Ramesh Singh Test: Security Market In India - 1 - UPSC

• World's first stock exchange was established in Antwerp, Belgium (then part of the Netherlands) in 1631, the London Stock Exchange opened in 1773 and then Philadelphia Stock Exchange (the first in the New World) opened in 1790.

• The first stock exchange in India, the Bombay Stock Exchange known as The Native Share and Stock Brokers' Association was set up in 1870.

S&P CNX-50 is the index of the National Stock Exchange of India (NSE). The index represents the weighted average of 50 of the largest and most liquid Indian securities listed on the NSE. It is designed to provide a broad representation of the Indian equity market and is used as a benchmark for measuring the performance of various investment funds and portfolios.

• Though the Over the Over the Counter Exchange of an Ltd (OTCEI) was set up in 1989, it could commence trading only in 1992.

India's first fully computerised stock exchange was promoted by the UTI, ICICI, SBI Cap among others, to overcome problems such as lack of transparency and delays in settlements prevalent in the older stock exchanges.

• The Bombay Stock Exchange Ltd. (BSE), earlier a regional stock exchange, converted into a national one in 2002.

• The biggest in India, it accounts for almost 75 percent of total stocks traded in Indian and is the fifth largest in the world (based on market capitalisation).

There are at present four indices connected with the BSE:

• Sensex: The sensitive index (i.e., Sensex) is a 30 stocks index of the BSE which was enlarged to include 50 stocks in 2000 but soon was cut down to the original level. This index represents the Indian stock market.

• BSE-200: This is a 200 stock share index of the BSE (including the 30 stocks of the Sensex) which has its Dollar version too—the Dollex.

• BSE-500: In mid-1999, the BSE came up with a 500-stock index representing major industries and many sub-sectors of the economy with information technology getting a significant weightage.

• National Index: An index of 100 stocks being quoted nationwide (Bombay, Delhi, Kolkata, etc.) was developed to give broader/wider representation of the stock market since the Sensex consists of only 30 stocks. The 30 stocks of the Sensex are included in the National Index.

• A jobber is a broker's broker or one who specialises in specific securities catering to the needs of other brokers—in India also known as Taravaniwallahn (in the BSE).

• In the London Stock Exchange, he is called a market-maker while in the New York Stock Exchange he is called a specialist.

• The Bombay Stock Exchange has made it mandatory for every company with a share capital of over Rs. 3 crore to appoint jobbers or market-makers if it seeks enlistment. Such an arrangement enables investors to buy and sell shares on the stock exchange and thus liquidity increases.

• The Forward Markets Commission is a statutory body set up under the Forward Contracts (Regulation) Act, 1952. It functions under the administrative control of the Department of Consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution.