITC,
Larsen & Toubro, Mahindra & Mahindra, Maruti Udyog, NTPC, ONGC, Ranbaxy
Laboratories, Reliance Communications, Reliance Energy, Reliance Industries, Satyam
Computer Services, State Bank of India, Tata Consultancy Services, Tata Motors, Tata Steel,
and Wipro.

THE GENERAL GUIDELINES FOR BSE SENSEX ARE AS FOLLOWS:

69
A) LISTING HISTORY:

The scrip should have a listing history of at least 3 months at, BSE. Minimum requirement of
3 months is reduced to one month, if full market, capitalization of a newly listed company
ranks among top 10 in the list of BSE, universe. In case, a company is listed on account of
merger/ demerger, amalgamation, minimum listing history would not be required.

B) TRADING FREQUENCY:

The scrip should have been traded on each and every, trading day in the last three months.
Exceptions can be made for extreme,reasons like scrip suspension etc.

C) FINAL RANK:

The scrip should figure in the top 100 companies listed by final rank. The final rank is arrived
at by assigning 75% weightage to the rank on the basis, of three-month average full market
capitalization and 25% weightage to the, liquidity rank based on three-month average daily
turnover & three-month, average impact cost.

D) MARKET CAPITALIZATION WEIGHTAGE:

The weightage of each scrip in SENSEX, based on three- month average free-float market

capitalization should be at least, 0.5% of the Index.

UNDERSTANDING HOW THE SENSEX IS CALCULATED

70
The whole nation is obsessed with the rise and fall of the Sensex whether or not people are
directly or indirectly associated with it. With the increase in economic activity in the nation,
the Sensex has become a household term keenly followed by millions each day. But the
methodology employed to calculate the Sensex is known to very few people.

UNDERSTANDING SENSEX

The Sensex is primarily an index reflecting the Bombay Stock Exchange (BSE). Established
in 1875, the stock exchange did not have an official index till Jan 1, 1986 when the Sensex
was adopted for gauging the performance of the Indian markets. The other important index in
India is the National Stock Exchange (NSE) barometer -- the Nifty. The Sensex comprises of
30 prominent stocks derived from all key sectors which are traded actively in the exchange.
Thus, the Sensex truly reflects the movement of the Indian stock markets.

CALCULATION METHODOLOGY FOR SENSEX

Like the other major financial indexes of the world, the Sensex has also shifted to the 'Free
Float market capitalization' methodology to determine its figures with effect from September
1, 2003. The level of the index is a direct reflection of the performance of the 30 selected key
stocks in the market.

Free-float market capitalization is defined as that proportion of total shares issued by the
company that are readily available for trading in the market. It generally excludes promoters'
holding, government holding, strategic holding and other locked-in shares that will not come
to the market for trading in the normal course. So, simply put, Free-float market
capitalization is the proportion of total shares available for trading to the general public.

Note: Suppose company A has 1,000 shares in total, of which 200 are held by the promoters,
so that only 800 shares are available for trading to the general public. These 800 shares are
the so-called 'free-floating' shares. If the price of each share is 120 rupees, then the 'total'
market capitalization of the company is 120,000 rupees (1,000 x 120), but its free-float
market capitalization is 96,000 rupees (800 x 120).

71
Sensex is calculated through the following steps:

1. The market capitalization of each of the 30 companies comprising the index is first
determined by multiplying the price of their stocks with the number of shares issued by that
company.

2. The market capitalization is then multiplied to the free-float factor to derive the free-float
market capitalization. (The free-float factor of a company is the multiple with which the total
market capitalization of that company is adjusted to arrive at its free-float market
capitalization. It is determined by the BSE based on the information submitted by the
companies. The value of the free-float factor lies between 0.05 and 1.00. A free-float factor
of say 0.55 means that only 55 pct of the market capitalization of the company will be
considered for index calculation.)

3. The free-float market capitalization of the Index constituents is then divided by a number
known as the Index Divisor. This index divisor is the sole link to the original base period
value of the index. (For the Sensex, the base value period, it is 1978-79) This value provides
for comparison of the index over a period of time.

