PROFILE OF BOMBAY STOCK EXCHANGE LIMITED

Transcription

1 PROFILE OF BOMBAY STOCK EXCHANGE LIMITED

2 The profile of the Bombay Stock Exchange Limited (BSE) is given in this chapter. The issues focused are: genesis of the BSE; objectives; functions; organisation and management; demutualisation; trading; clearing and settlement system; indices; and comparison with other stock exchanges especially National Stock Exchange (NSE). 1. Genesis ' The BSE is the oldest stock exchange in Asia. Its history can be traced back to 1850s. At the beginni~g, four Gujarati stock brokers and one Parsi stock broker gathered together under Banyan trees in front of Mumbai Town Hall. This location has been changed many times as the number of brokers constantly increased. Finally, this group had moved to Dalal Street during The BSE started its operations during 1875 under the name of the Native Share and Stock Brokers Association. When the government passed the Securities Contracts (Regulation) Act (SCRA), 1956, the BSE was the first stock exchange that obtained recognition under the Act. During 2005, the erstwhile BSE became the BSE Limited under the corporatisation and demutualisation scheme of During 2007, the BSE had completed the process of demutualisation. The BSE carries the depth of knowledge of capital markets since its inception. It is located in Mumbai, the commercial capital of India. The BSE has been the backbone of the country's capital market. In the beginning, the operations of the BSE were confined to Bombay only because of natural constraints. In those days, there was open outcry system to bid securities on the floor of the BSE. After the emergence of sophisticated technology and induction of online trading through computer network, trading ring was dispensed with. During 1995, the BSE had replaced its age old open outcry system with the BSE Online Trading (BOLT). The operational area of the BSE has been widely enlarged due to BOLT. It eliminated physical boundaries. It enables investors to carry out trading activities from any location facilitated by internet.

3 2. Objectives and functions. The main objectives behind the establishment of the BSE could be sun~marised as under: (i) to make funds available to entrepreneurs of business class; (ii) to ensure maximum possible return on investment to investors; (iii) to provide a platform for savings, investments and reinvestment activity; (iv) to provide a market for the purchase and sale of securities;(v) to promote and develop a well- regulated market for dealings in securities; (vi) to establish and promote honourable and just practices in the securities market; and (vii) to encourage investment culture across the country. Finance is the oxygen for any economy. Stock exchanges are commonly associated with industrial finance. Stock exchanges provide transaction facility to investors and thus discover the price for securities traded on them. The stock exchanges are organised markets for buying and selling existing industrial stocks, shares, debentures, government securities and hybrid instruments due to their functioning. The main function of a stock exchange is to create conducive climate for an active primary market and to ensure fair and efficient trading in securities in the secondary market. The former Finance Minister of India, Sri C.D Deshmukh, while placing a bill on securities contracts (regulation) bill in the Lok Sabha during November 1955, stated that the economic services which a well constituted and efficiently run securities market can render under normal incentives and impulse of private enterprise are considerable'. This statement reveals the importance of stock exchanges in promoting desirable economic growth. ~t present, the BSE functions across 380 medium and big cities in the country. The foremost function of the BSE is to channelize savings from household sector to meet the investment requirements of productive sectors of the economy. The functions include to: (i) impart liquidity to securities in the market i.e. securities can be readily converted into cash; (ii) provide.stability of continuity in price; (iii)

