Corporate Sectors want a wide market for trading of securities. The investors want liquidity for their investments. The securities which they hold should easily be sold when they need cash. Thus, there should be a place where the securities may be purchased and sold. Stock exchange provides such a place where securities of different […].

Stock exchange provides such a place where securities of different companies can be purchased and sold. Stock exchange is a body of persons, whether incorporated or not formed with a view to hold, regulate and control the business of buying and selling securities. Stock exchanges provide services to the investors, corporate sectors and also to the society.

This project is concerned with the role of Stock exchanges in Corporate Governance. Role of exchanges in Corporate Governance has been listing and disclosure standards and monitoring compliance. Demutualization has raised issues on the role of exchanges. After demutualization the role of stock exchanges in Corporate Governance has changed.

This project focuses on the impact of demutualization of stock exchanges on Corporate Governance. The project is structured in following manner.

Chapter-I describes the concept of stock exchange. Chapter-II is role of stock exchange in Corporate Governance. This chapter deals with the traditional role of stock exchanges that was listing, disclosure standards and monitoring compliances.

Chapter-III is impact of Demutualization of stock exchanges in Corporate Governance. This chapter deals with the changing scenario of the stock market and also corporate Governance after demutualization of exchanges. Statement of the problem. Stock exchanges were assigned the role of monitoring the compliance with legislation and securities regulations. Since the promulgation of OECD Principles of Corporate Governance, stock exchange has contributed to the development of Corporate Governance.

It provided new market for securities, increased goodwill of the company, helped in the growth of the Companies. Recently we find stock Exchange have demutualised and in most cases become listed and now stock exchanges have become engaged in intensified competition and are refashioning them to meet the challenge.

Thus, this is how the role of stock exchange is changing towards capital market and corporate governance. C Gupta is followed to understand the effect of demutualization of stock exchanges. Ramaseshan is referred for the getting the clear idea about the issues raise after demutualization of the exchanges.

A book on Commerce by R. K Sharma is also followed as it deals with the services provided by Stock exchanges to the Corporate Sectors. Objective of the project. Stock exchanges are organized and regulated markets for various securities issued by corporate sector and other institutions. The stock exchange enables free purchase and sale of securities as commodity exchanges allow trading in commodities.

Stock exchanges provide a platform for the buyers and sellers to purchase and sell of their stocks. Instead it acts like market where stock buyers connect with their stock sellers. Stock can be traded in any stock exchanges like BSE and NSE of India. Though the meaning of stock exchange is explained but it is pertinent to know the history of stock exchanges. In this Article, the birth of stock exchange will be focused. Indian stock market is marked to be one of the oldest stock market in Asia.

It dates back to the close of 18 th century when East India Company used to transact loan securities. In s trading of corporate stocks and shares took place in Bank and cotton press first in Bombay. An informal group of 22 stock brokers started trading stocks under a banyan tree opposite Town Hall of Bombay each investing princely amount of Rupee 1. In the exchange flourished with 60 brokers. The share mania in India started when the American war broke and the cotton supply from U.

S to Europe stopped. Further brokers increased to The informal group of stockbrokers organized themselves as the Native Share and stock brokers association which in formally organized as the Bombay Stock Exchange [4]. In an IPO, a company sells shares to an initial set of public shareholders the primary market. Depending on the type of brokerage account you have, you may be able to view this flow of price action.

The difference between the two is the bid-ask spread. Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. The other type of exchange is virtual, composed of a network of computers where trades are made electronically.

The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing.

Just imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer. Before explaining further it is need to understand the difference between primary market and secondary market. According to this definitions stock exchange allows trading in securities under certain rules and regulations. Actually investors want liquidity for their investments.

The securities which they hold easily be sold when they need cash. Similarly there are others who want to invest in new securities. There should be a place where the securities may be purchased and sold. Stock exchanges are organised and regulated markets for various securities issued by corporate sectors and other institutions.