For example, if the days' Market Capitalization based on the performance of the 30 key
stocks is 8060000 and the base index of 1978-79 is 60000. The index divisor becomes
100/60000 and the Sensex index value equals 8060000 x 100/60000 = 13433 for that day.

HIGHLIGHTS:
ACHIVEMENTS

72
 At par with international standards, BSE Ltd. has been a pioneer in several areas over the
decades and has many firsts and key achievements to its credit. BSE is the first exchange in
India.

 Launch a special platform for trading in SME securities

 Introduce Equity Derivatives
 Launch a Free Float Index - S&P BSE SENSEX
 Launch Exchange Enabled Internet Trading Platform
 Obtain ISO certification for a stock exchange
 Exclusive facility for financial training – BSE Institute Ltd.
 Launch its website in Hindi and regional languages
 Host the popular opening-bell ceremony in Indian capital markets
 Launch mobile-based trading in India in Sept 2010
 Become securities market infrastructure member of SWIFT in India and provide
corporate actions to custodians in ISO 15022 format
 Launched S&P BSE SENSEX Realized S&P BSE Volatility (REALVOL) Index in
Nov 2010

Besides the above, BSE has taken large strides in product and service innovation for the
benefit of its members and investors, notable ones being 

 Launch of a reporting platform for corporate bonds

 Launch of the S&P BSE IPO index and S&P BSE PSU website
 Revamp of its website with wide range of new investor-friendly features
 Launch of trading in S&P BSE SENSEX futures on EUREX and leading exchanges of
the BRICS nation bloc
 Launched Smart Order Routing for members and investors
 Introduced SACT (SMS alert & Complaint Tracking system)
 Launched co-location facility at BSE premises in November 2010
 Reduction in membership fees to Rs. 10 lakh for new memberships to promote financial
access and inclusion.

73
 AWARDS AND RECOGNITIONS :

 As a pioneering financial institution in the Indian capital market, BSE has won several
awards and recognitions that acknowledge the work done and progress made. 

 CIO Power List 2015

 SKOCH Renaissance Award 2014 for Contribution to Economy
 SKOCH Renaissance Award 2014 for Corporate Social Responsibility
 Net magic Innovative Champion Award – IT Consolidation growth & Scalability 2014
 India Innovative Awards- Big Data Innovation 2014
 ET Now – CISCO Technology Awards 2014
 Unicom –India Top 50 companies with best software 2014
 HR was awarded with Asia's Best Employer Brand Awards at Singapore in two
categories in August 2014

 Asia's Best Employer Brand Award

 CHRO of the Year Award

 Lokmat HR Leadership Award at Mumbai in June-2014

 50 most talented global HR leaders in Asia at the World HRD congress at Mumbai in
February-2014
 FIICI-Frames Best Animation Film-International Category for the Investor Education
television commercial

74
 India Innovation Award for Big Data Implementation
 ICICI Lombard & ET Now Risk Manager Award in BFSI Category
 SKOCH Order of Merit for E-Boss for qualifying among India’s Best 2013
 Indian Merchant Chamber Award in the Large Enterprise Category for use of
Information Technology
 Best Managed Financial Derivatives Exchange in the Asia Pacific by the The Asian
Banker
 The Golden Peacock Global CSR Award for its initiatives in Corporate Social
Responsibility
 BSE has won NASSCOM - CNBC-TV18’s IT User Awards, 2010 in Financial
Services category
 BSE has won Scotch Virtual Corporation 2010 Award in the BSE StAR MF category
 Responsibility Award (CSR), by the World Council of Corporate Governance
 Annual Reports and Accounts of BSE have been awarded the ICAI awards for
excellence in financial reporting for four consecutive years from 2006 onwards
 Human Resource Management at BSE has won the Asia - Pacific HRM awards for its
efforts in employer branding through talent management at work, health management at work
and excellence in HR through technology.

