Page 69 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes NASDAQ 100: It is an Index of 100 of the largest domestic and international non-financial
companies listed on NASDAQ. The component companies' weight in the index is based on their
market capitalization, with certain rules controlling the influence of the largest components.
The index doesn't contain financial companies. However, it includes the companies that are
incorporated outside the US. Both these aspects of NASDAQ 100 differentiate it from S&P 500
and Dow Jones Industrial Average (DJIA). The index includes companies from the industrial,
technology, biotechnology, healthcare, transportation, media, and service sectors.
Dow Jones Industrial Average (DJIA): DJIA was formed for the first time by Charles Henry
Dow. He formed a financial company with Edward Jones in 1882, called Dow Jones & Co. In
1884, they formed the first index including 11 stocks (two manufacturing companies and nine
railroad companies). Today, the index contains 30 blue-chip industrial companies operating in
America. The Dow Jones Industrial Average is calculated through the simple average, i.e., the
sum of the prices of all stocks divided by the number of stocks (30).
S&P 500: The S&P 500 Index was introduced by McGraw Hill's Standard and Poor's unit in 1957
to further improve tracking of American stock market performance. In 1968, the US Department
of Commerce added S&P 500 to its index of leading economic indicators. S&P 500 is intended to
be consisting of the 500 largest publically-traded companies in the US by market capitalization
(in contrast to the FORTUNE 500, which is the largest 500 companies in terms of sales revenue).
The S&P 500 Index comprises about three-fourths of total American capitalization.

LSE (London Stock Exchange)

The London Stock Exchange was founded in 1801 with British as well as overseas companies
listed on the exchange. The LSE has four core areas:
Equity markets: The LSE enables companies from around the world to raise capital. There are
four primary markets; Main Market, Alternative Investment Market (AIM), Professional Securities
Market (PSM), and Specialist Fund Market (SFM).
Trading services: Highly active market for trading in a range of securities, including UK and
international equities, debt, covered warrants, exchange-traded funds (ETFs), exchange-traded
commodities (ETCs), REITs, fixed interest, contracts for difference (CFDs), and depositary receipts.

Market data information: The LSE provides real-time prices, news, and other financial
information to the global financial community.
Derivatives: A major contributor to derivatives business is EDX London, created in 2003 to bring
the cash, equity, and derivatives markets closer together. It combines the strength and liquidity
of LSE and equity derivatives technology of NASDAQ OMX group.

The exchange offers a range of products in derivatives segment with underlying from Russian,
Nordic, and Baltic markets. Internationally, it offers products with underlying from Kazakhstan,
India, Egypt, and Korea.

Frankfurt Stock Exchange

It is situated in Frankfurt, Germany. It is owned and operated by Deutsche Börse. The Frankfurt
Stock Exchange has over 90 percent of turnover in the German market and a big share in the
European market. The exchange has a few well-known trading indices of the exchange, such as
DAX, DAXplus, CDAX, DivDAX, LDAX, MDAX, SDAX, TecDAX, VDAX, and EuroStoxx 50.
DAX is a blue-chip stock market index consisting of the 30 major German companies trading on
the Frankfurt Stock Exchange. Prices are taken from the electronic Xetra trading system of the
Frankfurt Stock Exchange.

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