4 provide easy marketability of shares and other securities so that value of these securities can keep pace with growth; (iv) provide a well organised mechanism to create a common platform for trading in securities; (v) safeguard the interest of investors through strict enforcement of rules and regulations; (vi) regulate members through registration, inspection and enforcement of provisions;(vii) provide speculation in the market to absorb more investor folk into the market; and (viii) provide listing and quotation for trading of securities2. The BSE also undertakes support functions such as training and education, technology solutions, datalinformation services and index service$. 3. Organisation and Management Historically trading members used to control and manage the stock exchanges in the country. This model was designed to serve the exchanges, which were essentially regional in character. After opening of the economy, the Indian stock market registered robust development. With the advent of telecommunications during 1990, a need was felt to recognise the structure of the BSE to cope with the interest of investors spread over the country. Towards this end, the BSE has initiated several measures to separate trading rights from ownership and management. The Governing Board of the BSE comprises 9 directors, one managinglchief executive director, two public representatives and three representatives from each of the shareholders and trading members. A President, Vice-President, Treasurer and Secretary are annually elected from among the elected directors of the governing body. The members of the stock exchange elect their directors. The representation of trading members does not exceed one fourth of total strength and the remaining directors are appointed as per the guidelines given by the Securities and Exchange Board of India (SEBI) from time to time4.

5 4. Demutualisation Traditionally, stock exchanges were organised in the form of clubs, with the ownership and control vested with the brokers. In case of disputes, often the interests of brokers alone were protected, leaving the investors at the losing end. Therefore, to reduce the dominance of trading members in the management of stock exchanges, the government of India has proposed to corporatize the stock exchanges by which ownership, management and trading membership segregated from one another. In this row, during 2005, the erstwhile BSE became the BSE Limited. The ownership has been diluted. The public shareholders took 51 per cent of brokers' stake5. The public shareholding includes 5 per cent share of each of its strategic partners i.e., Deutsche Borse and Singapore Exchange. 5. Membership In reflection of the need to upgrade the professional standards of market intermediaries, the admission standards for trading membership have become more vigilant. The BSE administration has tightened the qualifications/norms such as capital adequacy, experience etc. Now, the ownership and management of the BSE are completely separated from the rights of trading member to trade on the BSE. No person is eligible for admission as a member unless : (i) he/she worked for not less than two years as partner with or an authorised clerk or remisier or apprentice; or (ii) he/she agrees to work for a minimum period of two years, as a representative member with another member and enters into bargains on the floor of the exchange not in his own name but in the name of such other member; or (iii) he/she succeeds to the established business of a deceased or retiring member who is his father, uncle, brother or any other person who is in the opinion of the Governing Board a close relative; or (iv)he/she has a minimum networth, possesses a minimum working capital of cash and/or marketable securities, and possesses assets belonging to himself/herself and/or spouse or children, of such nature and value as

6 the Governing Board may from fime to time, in its opinion, determine and consider acceptable; and (v) he/she qualifies in a written test conducted by the exchange and in case of a corporate member, the directors referred to in sub-clause (v) of Rule 19A(b) qualify in a written test conducted by the exchange, and in the case of a Financial Corporation, the Chief Executive Officer and another Director/Officer both possessing experience as provided in sub-clause (v) of Rule 19A(b) qualify in a written test conducted by the exchange6. The applicant must be engaged solely in the business of securities and must not be engaged in any fund/asset based activity. Admission of trading members in the BSE is a two stage process. After meeting the minimum eligibility to become a member, the applicants are required to go through a written examination followed by an interview. The candidates are interviewed by a committee consisting of experienced people from the industry. The committee assesses the applicants' capability to operate as a member7. Trading members of the BSE are the individuals, partnership and corporate members. They have the right to trade in the stocks listed on the BSE. An investor can buy/sell securities through one of the trading members of the exchange. The members must be registered with the SEBI. In India, traditionally, brokerage firms were proprietary or partnership concerns with unlimited liabilities. This restricts the amount of capital that such firms can raise. The ever growing volume of transactions made it imperative for such firms to be well capitalised and professional. The necessary changes were effected to the existing legal frame work to open up the membership of stock exchanges to corporate members with limited liability. In recognition of the fact that the trading members were undercapitalised, the BSE has encouraged the setting up of corporate trading members with higher capitalisation. The year wise membership in the BSE during is presented in Table 3.1. The membership is spread over individuals, partnership firms and corporates. The individual membership has

