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STOCK EXCHANGE
An extended arm of the Regulator
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Stock Exchange
A stock exchange, securities exchangeor (in Europe) bourse is a corporation
or mutual organization whichprovides "trading" facilities for stockbrokers and traders, to trade stocksand other securities.
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Functionality
A Market Place
Providing an organized platform, putting
together, those wanting to sell shares intouch with those seeking to buy.Effectively, the Stock Exchange is amarket for second hand shares! To
facilitate this process the market hastwo main 'players' - stock brokers andmarket makers.
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A Monitoring Entity
Monitors and regulates the acts of
companies listed with it and membersempanelled with it and other marketintermediaries in pursuit of promotinginvestors awareness and protection of
their interest.
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Listing Agreement
Investors
Bye-Laws, AOA, MOA
Listed Companies Members
SEBI
Stock Exchange
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The First Stock Exchange
In 11th century France thecourtiers de change wereconcerned with managing andregulating the debts of agriculturalcommunities on behalf of thebanks. As these men also traded in
debts, they could be called the firstbrokers.Cont..
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The First Stock Exchange The Dutch later started joint stock
companies, which let shareholdersinvest in business ventures and get a
share of their profitsor losses. In1602, the Dutch East India Companyissued the first shares on theAmsterdam Stock Exchange. It wasthe first company to issue stocks andbonds. In 1688, the trading of stocksbegan on a stock exchange inLondon.
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History of Stock Exchanges
Around the Globe
In 1860, the exchange flourishedwith 60 brokers. In fact the 'Share
Mania' inI
ndia began when theAmerican Civil War broke and thecotton supply from the US toEurope stopped. Further thebrokers increased to 250.
Cont..
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History of Stock Exchanges
Around the Globe At the end of the war in 1874, the
market found a place in a street
(now called Dalal Street). In 1887,"Native Share and Stock Brokers'Association" was established. In1895, the exchange acquiredpremises in the street which wasinaugurated.
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Role of Stock Exchanges
Facilitating Capital Augmentation
Converting saving into surplus
Increasing opportunity cost ofmoney
Facilitating Financial and Strategic
growth to companies Balancing Wealth Segmentation
Cont..
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Introducing a Free and FairCorporate Governance Mechanism
Creating investment opportunitiesfor small investors
Funding to Government Projects
Mirror of the Economic Growth
Role of Stock Exchanges
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Ownershiporiginated as mutual organizations,owned by its members. recenttrend for stock exchanges to
demutualize, where the memberssell their shares in an initial publicoffering. In this way the mutualorganization becomes a
corporation, with shares owned bynon-members.
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Other types of exchangesIn the 19th century, exchangeswere opened to trade forward
contracts on commodities.Exchange traded forward contractsare called futures contracts.
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Structure ofIndian Stock Exchanges
BSE the oldest exchange in Asia
was established in 1875 asVoluntary not for profit un-incorporated association ofpersons.
Ahemdabad and Indore stockexchanges were other exchangeshaving similar structure.
Cont..
CORPORATISATION AND DEMUTUALISATION
OF INDIAN EXCHANGES
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The membership of these exchangesentitled the person to be the part ownerof the exchange as well as a broker on
the exchange.
All other regional stock exchanges wereformed as companies under section 12 ofthe Companies Act, 1956 as companylimited by shares/guarantee, but had anot for profit motive.
Cont..
CORPORATISATION AND
DEMUTUALISATION OF INDIAN EXCHANGES
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CORPORATISATION AND
DEMUTUALISATION OF INDIAN EXCHANGES These exchanges worked like a co-
operative society where the share of thecompany entitled the owner to be the
shareholder of the exchange and alsogave him a right to act as broker on theexchange.
OTCEI is a company formed under
section 25 of the Companies Act, 1956.
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CORPORATISATION AND
DEMUTUALISATION OF INDIAN EXCHANGES
NSE is a company formed undersection 12 of the Companies Act,
1956 with a profit motive.
Thus all exchanges in India except
NSE were not-for-profit entities.
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Stock Indices
Stock indices represents the performance ofstock market and by proxy, reflects investorssentiment on the state of the economy.BSE INDICES:
BSE Sensex , BSE 100 Index, BSE 200 Index,BSE 500 Index, BSE MIDCAPIndex, BSESMLCAPIndex, BSE TECk Index, BSE PSUIndex, BSE AUTO Index, BSE BANKEX, BSE CGIndex, BSE CD Index, BSE FMCG Index, BSE
HC Index, BSE IT Index, BSE Metal Index, BSEOil & Gas Index.NSE INDICES:Nifty, Jr. Nifty, CNX IT, Bank Nifty
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Mutual structure of IndianStock Exchanges
Indian stock exchanges (exceptNSE and OTCEI) therefore followed
a mutual structure where theownership and management rightsof the exchange are bundled withtrading rights as a broker and allthree are represented by ownershipof card/share of the exchange.
