Page 224 - DCOM510_FINANCIAL_DERIVATIVES

Unit 14: Regulation and Securities Markets in India

and settlement guarantee. Nearly 100% of the trades settled by delivery are settled in demat Notes
form. NSE also provides a formal trading platform for trading of a wide range of debt securities
including government securities.

Did u know? The exchanges in the country offer screen-based trading system. There were
10,203 trading members registered with SEBI at the end of March 2011.
The market capitalisation has grown over the period, indicating that more companies are using
the trading platform of the stock exchange. The market capitalisation across India was around
` 68,430,493 million (US $ 1,532,598 million) at the end of March 2011. Market capitalisation ratio
is defined as the market capitalisation of stocks divided by the GDP. It is used as a measure that
denotes the importance of equity markets relative to the GDP. It is of economic significance
since the market is positively correlated with the ability to mobilise capital and diversify risk.
The all-India market capitalisation ratio decreased to 86.89 percent in 2010–2011 from 94.2 percent
in 2009–2010.

Notes The trading in non-repo government securities on NSE has been declining
considerably since 2004–2005. The aggregate trading volumes in central and state
government dated securities on SGL declined from ` 4,217,022 million (US $ 93,421 million)
in 2009–2010 to ` 4,035,492 million (US $ 90,381 million) in 2010–2011.
The number of instruments available in derivatives has increased. To begin with, SEBI only
approved trading in index futures contracts based on the Nifty 50 Index and the BSE 30 (SENSEX)
Index. This was followed by approval for trading in options based on these indices and options
on individual securities, as well as futures on interest rates derivative instruments.

Notes On the NSE, there are futures and options based on the benchmark index Nifty 50,
CNX IT Index, Bank Nifty Index, and Nifty Midcap 50, as well as futures and options on 226
single stocks (as on October 30, 2011). On the BSE, futures and options are based on the BSE-
30 (SENSEX), BSE TECk, BSE BANKEX, BSE Oil & Gas, and BSE SENSEX mini, as well as
futures and options on 99 single stocks (as on October 30, 2011).

Self Assessment

Fill in the blanks:
1. At present ………………….. stock exchanges operate all over India.
2. ………………….. can be said a location where the savers meet the real investors who need
the fund.
3. The securities market has essentially three categories of participants, namely the issuers
of securities, ………………….. and the intermediaries.
4. Indian Share Market is the oldest ………………….. incorporated in 1875.
5. The securities market has two interdependent and inseparable segments, the new issues
(primary market) and the ………………….. market.

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