7 declined from 178 in 2001 to 147 in 2010 with relative ups and downs. Of the total membership in the BSE, the individual members constituted per cent in 2001 as compared to per cent in Table 3.1: Year-wise ~embershi~ in BSE during Year : IM Membership PM CM Total (15.04) 147 (14.66) 31 (3.15) 30 (2.99) 805 (81.81) 826 (82.35) 984 (100) 1003 ( 100) Notes: IM Individual membership PM Partnership membership CM Corporate membership Figures in brackets indicate the percentage to total Source: SEBI, Hand Book of Statistics on Indian Securities Market- 2011, Mumbai, 2012, 17-23" The partnership members were 48 or 6.97 per cent in 2001 vis-avis 30 or 2.99 per cent in In the meanwhile, there are to and fro changes in it. The corporate members were 463 in 2001 as compared to 826 in There is a gradual growth in relative as well as absolute

8 terms throughout the period. The share of corporate members was Per cent in 2001 as against per cent in As pointed out in the first chapter, the share of individual and partnership xnembers has declined while that of corporate members increased. This has prevailed in all the stock exchanges in the country in the same period. When all the three categories of meibers are put together, the aggregate members were 689 in 2001 while they were 1003 in It may be noted that this trend is contrary to the one observed in the first chapter. If all the stock exchanges are considered as a whole, the membership had declined in 2010 as compared to It may be concluded that both the individual and partnership members have declined in 2010 in both absolute and relative terms over 2001, whereas the corporate membership has shot up in 2010 upon There is nearly a two fold increase in corporate members. Thus, corporate members account for a lion's share in the BSE. Further, on an overall basis, the membership has gone up in the BSE. The relative share of the BSE in the total membership of all the stock exchanges in India during is furnished in Table 3.2. In the case of individual membership, the proportion of the BSE in the aggregate individual membership of all the stock exchanges was 3.15 per cent in 2001 as compared to 3.43 per cent in It was the least at 2.86 per cent in 2002 while the highest at 3.45 per cent in each of 2008 and In the case of partnership membership, the share of the BSE has varied between per cent and per cent during the period. With regard to corporate membership, the BSE has formed per cent in 2001 vis-a-vis per cent in 2010 with relative fluctuations. The years 2002 and 2009, with a proportion of per cent and per cent, formed the lowest and the highest sequentially. When all the three categories of members are considered as a whole, the proportion of the BSE was in the range of per cent. ~t may be summed up that the relative share of the BSE in the total membership of all the stock exchanges is the least in individual

9 Year Table 3.2: Relative Sham of BSE in the Total Membership of all Stock Exchanges in India during I 1 Partnership Individual membership I membership, I Corporate membership All India All India All India aggregate aggregate I All categories total I * (2.96) 148 (3.45) 148 (3.45) (10.88) 3 1 (1 1.31) 3 1 (10.88) (17.61) 767 (19.39) 805 (19.74) (3.43) (10.34) ) (19.68) Note: Figures in brackets indicate the percentage to total Source: As in Table (9.60) 946 (11.11) 984 (11.37) 1003 (11.39) (100.0) membership followed by partnership membership and corporate membership. Further, its proportion has never crossed 20 per cent in any one of the years of study period. Furthermore, there is a decline in individual membership and partnership membership in 2010 over 2001 in the BSE as well as Indian aggregate. A converse situation prevails in both the cases.

