What is Stock Exchange | Stock Exchange

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STOCK EXCHANGE EASY WAY TO EARN MONEY,

Transcript of What is Stock Exchange | Stock Exchange

Page 1: What is Stock Exchange | Stock Exchange

STOCK EXCHANGE

EASY WAY TO EARN MONEY,

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WHAT IS STOCK EXCHANGE?

Definition of Stock Exchange : The securities regulation act of 1956defined stock exchange as “an association , organization , or aindividual which is established for for the purpose of assisting ,regulating , and controlling business in buying ,selling and dealingin securities.”

Meaning : This comes under treasury sector ,which providesservice to stock brokers & traders to trade stocks ,bonds andsecurities. Stock exchanges helps the companies to raise their fund.Therefore the companies needs to list themselves in the StockExchange and the shares will be issued which is known as equity ora ordinary share and these shareholders are the real owners of thecompany the Board Of Directors of the Company are elected out ofthese Equity Shareholders only.

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FEATURES OF STOCK EXCHANGE

It is an organized market

It is a securities market

It is an important constituent of capital market i.e., market for long-term finance

It is a voluntary association of persons desirous of dealing in securities

Stock exchange is a voluntary association, its membership is not open to everybody

In a stock exchange, only the members can deal in i.e., buy & sell securities

The members of a stock exchange can buy and sell securities either as brokers for & on behalf of their clients

The dealings in a stock exchange are under certain accepted code of conduct i.e., rules and regulations

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IMPORTANT FUNCTION OF STOCK EXCHANGE

Provide central and convenient meeting places for sellers and buyer of securities

Increase the marketability and liquidity of securities

Contribute to stability of prices of securities

Equalization of price of securities

Smoothen price movement

Help the investors to know the worth of their holdings

Promote the habit of saving and investment

Help capital formation

Help companies and government to raise funds from the investors

Provide forecasting service

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HISTORY OF STOCK EXCHANGE

The stock exchange was established by “East Indiacompany” in 18th century . In India it was establishedin 1850 with 22 stock brokers opposite to town hallBombay .This stock exchange is known as oldest stockexchange of Asia.

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Initial members who are still running their business in stock exchange are

D.S.Prabhudas &company

Jamnadas Morarjee

Champak lal Devidas

Brymohan Laxminarayan

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BROKER AND JOBBER

BROKER: He is one acts as a intermidiary on behalf of others. A broker in a stock exchange ,is a commission agent who transacts business in securities on behalf of non members.

JOBBER: He is not allowed to deal with the public directly .He deals with brokers who are engaged with the investors . Thus, the securities is bought by the jobber from members and sells to members who are operating on the stock exchange as broker.

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DIFFERENCES BETWEEN A JOBBER AND A BROKER

JOBBER

A jobber is an independent dealer in securities, purchasing or selling securities on his own account

A jobber deals only with the brokers ,does not deal with the general public

A jobber earns profit from his operations i.e., buying and selling activities

Each jobber specializes in certain group of securities

BROKER

A broker deals with the jobber on behalf of his clients. in other words, a broker is a middleman between a jobber and clients

A broker is merely an agent, buying or selling securities on behalf of his clients

A broker gets only commission for his dealings

The broker deals in all types of securities

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SPECULATION AND SPECULATOR

SPECULATION : It is the transaction of members to buy or sell securities on stock exchange with a view to make profits to anticipated raise or fall in price of securities.

SPECULATOR : The dealer in stock exchange who indulge in speculation are called speculator . They do not take delivery of securities purchased or sold by them , but only pay or rescue the difference between the purchase price and sale price . The different types of speculators are

BULLBEAR STAGLAME DUCK

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BULL {TEJIWALA}

He is speculator who expects the future raise in price of securities he buys the securities to sell them at future date at the higher price.He is called as bull because his activities resembles as a bull , as the bull tends to throw its victims up in the air through its horns. In simple the bull speculator tries to raise the price of securities by placing a big purchase orders.

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BEAR {MANDIWALA}

He is speculator who expects future fall in prices , he does an agreement to sell securities at future date at the present market rate .

He is called as bear because his altitude resembles with bear , as the bear tends to stamp its victims down to earth through its paws . In simple the bear speculator forces of prices of securities to fall through his activities.

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STAG {DEER}

He operates in new issue of market . He is just like a bull speculator . He applies large number of shares in the issue market only by paying , application money , allotment money. He is not a genuine investor because , he sells the alloted securities at the premium and makes profit. In simple he is cautious in his dealings . He creates an artificial rise in prices of new shares and makes profits.

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LAME DUCK

He is speculator when the bear operator finds it difficult to deliver the securities to the consumer on a particular day as agreed upon , he struggles as a lame duck in fullfilling his commitment . This happens when the prices do not fall as expected by the bear and the other party is not willing to postpone the settlement to the next period.