BSE-Auctions

The stock exchanges enable free purchase and sale of securities as commodity exchanges allow trading in commodities [8]. The securities and Exchange Board of India SEBI Act, was passed by Central Government for establishing a Board to protect the interests of investors in securities and to promote the development of and to regulate, the securities market and for matters connected therewith or incidental thereto.

Every stock exchange needs recognition from the central Government. Any stock exchange, which is desirous of being recognized, may make an application to the central government. The application should be accompanied by a copy of the bye-laws of the stock exchange for the regulation and control of contracts and a copy of the rules relating in general to the constitution of the stock exchange. If the central Government is satisfied that bye-laws of the exchange ensure fair dealing and protect investors; stock exchange is willing to comply by other conditions which the Central Government imposes and it is in the interest of trade and public to grant recognition, it may recognize the stock exchange.

Stock exchanges provide services not only to the investors but also to the corporate sectors. Role of Stock Exchange in Corporate Governance. Corporate Governance is a term that refers broadly to the rules, process or laws by which business are operated, regulated and controlled. The term can refer to internal factors defined by the officers, stockholders or constitution of a corporation as well as to external forces such as consumer groups, clients and government regulations.

Demutualization and the Corporatization have changed the role of stock exchanges in Corporate Governance. The regulating functions of stock exchanges were in the past mostly limited to issuing rule and clarifying aspects of existing frameworks. The standard-setting role of stock exchanges was essentially exercised through the issuance of listing, ongoing disclosure, maintenance and de-listing requirements.

On the enforcement side stock exchanges have shared their regulatory function with the capital market supervisory agencies. Stock exchanges were also assigned the role of monitoring the compliance with the legislation and subsidiary regulation [14]. The securities can be listed and then traded at the exchanges.

It provides an opportunity to companies to raise funds for capital issues [15]. The securities are listed only after the scrutiny of financial positions pyramid trading system a company.

Besides new companies the existing companies also need to issue shares at the time of expansion.

The exchange provides liquidity to securities. When investors are not sure of getting ready market for their shares then they effect futures trading oil prices hesitate to invest.

On the basis of this information, companies can plan their future issues. Stock exchanges act as medium for capital formation in the country.

It helps in creating the habit of savings among people. People can invest their savings in corporate and government securities. Small savings of large number of people help in capital formation in the country. Companies can sell their shares through stock exchanges. Stock exchanges provide a platform to the companies for raising additional funds.

An exchange allows the trading of listed securities only. While getting the shares listed on an exchange, a company is required to follow certain guidelines for protecting the interests of shareholders. While following the guidelines of the exchange, the management of the company is also regulated.

However, trucking companies stock market must trading and settlement procedure of securities of bombay stock exchange ensure that the interests of otherChacha shareholders are not getting affected in the process. EBISEBI committee defined the objective of corporate governance as the. Impact of Demutualization and Corporatization of stock Exchanges in Corporate Governance.

Historically, stock exchanges, were owned, controlled and managed by a set of brokers. They set the rules and regulations which they were expected to follow.

This led to a conflict of interest. In case of disputes, integrity of the stock exchanges suffered. NSE, however, was set up with a pure demutualised governance structure i. This separation of ownership, management and trading rights eliminated conflict of interest how do you make money bartering provided transparency in operations.

Currently all the stock exchanges in India have a demutualised set up. Demutualization means restructuring the stock exchange and changing it from a nonprofit organization mutually owned organization by its members into a profitable company owned by various entities including the public. The shares of the exchange can then be distributed among members, financial institutions and the public.

Done properly, a change in the status of the. Now the budget stock brokers of it are its shareholders.

It has become a publicly traded sergei medvedev binary options. When stock exchanges go for public it is demutualization. Corporatization means stock exchange should be organized as a company.

The idea is to separate ownership, management and trading rights from each other. It is not necessary that any stock exchange which is corporatized is also demutualized.

There are still some stock exchanges like Calcutta Stock exchange, Bhubaneswar stock exchange, Bangalore Stock exchange etc. According to section 4A of the SCRA, on and from the appointed date buying otc stocks premarket recognized stock exchanges who are not corporatized and demutualised before the appointed date free forex historical data csv be corporatized and demutualised as per the provisions contained in section 4B.

