The market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets, is known as the equity market or stock market. The stock market is one of the most important components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a part of ownership in the company. The share market makes possible to its investors to grow their small initial sums of money into large ones, and to become wealthy without taking the risk of starting a business as their own or making the sacrifices that often accompany a high-paying career.
A stock exchange is a place or organization for the trade of shares of listed companies. A stock exchange is a form of exchange which provides services for stock brokers and traders to buy or sell stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
Securities traded on a stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it must be listed there. Usually, there is a central location at least for record keeping, but trade is increasingly less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of increased speed and reduced cost of transactions. Trade on an exchange is by members only.
There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities.
In recent years, various other trading venues, such as electronic communication networks, alternative trading systems and “dark pools” have taken much of the trading activity away from traditional stock exchanges.
ORIGIN OF INDIAN STOCK MARKET
BSE and NSE are the leading stock exchanges in India. Apart from these two stock exchanges there are another 22 stock exchanges are also trading shares in India. But BSE and NSE established themselves as leaders in stock exchanges. There are about 80 percent of equity volume are traded in these two exchanges.
BOMBAY STOCK EXCHANGE(BSE)
Bombay Stock Exchange is the oldest stock exchange in Asia. It is popularly known as BSE. It was established as ‘The Native Share and Stock Broker’s Association’ in 1875. . It is the world’s 5th most active in terms of number of transactions handled through its electronic trading system. There are over 6000 stocks are listed in BSE having the market capitalization around 968000 crores
BSE is the 1st in India and second in the world to obtain an ISO 9001:2000 certifications. It is also the first exchange in the country and second in the world to receive Information Security Management System. BSE’s normal trading session are from 9:15am to 3:30pm on all days of week except Saturdays Sundays and holidays declared by the Exchange in advance. BSE automated its system in1995.