BSE or Bombay Stock Exchange – Services, Features, How it Works & moreLast Updated Date: Nov 16, 2022
BSE or Bombay Stock Exchange is one of the oldest stock exchange in India.
When individuals or corporate organizations involve in the financial trading of their assets or security to gain profits, they are a part of the stock market.
The stock exchange allows legal and fair distribution, buying, selling, and investing of assets, bonds, securities to these individuals.
In India, the stock exchange provides a regulatory body for financial transactions registered by the Securities and Exchange Board of India.
These are the National Stock Exchange and Bombay Stock Exchange.
About BSE or Bombay Stock Exchange
The Bombay Stock Exchange (BSE) is Asia’s first and one of the largest stock exchanges existing in the world that covers around 6,000 companies.
The headquarters of BSE is in Mumbai, with its established year as 1875.
It has helped the corporate sector and capital markets like retail debt markets of India to observe a massive growth and development.
It even facilitates the equities trading and business platform for small and medium enterprises (SMEs).
BSE also motivates the investors to invest in equities, stocks, mutual funds, and other financial assets.
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Services provided by BSE
The BSE promotes some essential marketing services like risk management, settlements, clearing.
BSE is well known for the efficient electronic trading mechanism and system that provides efficient execution of the trade.
The BSE plays a crucial role in boosting India’s capital markets to raise capital subjected to investments.
Electronic trading has shown dominance over the corporate sector and financial industries as they provide faster as well as precise execution with minimal to no errors and higher efficiency rate as compared to the conventional open-outcry trading methods.
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Unique Features of Bombay Stock Exchange
Bombay Stock Exchange is the oldest and first securities market that was established in 1875 by Premchand Roychand.
Based in Mumbai and, it is the largest stock exchange in India and Asia overall. It has approximately 6,000 companies under its list.
It has lifted the Indian market and helped corporates to establish a strong capital base.
Besides, it includes and supports trading for retail enterprises and provides safe-keeping of records, binds, securities to assets, risk management, clearing, settling, and also loan-like options to all participants.
It allows agencies, offices, and organizations to create a stable investment environment for growth in terms related to capital expansion.
Due to its electronic trading feature, many foreign investors are attracted and interested to invest in the Indian Stock Exchange BSE.
The electronic trading system means that the transactions, buying, selling, and engaging in stock market activities are completely independent of the physical nature of cash or assets or security.
That is, individuals and institutions can conduct online exchange remotely via software. They are allowed to transact equities, currencies, debt, mutual funds, so on using BSE.
How does BSE Work?
As mentioned above, the BSE supports the electronic trading system. But this shift from open-floor to electronic trading took place in 1995.
It led to faster transaction execution, error-free exchange, and better efficiency than the traditional trading system.
It includes several trading options for participants to use, like a weekly option, index futures, index options, stock futures, stock options, so on, concerning the securities in BSE.
The performance of BSE in the market is measurable in Sensex. It covers 12 sectors of most active trading sessions in the index and is also called the BSE 30 that represents the entire composition of the Indian Market.
The online transaction of stocks allows direct market access that creates transparency in the flow of data. Participants are more involved in the exchange and are potential buyers and sellers.
But, they have to depend on a third-party brokerage agency to send or receive data. These agencies or individuals conduct online engagement in the stock market on behalf of the owner.
They are registered candidates of regulatory bodies by SEBI and have an attorney of law right to indulge in else-ownership stock. They charge a certain fee and also act as a legal guide.
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Transactions and Settlement Process in BSE
Transactions in Bombay Stock Exchange are possible by a T+2 rolling settlement where all the transactions process within a guaranteed period of two days.
The SEBI constantly evaluates the BSE to check for fraud and unfair trades. If found violating the rules and regulations, the engaging participants are punishable with a strong set of rules.
The BSE, located at Dalal Street, Mumbai, India, acts as a financial center for banks and other corporate companies. It is equally important as the Wall Street of the United States.
In 1874, the committee decided that Dalal Street would act as a head office to the Native Shares and Stock Brokers Association, which eventually changed into BSE.