10 The state-wise distribution of clients of members in the BSE during is shown in Table 3.3. Table 3,3: State-wise Distribution of Members' Clients in BSE during 2010 State Maharash tra Gujarat - Delhi West Bengal Uttar Pradesh Tamil Nadu AP Karnataka Rajasthan Madhya Pradesh Haryana Kerala Punjab Jharkhand Bihar Orissa Chattisgarh Uttarakhand Assam Chandigarh Jammu& Kashmir Himachal Pradesh Goa Pondicherry Tripura Dadra Nagar Haveli Daman& Diu Meghalaya Sikkim Manipur Nagaland Andaman Nicobar Islands Arunachal Pradesh Mizoram Lakshadweep Total source :http: / / www, bseindia.com No. of clients 49: Oh to total (neg.) (neg.) / markets/ kevstatics/ Kewtat clients. -

11 During 2010, there were lakh clients to the members of the BSE spread over different states and union territories in the country. Of them, lakhs or per cent are in Maharashtra followed by Gujarat with lakhs or per cent. These two states account for 40 per cent in the aggregate of clients. The share of each of six states such as Dalhi, West ~en~al, Uttar Pradesh, Tamil Nadu and Karnataka varied between 6.04 per cent and 6.61 per cent. The proportion of each of the five states like Rajasthan, Madhya Pradesh, Haryana, Kerala and Punjdb was in the range of per cent. The account of Jharkhand, Bihar and Orissa was 1.31 per cent, 1.26 per cent and per cent respectively. The share of each of eight states was in the level of per cent. The account of each of nine states and union territories differed between 0.01 per cent and 0.08 per cent. The share of all these was 0.23 per cent. The proportion of Mizoram and Lakshadweep is negligible. It may be said that, out of the states and union territories, there is high uneven distribution of clients to the members of the BSE. This is on account of many causes such as stage of economic development of the region concerned, spread in the density of population, distribution of income among the investing public in financial instruments, habit of thrift and savings, availability of online facility, perception of risk, psychology of investors, knowledge of finance etc. 6. Trading mechanism The trading system of the BSE, known as BOLT, is fully automated and screen based. During 1994, BOLT came into existence as a part of four-phase computerisation programme. This was introduced to bring an automated trading environment in the BSE. The aim is to convert the open outcry system of trading into screen-based trading system (STS). The extension of BOLT to cities outside Mumbai started during The existing technique can handle a maximum of 3,500 trades per second. On an average, per second, 222 orders can be executed with a peaking speed of 6,000 orders. The system comprises 54

12 17,000 Trade Work Stations (TWS) network on Ethernet, Very Small Aperture Terminals (VSAT) and Local Area Network (LAN). The wide area network (WAN) of the BSE is connected to over 8,000 BOLT TWS spread over 380 cities across the country. Further, WAN alone connects 2,500 member offices within Mumbai and 29 major metropolitan cities to BOLT. BOLT enables the members to trade simultaneously with ease and efficiency across the county. In one stroke it dispensed with need for people to congregate on the flooi- of an exchange to trade and took the exchange floor to the investors' doorstep. BOLT enables the BSE to xnder quality and standard service to members, investors and other market intermediaries. Presently, BOLT has the capacity to execute 80 lakh orders per day. Further, the BSE has introduced centralised exchange based internet trading system viz. BSEWEBx.co.in for the first time in the world. This initiative enables investors to trade on the BSE platform from anywhere in the globe. Through its technology, the BSE provides a facility for screen based trading with automated order meeting. The trading system of the BSE is an anonymous order driven system. This technique helps members to place orders, whether large or small, without disclosing their names. The disadvantage of disclosure of identity is avoided. The trading system operates on a strict principle of price-time priority. All orders received on the system are sorted out with the best priced order getting the first priority of matching. Orders are automatically matched by computer. The computer keeps the system more transparent and fair. If an order does not find a suitable match, it remains in the system and is displayed to the whole market till a fresh order comes in or the earlier order is cancelled or modified. The trading system provides flexibility to users to place several kinds of orders: orders with time related, price related and volume related conditions can be placed/implemented at the same time without any delay in their execution. It also provides market

