Page 129 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes The exchange, while providing an efficient and transparent market for trading in securities, debt
and derivatives upholds the interest of investors and ensures redressal of their grievances
whether against the companies or its own member brokers. It also strives to educate and enlighten
the investors by conducting investor education programmes and making available to them
necessary information inputs.
Out of the twenty two stock exchanges in the country, Mumbai is the largest, with over six
thousand stocks listed. The BSE accounts for over two-thirds of the total volume in the country.
The BSE 'sensex' is a widely used market index for the BSE.

National Stock Exchange of India (NSE)

The NSE of India limited has genesis in the report of the high powered study group on
establishment of new stock exchanges which recommended promotion of a National Stock
Exchange by financial institutions to provide access to investors from all across the country on
an equal footing. Based on the recommendations, NSE was promoted by leading financial
institutions. Government of India incorporated NSE in November 1992 as a tax paying Company
unlike other stock exchanges in the country.

On its recognition as stock exchange under the Securities Contract Act, 1956 in April 1993, NSE
commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.
Currently, two hundred large companies are traded on the NSE; that list is expected to gradually
expand as the exchange stabilizers. The NSE is a computerized market for debt and equity
instruments.

The NSE, located in Bombay, was set up in 1993 to encourage stock exchange reform through
system modernization and competition.
To improve the settlement system and minimize the risks associated these in, NSE has set up a
subsidiary National Securities Clearing Corporation (NSCC).

Primary Market

Primary market is the place for issue for new securities to raise funds for investment and/or
discharge some obligations.

They do so either through public issues, rights issues or offer for sale.
It is a public issue if any body and everybody can subscribe for the securities.
It is a rights issues if the offer is made only to existing shareholder.
However if the issue is made to select few people, it is called a private.

Both private and public sector companies make public issues. Every month roughly 130 issues
takes place unlike many other countries, where issues are privately placed, public issues in India
are directly marketed to retail investors all over the country.

Secondary Market

Secondary market enables the investor to adjust his holdings of securities in response to changes
in assessment about risk and return by selling or buying the securities. It enables him to sell
securities for cash to meet the liquidity needs.
It essentially comprises of the stock exchanges, which provide a platform for trading of securities.
The securities are traded, cleared and settled as per a detailed well-settled regulatory framework

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