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STOCK EXCHANGE

An extended arm of the Regulator

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Stock Exchange

A stock exchange, securities exchangeor (in Europe) bourse is a corporation

or mutual organization whichprovides "trading" facilities for stockbrokers and traders, to trade stocksand other securities.

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Functionality

A Market Place

Providing an organized platform, putting

together, those wanting to sell shares intouch with those seeking to buy.Effectively, the Stock Exchange is amarket for second hand shares! To

facilitate this process the market hastwo main 'players' - stock brokers andmarket makers.

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A Monitoring Entity

Monitors and regulates the acts of

companies listed with it and membersempanelled with it and other marketintermediaries in pursuit of promotinginvestors awareness and protection of

their interest.

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Listing Agreement

Investors

Bye-Laws, AOA, MOA

Listed Companies Members

SEBI

Stock Exchange

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The First Stock Exchange

In 11th century France thecourtiers de change wereconcerned with managing andregulating the debts of agriculturalcommunities on behalf of thebanks. As these men also traded in

debts, they could be called the firstbrokers.Cont..

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The First Stock Exchange The Dutch later started joint stock

companies, which let shareholdersinvest in business ventures and get a

share of their profitsor losses. In1602, the Dutch East India Companyissued the first shares on theAmsterdam Stock Exchange. It wasthe first company to issue stocks andbonds. In 1688, the trading of stocksbegan on a stock exchange inLondon.

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History of Stock Exchanges

Around the Globe

In 1860, the exchange flourishedwith 60 brokers. In fact the 'Share

Mania' inI

ndia began when theAmerican Civil War broke and thecotton supply from the US toEurope stopped. Further thebrokers increased to 250.

Cont..

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History of Stock Exchanges

Around the Globe At the end of the war in 1874, the

market found a place in a street

(now called Dalal Street). In 1887,"Native Share and Stock Brokers'Association" was established. In1895, the exchange acquiredpremises in the street which wasinaugurated.

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Role of Stock Exchanges

Facilitating Capital Augmentation

Converting saving into surplus

Increasing opportunity cost ofmoney

Facilitating Financial and Strategic

growth to companies Balancing Wealth Segmentation

Cont..

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Introducing a Free and FairCorporate Governance Mechanism

Creating investment opportunitiesfor small investors

Funding to Government Projects

Mirror of the Economic Growth

Role of Stock Exchanges

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Ownershiporiginated as mutual organizations,owned by its members. recenttrend for stock exchanges to

demutualize, where the memberssell their shares in an initial publicoffering. In this way the mutualorganization becomes a

corporation, with shares owned bynon-members.

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Other types of exchangesIn the 19th century, exchangeswere opened to trade forward

contracts on commodities.Exchange traded forward contractsare called futures contracts.

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Structure ofIndian Stock Exchanges

BSE the oldest exchange in Asia

was established in 1875 asVoluntary not for profit un-incorporated association ofpersons.

Ahemdabad and Indore stockexchanges were other exchangeshaving similar structure.

Cont..

CORPORATISATION AND DEMUTUALISATION

OF INDIAN EXCHANGES

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The membership of these exchangesentitled the person to be the part ownerof the exchange as well as a broker on

the exchange.

All other regional stock exchanges wereformed as companies under section 12 ofthe Companies Act, 1956 as companylimited by shares/guarantee, but had anot for profit motive.

Cont..

CORPORATISATION AND

DEMUTUALISATION OF INDIAN EXCHANGES

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CORPORATISATION AND

DEMUTUALISATION OF INDIAN EXCHANGES These exchanges worked like a co-

operative society where the share of thecompany entitled the owner to be the

shareholder of the exchange and alsogave him a right to act as broker on theexchange.

OTCEI is a company formed under

section 25 of the Companies Act, 1956.

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CORPORATISATION AND

DEMUTUALISATION OF INDIAN EXCHANGES

NSE is a company formed undersection 12 of the Companies Act,

1956 with a profit motive.

Thus all exchanges in India except

NSE were not-for-profit entities.

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Stock Indices

Stock indices represents the performance ofstock market and by proxy, reflects investorssentiment on the state of the economy.BSE INDICES:

BSE Sensex , BSE 100 Index, BSE 200 Index,BSE 500 Index, BSE MIDCAPIndex, BSESMLCAPIndex, BSE TECk Index, BSE PSUIndex, BSE AUTO Index, BSE BANKEX, BSE CGIndex, BSE CD Index, BSE FMCG Index, BSE

HC Index, BSE IT Index, BSE Metal Index, BSEOil & Gas Index.NSE INDICES:Nifty, Jr. Nifty, CNX IT, Bank Nifty

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Mutual structure of IndianStock Exchanges

Indian stock exchanges (exceptNSE and OTCEI) therefore followed

a mutual structure where theownership and management rightsof the exchange are bundled withtrading rights as a broker and allthree are represented by ownershipof card/share of the exchange.