13 ix~formation online through many enquiry channels. The market screens, at any time, provide information on the total offer depth relating to a security i.e. the high and lows, the last traded price, spread of the security etc. This information is updated online, which enables a member to make better decisions. The clearing and settlement system in a stock exchange refers to the mechanism where the seller delivers the securities and purchaser makes payment thereon. The clearing and settlement system of the BSE had undergone many changes'along with the changes of security market as a whole. The clearing and settlement operations of the BSE are managed by the Bank of India (BOI) Shareholding Limited, which is the Joint Venture of the BSE and the BOI. As per the directions of the SEBI, all the transactions in all groups in equity segment and fixed income segment are required to be settled under T+2 basis. In the BSE, the settlement cycle starts on Monday and ends on Friday. The BSE circulates settlement calendar among the market participants. It shows the dates of settlement and the related issues. Under this system, the deals struck on a particular day are settled after a given number of business days. T+2 means that the exchange of securities for money between seller and buyer will take place after a span of 2 days after the BSE. Member settles trade deals on his own account or on behalf of individual or corporate or institutional clients. This is carried out either through member himself or through the SEBI registered custodian appointed by hirnlclient. The BSE generates delivery, and receives orders for the trading day excluding Saturday, Sunday and any other public holiday. Table 3.4 shows the trade settlement cycle time and process of operations in transactions carried out by members in different group scrips after sum up of purchase and sale deals. The deliverylreceive order passes information about the name of the company's script and the quantity to be delivered /received by the member through clearing house. The

14 Day T ( Trading T+2 Table 3.4: Trade Settlement Cycle Time and Process in the Timings BSE during A.M to 3.30 P.M (Market timings) Job performed Buy/sell of securities confirmation of all trades Processing and downloading of files to brokers/custodians by A.M. Pay-in of securities and funds by 1.30 P.M Pay-out of securities and fund Source: Chapter%ZOS.~df I - market timings on the trading day are 9.30 AM to 3.30 PM. During this period, the securities are bought and sold. Under T+1, all trades are confirmed by 11 AM. Files are processed and downloaded to brokers/custodians by 1.30 PM. In the case of T+2, pay-in of securities and funds is by 11 AM and pay-out of securities and funds is by 1.30 PM. Settlement cycle in the BSE is presented in Fig Figure 3.1: Settlement Cycle in the BSE during 2010 Source: The Institute of Charted Accountants of India, Hand Book for Investing and Investor Protection, Sahitya Bhavan Publications, New Delhi,20 1 1, p2 1.

15 Every ~h01-t delivery has to be first debitedlcredited directly to the account of clearing member of the clearing house at the closing price of short-delivered shares on sthe previous trading day to the settlement day. Then, it is auctioned off on the next trading day and settled on a T+2 basis. Finally, short deliveries that are left unmatched are closed out at the highest price prevailing'on the BSE from the trade day till the day of closing out or 20 per cent above the official closing price on the auction day, whichever is higher. On the basis of nature, the'securities traded in the BSE are classified into seven groups. These include 'A', B', 'S7,T',TS','F','G' and '2'. 'A' group covers large outstanding shares, good track record and big volume of business in the secondary market. Carry forward transactions are permitted in it. At present, 2 16 companies' securities are under it. Group 'B' consists of relatively liquid securities. Group 'S' represents scripts forming part of the BSE-Indonext' segment. All the trade deals in this segment are through BOLT system. ''I" group consists of scripts that are traded on trade to trade basis. The TS' group includes those scripts traded in the BSE-Indonext' segment. These are settled on a trade to trade basis as a surveillance measure. 'F' group comprises fixed income securities whereas 'G' group government securities. 'Z' group includes securities of companies which have failed to comply with listing requirements of the BSE. All the securities are settled through the clearing house. Till the advent of online trading, an investor who wants to transact business in any.security which was not traded in the nearest stock exchange had to route orders through a series of correspondent brokers to the appropriated exchange. This has resulted in a great deal of uncertainty and high transaction cost. The BSE has made it possible to connect the parts of the nation by its online trading system. The success of any organization depends upon the efficiency and the qualification of rnembers/brokers. The trading platform of the BSE is accessible to investors only through the trading rnembers/brokers. The