As mentioned above, there are approximately 6,000 organizations listed under BSE. These achieve certain benefits in terms of different criteria as follows:
Risk-free Capital Generation – Trading Feature
Companies that actively participate in the stock market and are a participant of the BSE list, gain trust from all investors and eventually grow in the market.
In case a new company enters the field of the stock market and is aiming to build a realm, all information regarding it spreads in the investors, attracting their involvement. It leads to recognition, and potential buyers provide suitable attention to them.
The liquidity characteristics allow or promote the trade to specific buyers or sellers that are looking for the same. It creates a user-friendly environment to spread arms in the market.
If an organization wants a debt or allowance of any kind, issuance of the same takes place and monitoring allows risk-free exchange.
Authorized Supervision – Help From BSE
SEBI rules and regulations do not allow participants to engage in any fraud activity. It ensures that the traders follow the policies strictly and respect the same.
It established the regulatory bodies, like BSE, to confirm the implementation of those rules and regulations.
If an organization has involvement in scams or violates any policy, they are punishable with strong laws.
It is also the responsibility of CDSL in BSE to guarantee the implementation of those rules and regulations.
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Market Stability with BSE and Guarantee
The market is not always stable. But, few rules add up to the change in prices of a security. The pricing rule depends on the demand and supply of existing trade of a company.
Based on it, the next trade starts with an opening price and ends with the closing price at which the exchange took place in a day.
The BSE stands strong to provide securities and safe-keeping to companies’ assets, bonds, funds, and transactions.
If a company avails loans, the providing authority, investor or, the organization holds the securities of that company as a promise that it will payback.
If the demanding or availing company fails to do so, the providing company can buy their stocks and securities in cost.
For example, corporate institutions hold equity shares as leverage against the funds offered as a loan.
Investment methods and Payment in BSE
The BSE initiates trading of securities either directly or indirectly. It depends on the volume of the transaction and the initiator.
For example, a primary company listed under BSE can make a bulk transaction via a registered broker.
Retail companies, however, do not enjoy the benefit of direct access to investment schemes and need to hire a certified broker for the same purpose. It is a secondary trading mechanism that they follow.
For the same purpose, they need to create a Demat account to initiate the funding or the market exchange and the Financial Industry Regulatory Authority regulates it.
According to SEBI regulations, companies under BSE benefit the display of annual revenue generation profit secured, dividend distribution, and so on.
This information is displayed with time, including the bonus and transfers achieved in the period.
Terms in Transaction
Aspects that the BSE supports and that the listed companies can use to gain profit or in transactions are as follows:
Equity: These are the values of the shares of a company. The rise in the equities in the market helps companies to raise capital for stable market existence and internal growth.
It is useful for start-up companies to raise the growth potential in the beginning stages.
Debt Instruments and legal security: All retail participants and listed BSE companies enjoy legal protection from the government under regulations provided by SEBI.
These ensure that if a company avails loan, it provides some leverage to the providing investor that acts as a debt instrument towards them.
Debt instruments are tools available for corporate agencies to trade in debts in the primary and secondary markets.
These include the trading of securities in bonds in various ways under government evaluation.
Indices: As mentioned above, Sensex is an index that tracks the performance of different companies from different sectors in the market. Also, the Sensex of major companies determines the nature of the market.
It interprets the transaction movement and decides whether the Stock market of India will rise or fall.
Bombay Stock Exchange or BSE – Conclusion
The BSE incorporates securities like the stock, stock oriented features, options and index features as well as weekly options.
Sensex measures and administers the entire performance and activities of the Bombay Stock Exchange.
BSE even facilitates financial assistance of up to Rs 1 crore to the legitimate and renowned investor associations to promote them to work in protecting the measures laid by the investors.
For aiding this process, BSE has laid the foundation of several Investor Assistance centers in various cities across the country.
They provide proper education to the investors and make them aware of all the essential aspects of investments and capital markets.
They organize training sessions for the investors, where they use online methodologies like audio-video tutorials to provide all the necessary information to the investors.
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