75
VISION AND SECURITY OF BSE:

BSE vision is to be the most sought after learning provider in the world in areas of financial
and leadership learning, by pioneering the generation and dissemination of knowledge for the
enhancement of skills and capabilities of professionals and aspiring professionals. The vision
of the Bombay Stock Exchange is “Emerge as the premier Indian stock exchange by
establishing global benchmarks.” That means the exchange is thinking big in terms of
customer service and trading activity. That being said, the market has not only experienced
explosive growth in terms of trading volume, but also in terms of overall return to investors.

After compensating for inflation, the BSE has averaged a roughly 18% annual return when
measured by Sensex, the most popular stock index in India – over the last 15 years. Other
important indices originating from the Bombay exchange include the BSE 100, BSE 500,
BSEPSU, BSEMIDCAP, BSESMLCAP, and BSEBANKEX.

Protecting the interests of investors dealing in securities is one of the primary objectives of
the exchange. The exchange provides this additional security by ensuring remedy of
grievances whether this is against member companies or member/brokers. Overall guidelines
for the marketplace are established by the Securities and Exchange Board of India (SEBI).

The Bombay Stock Exchange has a national reach in India, claiming a presence in over 400
towns and cities throughout the country. The exchange is operated through a unique and
propriety computer system known as the “BSE on Line Trading System” or BOLT. The
exchange has also received ISO 9001:2000 certification in the areas of surveillance and
clearing /settlement functions.

76
BSE Indices

In an attempt to offer an enhanced demonstration of the expanding number of registered

firms, bigger investments and new corporates, BSE introduced DOLLEX-200 and BSE-200
on 27th May, 1994. In the process it has achieved a lot in standardizing itself to the diverse
requirements of the shareholders and market players. 

In an attempt to satisfy the requirement of more extensive and industry specific indices, BSE
has incessantly been triggering the assortment of its indices. Other indices launched which
followed are; BSE-500 in 1999, BSE-PSU and BSE TECK in 2001. Later the unit altered all
its indices to free-float technique. BSE broadcasts data on the Value-Yielding ratio, the Cost
to Book Value Ratio and the Dividend Return Ratio on the basis of daily index
transactions.The worth of all BSE indices is upgraded on statistical basis during transaction
hours and is exhibited via its website, news cable intermediaries and BOLT set-up.

The indices are analyzed sporadically by the BSE Index Committee which comprises
renowned autonomous finance experts who draw the comprehensive policy rules for the
expansion and sustenance of the indices.

MAINTENANCE OF BSE INDICES:

One of the important aspects of maintaining continuity with the past is to update the base
year average. The base year value adjustment ensures that replacement of stocks in Index,
additional issue of capital and other corporate announcements like 'rights issue' etc. do not
destroy the historical value of the index. The beauty of maintenance lies in the fact that
adjustments for corporate actions in the Index should not per se affect the index values.
The Department of BSE Indices of the exchange does the day-to-day maintenance ofthe
index within the broad index policy framework set by the BSE Index Committee.
The Department ensures that all BSE Indices maintain their benchmark properties by
striking a delicate balance between frequent replacements in index and maintaining its
historical continuity. The Index Committee of the Exchange comprises of experts on
capital markets from all major market segments. They include Academicians, Fund

77
managers from leading Mutual Funds, Finance Journalists, Market Participants,
Independent Governing Board members, and Exchange administration

78
BSE MANAGEMENT,NETWORK AND FACTS

The Bombay Stock Exchange (BSE), also known as the Stock Exchange Mumbai, is one of
the oldest stock exchanges in all of Asia dating back to 1875 when it was known as the
Native Share and Stock Brokers Association and became the first stock exchange in the
country to be recognized by the government.
In 1956, BSE obtained a permanent recognition from the Government of India under the
Securities Contracts (Regulation) Act, 1956. The exchange is home to about 4,900 listed
companies with a total market capitalization of around 81 trillion Rupees or nearly $1.8
trillion.

In the past and even now, it plays a pivotal role in the development of the country’s capital
market. This is recognized worldwide and its index, SENSEX, is also tracked worldwide.
Earlier it was an Association of Persons (AOP), but now it is a demutualized and corporatized
entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE
(Corporatization and Demutualization) Scheme, 2005 notified by the Securities and
Exchange Board of India (SEBI).

