Stock Exchange
A stock exchange is a place which provides trading facilities for traders and share brokers to trade in stocks and other securities. It also provides the facilities for the issue and redemption of securities as well as other financial instruments which also includes the events like the payment of income and dividends. Generally securities traded on a stock exchange include shares, unit trusts and other pooled investment products and bonds. The initial offering of stocks and bonds to investors is done in primary market and subsequent trading is done in the secondary market. The stock exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public. There has been a significant boom in the degree of development and volume of trading in the stock exchanges.
At the stock exchange, share prices rise and fall can be seen with the ups and downs in market forces. Share prices moves up and down or remains stable when companies and the economy show signs of stability or growth. An economic recession or financial crisis could eventually lead to a stock market crash which is seen in this year due to US economy recession. This year’s recession has shown the greatest down fall in stock markets on stock exchanges all over the world. The impact is still there and it will take a longer period to cover the economic loss.
In India (NSE) National Stock Exchange and (BSE) Bombay Stock Exchange has a very prime place in stock market. Bombay Stock Exchange accounts for two-thirds of the total trading volume of the country. The main aim and objectives of the BSE is to provide a market place for the purchase and sale of security evidencing the ownership of business property or of a public or business debt. It aims to promote, develop and maintain a well regulated market for dealing in securities and to safeguard the interest of members and the investing public having dealings on the Exchange. It helps industrial development of the country through efficient resource mobilization. The market capitalization of the BSE is Rs.5 trillion. The BSE sensex is a widely used market index for the BSE. Approximately 70,000 deals are executed on a daily basis, giving it one of the highest per hour rates of trading in the world. There are around 3,500 companies in the country which are listed and have a serious trading volume. Securities and Exchange Board of India or SEBI supervises the activities of stock markets, regulates the functioning of stock exchanges and intermediaries and registers Foreign Investors trading in Indian scripts.
Thus, stock exchange plays multiple roles in the economy and today it has got very significant role in world’s economy. This year’s US recession has shown the greatest down fall in stock markets on stock exchanges all over the world. The impact is still there and it will take a longer period to cover the entire economic loss.