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Unit 7: Depositories and Custodians

(c) Underwriting is optional. But if appointed they are also to be approved by the SEBI. Notes
(d) Allotment is to be made with in 30 days of the closure of the subscription.
(e) No provision of retention of over subscription without SEBIs permission.
(f) A code for Book building of any issue by the merchant banker or lead manager is
also laid down by the SEBI.

7.3 Stock Exchange

Stock exchange means any body or individuals whether incorporated or not, constituted for the
purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities.

Functions of Stock Exchange

1. Stock exchange provides liquidity to the listed companies.
2. It gives quotations to the listed companies; they help trading and raise funds from the
market.
3. By obtaining the listing and trading facilities, public investment is increased and companies
were able to raise more funds.
There are twenty two stock exchanges in India. Ahmedabad, Delhi, Kolkata, Chennai and
Bangalore are major ones amongst the other stock exchanges. Three thousand brokers and
twenty thousand sub-brokers serve these stock exchanges.

Task Visit any near by stock trading house and watch how trading happens.

Globalization of Stock Exchanges

1. Demat form of trading
2. Electronic form of trading
3. Internet trading
The NSE, BSE and OTCEI have introduced screen based trading. All other exchanges (except
Guwahati, Magadh, and Bhubaneshwar) are to introduce the computerization and screen based
trading by 30th June 1996.
This will bring about greater transparency for investors, reduce spreads, allow for more effective
monitoring of prices and volume and speed up settlements.

Bombay Stock Exchange (BSE)

The stock exchange in Mumbai, popularly known as "BSE" was established in 1875 as "The Native
Share and Stock Brokers Association." It is the oldest one in Asia, even older than the Tokyo
stock exchange, which was established in 1878. It is a voluntary non-profit making Association
of Persons (AOP) and is currently in the process of converting itself into demutualised corporate
entity.

It is the first stock exchange in the country to have obtained permanent recognition in 1956 from
the Government of India under the Securities Contracts (Regulation) Act, 1956.

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