Appointed date shall be fixed by neopets stock market crash SEBI by issuing a notification in official Gazette and SEBI can fix different appointed date for different recognized stock exchanges.

SEBI can extend the date for corporatization and demutualization of an exchange, if a particular stock exchange could not convert on or after the appointed date for sufficient cause [23]. Change in the role of stock exchanges after being demutualised. Over the past 15years, the exchange industry is continuously changing.

Exchanges have demutualised and in most cases become listed. A precursor to most of the recent structural changes in the stock exchange industry has been the process of demutualization.

The listing of stock exchanges, perhaps even more than their demutualization, has transformed their business model. Demutualization has changed the ownership of stock exchanges, significant ownership stakes were often retained by previous member firms. The fundamental governance structure of exchanges was not significantly impacted.

But self-listing and the subsequent dispersion of ownership of exchanges have finally divorced their interests from those of broker dealers. While competition among stock exchanges is not new, it has intensified in recent years in various areas of exchange activities, including trading, listing and settlement. In addition to the obvious effects of demutualization and listing of exchanges, a rapid improvement in information technology and the creation of innovative financial instruments have also been among the key factors.

Moreover the scope of competition has broadened from the national to the international level. While earlier there was only among the domestic level now it has increased to international level. With regard to the functioning of securities market competition between exchanges can produce conflicting results.

On the one hand, greater liquidity may be generated due to enhanced inter-market competition. On the other, insofar as competition may result in trading fragmentation, concerns regarding market transparency and indeed financial stability of exchanges emerge, since illiquid markets tend to be less resilient in periods of volatility. Concerning the ability of stock exchanges to enhance corporate governance of listed companies, competition between stock exchanges, in the absence of minimum standards set by the regulators or weak enforcement of such standardsraises concerns.

The incentives faced by exchanges to establish and maintain high regulatory standards might weaken as they weigh the risk of deterring listings altogether or losing them to competing market places.

This risk may be exacerbated by the pressures a demutualised exchange is subject to from its shareholders to give top priority to maximizing profitability.

BSE Trading and Settlement

As the stock exchange has itself turned into Business Corporation, in some jurisdictions its regulation function has been removed. Whenever investors want to invest in a company it needs to get information about the company. A company is bound to keep update the stock exchange as part of its listing agreement, information regarding annual reports, quarterly financial information, shareholding patterns and corporate governance compliance reports [29].

The company also has to update the exchange on any event that can impact its financial performance or stock price. If a company fails to do so, then the stock exchange can take action against it. SEBI has also pointed out that not only companies but sometimes even stock exchanges fails short of adequate monitoring disclosure compliances. Now Stock Exchanges are also profit making institutions with commercial operations.

Stock exchanges have been asked to compare information filed on shareholding pattern with that in the previous quarter and to find out whether the disclosures comply with the existing regulations, such as those on insider trading. They have to keep themselves informed on media updates on companies to check whether the information has also been filed with them. Besides, separate cells have to be set up for monitoring company disclosures.

While stock exchanges have been pursuing companies in case of unsatisfactory disclosures, what has been missing so far is an effective follow-up process. This is now set to change, as a detailed follow-up procedure has been laid out. Deadlines have been set for exchanges to seek information and for companies to respond to the queries raised.

While these are steps in the right direction, given that stock exchanges are profit-making entities with commercial operations besides a regulatory role to be taken care of, one will have to wait and see how all this will be accomplished.

According section 7 of the Securities Contract and regulation Actevery stock exchange is shall furnish the Central Government with a copy of the annual reports and such annual reports shall contain the entire requirement as may be prescribed.

According Section 8 2 of the Securities Contract and Regulation ActIf any recognized stock exchange fails or neglects to comply with any order made by the Central Government within the period specified therein, the Central Government may make the rules for, or amend the rules made by, the recognized stock exchange, either in the form proposed in the order or with such modifications thereof as may be agreed to between the stock exchange and the Central Government.