16 spread of trade work stations of the BSE through BOLT across the cities is provided in Table 3.5. The' number of trading terminals were 9,705 in 2004 as against to 15,630 in On an average, per year, the trading stations were 14, There are fluctuations in the yearly progress. It varied between 0.88 per cent and per cent. The compound growth rate (CGR) was 7.04 per cent, which is insignificant. The trading was spread over 420 cities in 2004 as compared to 293 in The decline was in the range of per cent. On an average, per year, the BSE has covered cities Table 3.5: Spread of Trade Work Stations of BSE through BOLT Year Mean CGR (%) 7.04 't' cal 17.43"s Note: NS Not significant. Source: As in Table 3.1 during Trade work stations Number 9705 % of change over previous year Cities % of change over Number previous year ns during the period. The CGR in the spread of cities was per cent which is not significant. The decline in the coverage of cities is due to the emergence of the NSE as premier stock exchange in the country, establishment of regional stock exchange etc. It may be said that the trading terminals of the BSE have inc,reased but the number of cities

17 covered declined. Either the increase or decrease are insignificant during the period. 7. Indices Over the decades, the BSE has passed through good and bad periods. Till 1980s, there was no index to measure ups and downs in the prices of scrips of stock market. During 1986, the BSE came out with a stock index, which is popularly known as 'Sensex'. The launch of sensex was followed by the introduction of National Index during It comprises 100 stocks listed at five major stock exchanges such as Bombay, Calcutta, Delhi, Ahmadabad and Madras. During 1994, the BSE launched two more indices, namely, the BSE 200 and the Dollex 200 with a view to provide a representation to an increasing number of listed companies, large market capitalisation and new industry sectors. Since then, the BSE came a long way by adjusting itself to the varied needs of investors and market participants. In order to fulfil a wide range of expectations of market players, the BSE has introduced segment specific and sector specific indices. During market hours, the values of these indices are updated on real time basis and the same is displayed through BOLT system. The index committee periodically revises all the indices of the BSE. Presently, 11 sectoral indices emerged in the BSE. The details of sectoral.indices, which emerged in the BSE during , are furnished in Table 3.6. A glance at the Table reveals that five sectoral indices such as the BSE capital goods, the BSE consumer durables, the BSE fast moving consumer goods, the BSE health care and the BSE information technology were launched during After a gap of 3 years, the BSE bankex was brought during Three more indices like the BSE auto, the BSE metal and the BSE oil and gas were launched during During 2007, the BSE

18 Table 3.6: Sectoral Indices of the BBE during Name of index BSE capital goods BSE consumer durables BSE FMCG BSE health care BSE IT BSE bankex Sector Capital Goods Consumer Durables Fast Moving Consumer Goods Health Information Technology Banking BSE auto Automobile I BSE metal I Metal BSE oil and gas Oil and Gas BSE realty Real Estate BSE power index Power and Energy Source: power and the BSE realty indexes were added. Thus several sectoral indices were launched by the BSE at different points of time. 7.1 Method of compilation Date of launch In the BSE, most of the indices are calculated by following the free-float market capitalisation methodology. The free-float methodology is the process of constructing an index. The free-float market capitalisation is the total shares issued by a company, which are readily available for trading in the market. It generally excludes promoter's holdings, government holdings, strategic holdings and other locked-in shares. This method allows that the level of index at any point of time reflects the free-float value of component stocks relative to base period. The market capitalisation is multiplied by the free-float factor to arrive at the free-float market capitalisation. All the index companies have to submit the filled in free-float on quarterly basis to the BSE, Then, the BSE, on the basis of information submitted by each constituent company,determines the free-float factor for each company.