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Demutualisation

In order to overcome the perceiveddisadvantages of a mutual structure, theglobal trend amongst the exchanges hasbeen to demutualise themselves.

Demutualisation means segregation ofmembership right in a recognized stock

exchange into a distinct ownership rightthrough the ownership of shares anddistinct trading and / or clearing right ofthat recognized stock exchange.

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Corporatisation

In order to demutualise, a corporatestructure of the exchange is a necessity.

Exchanges like BSE that were not evena corporate entity needed to beconverted from association of personsto a Company limited by shares.

This process of conversion is termed ascorporatisation.

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Indian Effort to makeexchanges more vibrant and

transparent KANIA COMMITTEE REPORT

Management-three stakeholders namelyshareholders, brokers and investing public

to be equally represented. Disbursal of majority shareholding post

demutualisation to non-brokers.

Concept ofconverting part of reserves of

the exchange into deposit from brokersand issuance of shares.

Consolidation of exchangesrecommended.

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Amendments made recently

In Income Tax Act, 1962 relating toincidence of capital gains tax.

In Indian Stamp Act, 1899 relating to

exemption of stamp duty on transfer ofimmovable property.

In SCRA, 1956 to give powers to SEBI toapprove any scheme of Corporatisation /Demutualisation.

In SEBI (Stock Broker and Sub-brokerRegulations, 1992) for regulating theactivities of Stock Broker and Sub-broker in atransparent manner.

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INTRODUCTION OUR

MISSION

OUR VISION

MILESTONES

BOARD

STAKES INDSE

TRADINGPROSPECTS

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OUR MISSION

To provide world class tradingfacilities for investors andcompanies.

To introduce innovativetechniques and instruments tomaximize shareholders value.

To uphold highest standards ofcorporate governance andtransparency.

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CAPITALS EXCHANGE

FOR

CAPITAL MARKET

OUR VISION

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FAST COMPANY FAST GROWTH

JUN47 : INCORPORATION OF DSE

JUN56 : RECORDING OF TRANSACTIONS IN CHOPRI

DEC57 : SCRA ENACTED AND MADE APPLICABLE

MAR82: PERMANENT RECOGNITION U/S 4 OF SCRA,

1957

CONT

MILESTONES

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FEB87 : COMPUTERISED RECORDING STARTED

F

EB88 : LAUNCHED DSE INDEX

MAR89: CONSTITUTION OF CUSTOMER PROTECTION

FUND

APR92: DSE INDEX CROSSES 1000 POINTS

CONT.

MILESTONES

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JUN96 : FORMATION OF SUBSIDIARY - DFSL

MAR97: ALL TIME HIGH NO. OF COMPANIES LISTED

AT 3895

AUG97: LAUNCHED ONLINE TRADING PLATFORM

CONT

MILESTONES

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DEC97

INAUGURATATION

OFDSE HOUSE

CONT

MILESTONES

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SEP2000

ALL TIME HIGH

TRADING VOLUME AT Rs. 9648.69 Cr.

CONT

MILESTONES

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JUN2007

DSE COMPLETED GLORIOUS YEARS

CONT.

MILESTONES

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AUG2007

DEMUTUALISATION PROCESS

COMPLETED

SUCCESSFULLY

MILESTONES

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DEMUTUALIZATIONOF DSE

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DSE HAD TO ENSURE

Induction Of Non-tradingShareholding Of Not Less Than51% Of Post Demutualization

Equity Shareholding

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A N D

To restrict the trading

members shareholding up to49% of post demutualizationequity shareholding of the

exchange

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PROCESS OF

DEMUTUALIZATION

Constitution of DemutualizationCommittee of the Exchange

Appointment of Valuers

Offer for Sale under the Scheme

Invitation for Expression ofInterest

Approvals from various regulatoryauthorities

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COMPOSITION OF BOARD

BOARD

EXECUTIVE DIRECTOR

Mr. H. S. SidhuNON EXECUTIVE DIRECTORS

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NON EXECUTIVE

DIRECTORS

SHAREHOLDER

DIRECTORS

PUBLIC INTEREST

DIRECTORS

TRADING MEMBER

DIRECTORS

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STAKEHOLDERS OF DSE

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19.84%

Foreign

Holding

31.25%

Domestic Holding

48.91%

Trading Member Holding

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TRADING PROSPECTS

CAPITALS EXCHANGE FORCAPITAL MARKET

COMPOSITE TRADING PLATFORMPROVIDER EXCHANGE

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SMALL & MEDIUM ENTERPRIZES

ORIENTED EXCHANGE

SINGLE WINDOW CLEARANCE

FACILITATOR EXCHANGE

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Time Has Come

To

Go

Global

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Success Journey

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Success JourneyContinues

Towards New Era OfGrowth...

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The Future Ahead...

SENSEX

DSE Index

NIFTY

2008-09

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