According to section 8 A of the Securities Contract and Regulation Act the stock may with the prior approval of the SEBI transfer the duties and the duties and function of a clearing house to a corporation being a company registered under the Companies Act, These are the laws that are framed under SCRA in case any stock exchanges fail to meet its requirements these measures can be adopted.

It empowers the board to regulate the business in stock exchange and to regulate the working of the stock brokers, sub-brokers, share transfer agents etc.

The Board is bound by the directions given by the Central Government from time to time on questions of policy and the Central Government has the right to supersede the Board. The Board is also obliged to submit a report to the Central Government every year, giving true and full account of its activities, policies and programmers.

Thus from the above discussions an inference can be drawn that Stock exchanges play a very important role in the corporate governance but recently the role of it has changed. Corporatization of Stock Exchange has no adverse effect on Corporate Governance as separation of ownership, management will cause efficiency.

But profit motive of stock exchange after being demutualised may somehow affect the performance of the stock exchange in corporate governance as now it itself has become a company.

There are different opinions on the performance of stock exchanges after it is demutualized. Some says that intense competition may increase the skill of the performance of stock exchange.

Investors are getting Traditional functions of the stock exchange became available from other sources and made investors seek the means that can provide liquidity more efficiently. The discussion highlights a variety of issues that need to be addressed in order to maximize the benefits to be gained from demutualization. It is unlikely that one set of solutions will suit all. Each exchange will need to consider these and other issues in the light of its own particular environment. However, some laws are implemented like SCRA, SEBI ACTwhich shall protect the interest of the investors as well as other corporate sectors which are listed in the stock exchanges for selling of its shares.

SEBI plays a very important role to regulate the securities market. SEBI regulates the securities market and gives guidelines to the stock exchanges and thuss protect the interest of the investors. Corporatisation and demutualisation of stock exchanges are complex subjects and involve a number of legal, accounting, Companies Act and tax issues. These issues would need careful examination, before a clear roadmap could be prepared to take this process forward. SEBI felt that it would be desirable to appoint a Group comprising of eminent personalities, in fields of law, accountancy, finance, company law affairs and taxation to advise SEBI on this matter and to recommend the steps that need to be taken to implement the announcement of the Finance Minister.

MCorporate GovernanceTech Target, January ,searchfinancialsecurity. Christaniansen Hans and Alissa Koldertsova, Role of stock exchange in Corporate Governance, OECD ,http: MorsyThe impact of demutualization on the performance of stock exchangesMSM, ,http: Secondary Market Department, Corporatization and Demutualization of stock Exchange, 30 Januarywww.

Akhtar Shamshad, Demutualization of stock exchanges, Problems, Solutions and case studiesDirector,Governance, Finance and Trade, East and Central Asia Department, Asian Development Bank, At 83, http: Sharma and Shashi K. GuptaStructure of commerce GuptaStructure of Commerce Tejpal, History and evolution of stock exchanges in Indiashodhganga shodhganga.

Gupta, Structure of commerce, Gupta, Structure of Commerce, Role of Stock Exchange in Corporate Governance ,www.

Trading and settelment in stock cyzopuk.web.fc2.com1

Stock exchanges to gear upBUSINESS LINE THE HINDU, November 30, Stock exchanges to gear upBUSINESS LINE THE HINDU, November 30, ,www. Morsy, Impact of demutualization on the stock exchange, MSM ,http: Corporate Law Reporter is the fastest Indian Law Journal delivered everyday - Free: Registration takes 30 seconds and entitles you to receive Daily Legal Updates on Corporate Laws in your inbox.

Overview of the literature. The objective of the project is: EBISEBI committee defined the objective of corporate governance as the Chapter-III Impact of Demutualization and Corporatization of stock Exchanges in Corporate Governance.

It is unlikely that one set of solutions will suit all Exchanges. Some issues that should be taken into consideration are as follows: Thus, these are some of the issues that should be taken into consideration.

Stock exchange simple ppt

Gupta, Structure of CommerceArticles Tejpal. N History and evolution of stock exchanges in Indiashodhganga shodhganga.

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