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Largest stock exchanges

IN THE WORLD

LONDON STOCK EXCHANGE NEW YORK STOCK EXCHANGE SHANHAI STOCK EXCHANGE AUSTRALIA STOCK EXCHANGE TOKYO STOCK EXCHANGE HONG KONG STOCK

EXCHANGE TORONTO STOCK EXCHANGE DEUTSCHE BORSE BM&F BOVESPA NASDAQ OMX STOCK

EXCHANGE

IN INDIA

NATIONAL STOCK EXCHANGE

BOMBAY STOCK EXCHANGE

CALCUTTA STOCK EXCHANGE

COCHIN STOCK EXCHANGE

MULTI COMMODITY EXCHANGE

DERIVATIVES EXCHANGE

OTC EXCHANGE

PUNE STOCK EXCHANGE

INTERCONNECTS EXCHANGE

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LONDON STOCK EXCHANGE

It was the first stock exchange established by east India company in 18th century in London. The top gainer of LONDON STOCK EXCHANGE is “Blue chip shares”.

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BOMBAY STOCK EXCHANGE

It is oldest and first stock exchange of India established in the year 1875. First it was started under baniyan tree opposite to town hall of Bombay over 22 stock brokers. The top gainer in BSE is 100 companies in that GMR infra is first

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NATIONAL STOCK EXCHANGE OF INDIA(NSE OR NSEI)

The NSE of India is the leading stock exchange of India, covering 370 cities and

towns in thecountry. It was established in1994 as a TAX company. It was established by 21 leading

financial institutions and banks like the IDBI,ICICI,IFCI,LIC,SBI,etc.

Features of NSEINation wide coverage i.e., investors from all over country

Ringless i.e., it has no ring or trading floor

Screen-based trading i.e., trading in this stock exchange is done electronically.

Transparency,i.e.,the use of computer screen for trading makes the dealings in securities transparent.

Professionalization in trading, i.e., it brings professionalism in its functions

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OVER-THE-COUNTER EXCHANGE OF INDIA(OTCEI)

The OTCEI is a national,ringless and computerized stock exchange. It was established in october,1990.it started its

operation in september,1992.

Features of OTCEI1. It is a nation-wide stock exchange. Its operational areas cover entire India.2. It is a ringless stock exchange. The trading ring(i.e., trading place)commonly found in a

traditional stock exchange is not found in the OTCEI.3. It is a computerized stock exchange

Advantages of OTCEI1. It helps the investors to have easy and direct access to the stock exchange2. It helps investors to get fair prices for their securities3. It provide safety to the investors4. To provide computerized trading system5. To provide investors a convenient,effcient and transparent mode of

investment

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SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI)

The SEBI was constituted on 12th April,1988 under a resolution of the Government of India. On 31st

january,1992,it was made a statutory body by the Securities and Exchange board of India Act,1992.

The Companies (Amendment) Act,2000 has given certain powers to SEBI as regards the issues and transfer of

securities and non-payment of dividend

Function Of SEBIRegulating the business in stock exchange and any other securities markets.Promoting and regulating self-regulatory organization.Registering and regulating the work of collective investment scheme,incluing mutual funds.Prohibiting fraudulent and unfair trade practices relating to securities market.Promoting education, and training of intermediaries of securities market

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Power of SEBIPower to approve the bye-laws of stock exchangePower to inspect the books of accounts Power to grant license to any person for the purpose of dealing in certain areas.Power to delegate powers exercisable by it.Power to try directly the foliation of certain provision of the company Act

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How to see the value of shares in stock exchange

SENSEX is an indicator to checkout in BSE

NIFTY is an indicator to checkout in NSE

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Latest news of BSE and NSE

Most profitable company in BSE is GMR Infra

Most profitable company in NSE will be RELIANCE and ICICI

During last three months nearly only 26% of profit is earned by our stock exchanges the working hours will be

From 9:30 to 3:30 from Monday to Friday

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The Daily graph of the companies will be showed in following manner

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How stock exchanges get money

They get their money by listing fees paid by the corporation to have their

company traded

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HOW TO DEAL AND INVEST IN STOCK EXCHANGE

In order to deal with a securities one as to have an account called Demat a/c or Trading a/c. It is just like a bank account. Same procedure of opening the bank account is followed to open the a/c. But all the banks does not give this facility of opening the account , only few banks provide this facility. After demat a/c or Trading a/s is opened then the securities is bought and sold. The banks which gives facility of demat a/c in India is

ICICI Bank Citi Bank Bank of Baroda

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HAPPY INVESTMENT WITH LOTS OF PROFITS

END

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