The BSE is also one of the busiest stock exchanges in the world, currently ranking around
number five in terms of annual transactions. The exchange has experienced explosive growth
with a four-fold increase in trading volume over the last 15 years.

79
 BSE NETWORK:

The Exchange reaches physically to 417 cities and towns in the country. The framework of it
has been designed to safeguard market integrity and to operate with transparency. It provides
an efficient market for the trading in equity, debt instruments and derivatives. Its online
trading system, popularly known as BOLT, is a proprietary system and it is BS 7799-2-2002
certified. The BOLT network was expanded, nationwide, in 1997. The surveillance and
clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

Bombay Stock Exchange is managed professionally by Board of Directors. It comprises of

eminent professionals, representatives of Trading Members and the Managing Director. The
Board is an inclusive one and is shaped to benefit from the market intermediaries
participation.

The Board exercises complete control and formulates larger policy issues. The day-to-day
operation of BSE is managed by the Managing Director and its school of professional as a
management team.

BSE FACTS AND FIGURES:

 In 2009, the average volume of business conducted on the BSE was approximately $40
billion each month.
 The number of shares traded each month on the BSE is in the range of 40 – 50 million.
 The total market capitalization for the companies traded on the BSE is in the area of $1.1
trillion. All of the above dollar values are stated in USD.
 First in India to introduce Equity Derivatives.
 First in India to launch a Free Float Index.
 First in India to launch US$ version of BSE Sensex.
 First in India to launch Exchange Enabled Internet Trading Platform.
 First in India to obtain ISO certification for Surveillance, Clearing & Settlement.
 BSE On-Line Trading System (BOLT) has been awarded the globally recognized the
Information Security Management System standard BS7799-2:2O02.

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 First to have an exclusive facility for financial training

CORE VALUES:

Our core values represent our priorities, our culture and the driving force behind our actions
as listed below:

 Pursue knowledge in its entirety

 Ignite in our students a lifelong love of learning.
 Celebrate and learn from our diversity.
 Open the world to our students.
 Be forward thinking, pioneering and business aligned.

BSE’S INTERNATIONAL CONVENTION HALL

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The Bombay Stock Exchange provides convention hall for listed companies ’and other
Institutions to hold their Annual/ordinary General Meetings, Listing ceremonies, Analyst and
any other important event.

It is centrally located at Mumbai, which can be easily reached from Church gate or CST (VT)
railway stations. It has a capacity of around 700 to 900 persons with state-of-the-art
infrastructure. The hall has Projection Equipment, Web-cast facility and a Business Room
with Facsimile, Internet, Photocopier and telecom equipment.

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 CONCLUSION

Bombay stock exchange is the oldest stock exchange in Asian with a rich heritage, now
spanning three centuries in its 133 years of existence. What is now popularly known as BSE
was established as “The Native Share & Stock brokers Association” in 1875. BSE is the first
stock exchange in the country which obtained permanent recognition (in 1956) from the
government of India under the securities contracts (Regulation) Act 1956. BSE’S pivotal and
pre-eminent role in the development of the Indian capital market is widely recognized. It
migrated from the open outcry system to an online screen – based order driven trading system
in 1955. Earlier an Association Of person (AOP), BSE is now a corporatized and
demutualized entity incorporated under the provisions of the companies Act, 1956 pursuant
to the BSE (Corporatization and Demutualization) SCHEMES, 2005 notified by the securities
and exchange board of India(SEBI) With demutualization ,BSE has two of world’s best
exchanges, as its strategic partners.

In the ending of year 2007, the SENSEX was increased very high. It reached at point 17000
on sep. 2007. i.e. rising of SENSEX Was to heavy investment of the foreign investors in
Indian Market.

On the other hand this fall down of SENSEX is the best opportunity for the investors so that
in future when the SENSEX rise then the investors will get maximum profit.

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 BIBLIOGRAPHY

THIS PROJECT WAS MADE USING THE FOLLOWING WEBSITE.

www.wikipedia.com

www.investopidia.com

www.scribd.com

www.bseinindia.com

BOOKS REFERRED:

FINANCIAL INSTITUTIONS AND STOCK MARKET

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