19 Once the free-float of a company is determined, it is rounded-off to the higher multiple of 5 and each company is categorised into one of the 20 bands. The free-float bands of BSE.sensex are given in Table 3.7. Band (%) Table 3.7: Free-Float and; of B8E Sensex daring 2010 Free-float factor Source: www. bseindia.com Band (%) Free-float factor If a free- float factor is 0.55, it means only 55 per cent of market capitalisation of the company will be considered for index calculation. The BSE's sensitivity index is popularly known as the BSE sensex. The sensex came into existence during Subsequently, sensex has become the barometer of the Indian stock market, Sensex is designed with global standards of index construction and review methodology. It is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of sensex is and hence the base value is 100. The index is widely used in both the domestic and international markets. Due to wider acceptance of Indian investors, the BSE sensex is regarded as the pulse of stock market. Initially, the index was calculated on the basis of full market capitalisation methodology. Later on, as a part of stock market reforms, the BSE adopted free-float methodology, in the place d full

20 market capitalisation methodology since On any trading day, closing sensex is computed by taking the weighted average of all trades of constituent companies in the last 20 minutes of trading session. The use of index closure algorithm prevents any intentional manipulation in the value of closing index. One of the important a3pects of maintenance is upgradation of data to the base year average. The adjustment of base year value ensures the replacement of stock in index, additional issues of capital and other corporate announcements like right issues etc. The index cell of the BSE takes care of day-to-day maintenance of index within the broad framework of index policy. It ensures proper maintenance of index by updating data at regular intervals. During market hours, prices of index scrips are automatically updated for every 15 seconds in all the trading work stations which are connected to the BSE trading computer. The BSE selects scrips on the basis of criteria to promote transparency in trading. The general guidelines for the selection of constituents in the sensex are: (i) listed history; (ii) trading frequency; (iii) final rank; (iv) market capitalisation weights; (v) industry representation; and (vi) track record. 8 Comparative analysis The membership in all the stock exchanges in India during 2010 is furnished in Table 3.8. In the case of corporate members, the share of the BSE was per cent followed by Delhi stock exchange. The share of corporate members has increased in all stock exchanges over the years. The percentage of total corporate members to total members in all stock exchanges was per cent during 2001, which increased to per cent during The reverse trend can be observed during the same period in the case of individuals and partnership members. The percentage of individual and partnership members to total members in all stock exchanges was per cent and 3.29 per cent respectively du~ng 2010 against to per cent and per cent respectively during

21 Table 3.8: Classfffcation of Members in Stock Exchanges in India Name of stock exchange Ahrnedabad Bangalore Bombay Bhuvaneswar Calcutta Cochin Coimbatore Delhi Gauhati Hyderabad Interconnected Jaipur Ludhiana Madhya Pradesh Madras

22 I Magadh 1. - I - I - I Mangalore I National Over the counter 1,175 (89.69) (5.19) (5.1 1) 18 (29.03) Saurashtra Uttar Pradesh 75 (20.51) Total - ~ (22.12) 64 (67.2) 259 (76.4) 245 (78.53) (3.76) 5 (1.47) 3 (0.96) Notes: CM corporate membership; IM individual membership; PM partnership membership Source: Compiled from relevant issues of Hand Book of Statistics on Indian Securities Market-201 1, SEBI, Mumbai, The share of corporate members in total members in the BSE ranged between per cent which was the second highest among all the stock exchanges. This shows a conscious effort by the BSE to improve the corporate membership so as to strengthen confidence in its operations. The members in corporate firm could raise more funds and have better infrastructure setup. This leads to better liaison between the exchange and clients. '

23 References 1. S.L.N. Sinha., The Capital Macket of India, Vora Publisher Pvt. Ltd. Bombay, 1960, p V.A. Avadhani., A Manual on Sto'ck Broklng, Himalaya Publishing House, New Delhi, 1996, p14 3. Bimal Jalan., Review of Ownership and Governance of Market Infrastructure Institutions, SEBI, Mumbai, 2008, pp http: / /articles.economictimes.indiatimes.com/ I news singapore-exchange-deutsche-borse-listing 6. BSE, Rules, Bye-laws, and Regulation, Bombay, 1957, pp Ibid, p.4