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Demutualisation
In order to overcome the perceiveddisadvantages of a mutual structure, theglobal trend amongst the exchanges hasbeen to demutualise themselves.
Demutualisation means segregation ofmembership right in a recognized stock
exchange into a distinct ownership rightthrough the ownership of shares anddistinct trading and / or clearing right ofthat recognized stock exchange.
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Corporatisation
In order to demutualise, a corporatestructure of the exchange is a necessity.
Exchanges like BSE that were not evena corporate entity needed to beconverted from association of personsto a Company limited by shares.
This process of conversion is termed ascorporatisation.
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Indian Effort to makeexchanges more vibrant and
transparent KANIA COMMITTEE REPORT
Management-three stakeholders namelyshareholders, brokers and investing public
to be equally represented. Disbursal of majority shareholding post
demutualisation to non-brokers.
Concept ofconverting part of reserves of
the exchange into deposit from brokersand issuance of shares.
Consolidation of exchangesrecommended.
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Amendments made recently
In Income Tax Act, 1962 relating toincidence of capital gains tax.
In Indian Stamp Act, 1899 relating to
exemption of stamp duty on transfer ofimmovable property.
In SCRA, 1956 to give powers to SEBI toapprove any scheme of Corporatisation /Demutualisation.
In SEBI (Stock Broker and Sub-brokerRegulations, 1992) for regulating theactivities of Stock Broker and Sub-broker in atransparent manner.
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INTRODUCTION OUR
MISSION
OUR VISION
MILESTONES
BOARD
STAKES INDSE
TRADINGPROSPECTS
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OUR MISSION
To provide world class tradingfacilities for investors andcompanies.
To introduce innovativetechniques and instruments tomaximize shareholders value.
To uphold highest standards ofcorporate governance andtransparency.
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CAPITALS EXCHANGE
FOR
CAPITAL MARKET
OUR VISION
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FAST COMPANY FAST GROWTH
JUN47 : INCORPORATION OF DSE
JUN56 : RECORDING OF TRANSACTIONS IN CHOPRI
DEC57 : SCRA ENACTED AND MADE APPLICABLE
MAR82: PERMANENT RECOGNITION U/S 4 OF SCRA,
1957
CONT
MILESTONES
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FEB87 : COMPUTERISED RECORDING STARTED
F
EB88 : LAUNCHED DSE INDEX
MAR89: CONSTITUTION OF CUSTOMER PROTECTION
FUND
APR92: DSE INDEX CROSSES 1000 POINTS
CONT.
MILESTONES
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JUN96 : FORMATION OF SUBSIDIARY - DFSL
MAR97: ALL TIME HIGH NO. OF COMPANIES LISTED
AT 3895
AUG97: LAUNCHED ONLINE TRADING PLATFORM
CONT
MILESTONES
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DEC97
INAUGURATATION
OFDSE HOUSE
CONT
MILESTONES
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SEP2000
ALL TIME HIGH
TRADING VOLUME AT Rs. 9648.69 Cr.
CONT
MILESTONES
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JUN2007
DSE COMPLETED GLORIOUS YEARS
CONT.
MILESTONES
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AUG2007
DEMUTUALISATION PROCESS
COMPLETED
SUCCESSFULLY
MILESTONES
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DEMUTUALIZATIONOF DSE
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DSE HAD TO ENSURE
Induction Of Non-tradingShareholding Of Not Less Than51% Of Post Demutualization
Equity Shareholding
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A N D
To restrict the trading
members shareholding up to49% of post demutualizationequity shareholding of the
exchange
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PROCESS OF
DEMUTUALIZATION
Constitution of DemutualizationCommittee of the Exchange
Appointment of Valuers
Offer for Sale under the Scheme
Invitation for Expression ofInterest
Approvals from various regulatoryauthorities
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COMPOSITION OF BOARD
BOARD
EXECUTIVE DIRECTOR
Mr. H. S. SidhuNON EXECUTIVE DIRECTORS
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NON EXECUTIVE
DIRECTORS
SHAREHOLDER
DIRECTORS
PUBLIC INTEREST
DIRECTORS
TRADING MEMBER
DIRECTORS
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STAKEHOLDERS OF DSE
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19.84%
Foreign
Holding
31.25%
Domestic Holding
48.91%
Trading Member Holding
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TRADING PROSPECTS
CAPITALS EXCHANGE FORCAPITAL MARKET
COMPOSITE TRADING PLATFORMPROVIDER EXCHANGE
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SMALL & MEDIUM ENTERPRIZES
ORIENTED EXCHANGE
SINGLE WINDOW CLEARANCE
FACILITATOR EXCHANGE
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Time Has Come
To
Go
Global
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Success Journey
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Success JourneyContinues
Towards New Era OfGrowth...
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The Future Ahead...
SENSEX
DSE Index
NIFTY
2008-09
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