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A stock exchange is an entity authorised by the government through which a listed company’s securities are traded. Through a stock exchange, you can trade stocks, bonds and ETPs (exchange-traded products). We have covered the following in this article:
The following are the list of stock exchanges operating in India:
Bombay Stock Exchange or BSE, established in 1875, is not only India’s oldest stock exchange but also Asia’s. It is the largest stock exchange in India and is operating out of Mumbai, Maharashtra. As of February 2021, the market cap of BSE stood at $2.8 trillion.
National Stock Exchange or NSE was established in 1992. It is the first stock exchange in India to provide a decentralised electronic trading platform for investors. As per the latest records, the market cap of NSE was $2.27 trillion. Like BSE, even NSE is based out of Mumbai, Maharashtra.
Calcutta Stock Exchange or CSE was established in 1908. It is operating out of Kolkata, West Bengal. The Securities and Exchange Board of India (SEBI) has asked the CSE to exit. However, the matter is currently being heard at the Calcutta High Court.
India International Exchange or India INX was founded in 2017. It is India’s first international stock exchange. It operates out of Gujarat International Finance Tec-City and is a subsidiary of BSE.
Metropolitan Stock Exchange or MSE was founded in 2008. The MSE is a modern clearing house formed to perform the clearance and settlement of contracts involving multiple asset classes. It is operating out of Mumbai, Maharashtra.
The NSE IFSC Limited (NSE International Exchange) came to the fore in 2016. It is a subsidiary of the NSE. It operates out of Gujarat International Finance Tec-City.
The following are the most important functions of stock exchanges:
The stock exchanges facilitate in discovering fair prices of the publicly listed securities. Relentless trading of securities helps in determining the price of the listed securities.
The industrialisation of a nation is reliant on capital availability. This is ensured by the stock exchanges as the public can invest directly in the companies through stock exchanges.
The stock exchanges lay down guidelines for the operation of the listed entities. These norms have to be strictly followed by the companies, thereby protecting investors’ interest as they would have financed the operations. Any major decision to be taken by the company will have to be brought to the stock exchange notice.
Stock exchanges will help investors of certain bonds, such as sovereign gold bonds (SGBs), to sell their holdings within the lock-in period or maturity.
The existence of stock exchanges has helped listed companies avoid availing a loan as they could raise capital by issuing securities. This has helped them save a significant amount in the form of regular interest outgo.