Basics of Stock Exchange - Stocksbaazigar

Spread the love

What is Stock Exchange?

As per the Wikipedia,

A stock exchange, security exchange or bourse, is a facility where stock brokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments.
Stock exchanges may also provide for facilities like the issue and redemption of such securities and instruments and capital events including the payment of income and dividends.
Securities traded on a stock exchanges include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds.

As per the Securities Regulation Act, 1956

Stock Exchange is defined as any body of individuals, whether incorporated or not, constituted before corporatization and demutualization under Section 4A and 4B or
a body corporate incorporated under the Companies Act, 1956 whether under a scheme of corporatization and demutualization or otherwise,

For the purpose of assisting, regulating or controlling the business of buying, selling or dealing in Securities.

Corporatization means the succession of the recognized stock exchange, being a body of individuals or a society registered under the Societies Registration Act, 1860, Article 21, by another stock exchange, being a company incorporated for the purpose of assisting in buying, selling and dealing in securities.
Demutualization refers to the legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange are segregated from one another.

It is an organized Security market
It is an association of individuals recognized by the Central Government
Its membership is not open for everybody
Only the members can deal in a stock exchange
The Members can buy and sell securities as a broker for and on behalf of their clients
The dealing in Stock exchange are under certain accepted code of conduct.
It is an important constituent of Capital Market
It deals in Second-hand securities