NOTE: PLEASE REFER TO DICTATION GIVEN IN CLASS FOR COMPLETE NOTES

BSE, NSE, OTCEI

BSE:

BSE is the leading and the oldest stock exchange in India as well as in Asia. It was established in 1887 with the formation of "The Native Share and Stock Brokers' Association". BSE is a very active stock exchange with highest number of listed securities in India. Nearly 70% to 80% of all transactions in the India are done through BSE alone. The BSE is the world's 11th largest stock exchange with an overall market capitalization of USD 1.43 Trillion as of March, 2016. More than 5500 companies are publicly listed on the BSE.The exchange is professionally managed under the overall direction of the Board of Directors, Governing Body, or Executive Committee. The Board comprises of eminent professionals, representatives of trading members and the Managing Director of the Exchange. The day-to-day operations of the exchange are managed by the managing Director and CEO and an expert Management Team of Professionals. BSE Indices are BSE Sensex, BSE Mid Cap, BSE Small Cap, BSE 500. The objectives of BSE are as follows:

  • To promote, develop and maintain a well-regulated market for dealings in securities.
  • To safeguard the interest of members and the investing public having dealings on the exchange.
  • To promote industrial development in the country through efficient resource mobilization by way of investment in corporate securities.
  • To establish and promote honourable and fair practices in securities transactions.

NSE:

Formation of National Stock Exchange of India Limited (NSE) in 1992 is one important development in the Indian capital market. The need was felt by the industry and investing community since 1991. The NSE is headed to become a leading stock exchange in terms of technology, systems and practices in due course of time. NSE is the largest and most modern stock exchange in India. In addition, it is the third largest exchange in the world next to two exchanges operating in the USA. The NSE uses a screen based trading system. In the NSE, the available system provides complete market transparency of trading operations to both trading members and the participates and finds a suitable match. The NSE does not have trading floors as in conventional stock exchanges. The trading is entirely screen based with automated order machine. The screen provides entire market information at the press of a button. At the same time, the system provides for concealment of the identify of market operations. The screen gives all information which is dynamically updated.

NSE has collaborated with several universities like Gokhale Institute of Politics & Economics (GIPE), Pune among others to offer MBA and BBA courses. NSE has also provided mock market simulation software called NSE Learn to trade (NLT) to develop investment, trading and portfolio management skills among the students. The simulation software is very similar to the software currently being used by the market professionals and helps students to learn how to trade in the markets. NSE also conducts online examination and awards certification, under its Certification in Financial Markets (NCFM) programmes. At present, certifications are available in 46 modules, covering different sectors of financial and capital markets, both at the beginner and advanced levels. The list of various modules can be found at the official site of NSE India. In addition, since August 2009, it offered a short-term course called NSE Certified Capital Market Professional (NCCMP).

OTCEI:

The OTCEI was incorporated in October, 1990 as a Company under the Companies Act 1956. It became fully operational in 1992 with opening of a counter at Mumbai. It is recognised by the Government of India as a recognised stock exchange under the Securities Control and Regulation Act 1956. It was promoted jointly by the financial institutions like UTI, ICICI, IDBI, LIC, GIC, SBI, IFCI, etc.

The features of OTCEI are :-

OTCEI is a floorless exchange where all the activities are fully computerised. Its promoters have been designated as sponsor members and they alone are entitled to sponsor a company for listing there. Trading on the OTCEI takes place through a network of computers or OTC dealers located at different places within the same city and even across the cities. These computers allow dealers to quote, query & transact through a central OTC computer using the telecommunication links. A Company which is listed on any other recognised stock exchange in India is not permitted simultaneously for listing on OTCEI. OTCEI deals in equity shares, preference shares, bonds, debentures and warrants.

The Participants of OTCEI are :-

  • Members and dealers appointed by OTCEI,
  • Companies whose securities are listed,
  • Investors who trade in the OTCEI,
  • Registrar who keeps custody of scrip certificates,
  • Settlement Bank which clears the payment between counters, and
  • SEBI and Government who supervise and regulate the working.

For any company to list its shares in OTCEI, it requires sponsorship by members of the OTCEI and it must also have two market makers. The OTCEI has also laid down rules regarding listing requirements.

  • Once a company lists its securities in the market, it cannot delist its securities for a minimum period of 3 years.
  • There are certain norms to be fulfilled by companies for sale of equity shares or any other securities under bought out deal (i.e., a company at its early stage may issue shares with an understanding that it will buy back after 5 years at the market price from out of its profits.)
  • 20% of the issued capital should be retained by the promoters for a period of not less than 3 years.
  • There should be two market makers as per the guidelines of OTCEI.

The benefits that are offered to companies listed with OTCEI are as follows:

  • It provides an opportunity for fair pricing of an issue through negotiation with the sponsors.
  • Lots of costs associated with public issue of capital are saved through this mode. It provides an opportunity to companies to raise funds through capital market instruments at an extremely low cost as compared to a public issue.
  • OTCEI lists scrips with upto 40 percent of the capital offered for public trading. The limit has now been brought down to 20 percent in the case of closely held companies and new companies. As a result, the present management of the companies are saved of threats of takeover if they restrict public offer.
  • Accessing a large pool of captive investor base through the OTCEI’s computerized network is made possible for companies. Though nationwide network for servicing of investors, companies listed on OTC Exchange can have a larger investor base.
  • Shares of all unlisted companies can now be traded on OTCEI
  • Platform for issuers and first-level investors like financial institutions, state level financial corporations, Foreign Institutional Investors, etc.
  • Increasing business for the market constituents