Stock Exchange - Meaning and Functions
- 1. Stock Exchange Overview M.Rajakrishnan Asst.Professor in Commerce with CA Dr.N.G.P.Arts and Science College (Autonomous) Coimbatore
- 2. ?Market Latin word “Marcatus” – Merchandise, trade or a place where business is conducted. ?Financial Market No specific placed or location – financial transaction – place – deemed to have taken place in the financial market ( Refer Financial Markets and Services – Gordon and Natarajan - 2013 Edition – Page no.7 - 9)
- 3. Classification of financial Markets:
- 4. ?Primary Market – New issues ?Secondary Market – Securities – passed through the new issue market -Stock exchange ( Refer Financial Markets and Services – Gordon and Natarajan - 2013 Edition – Page no.10-16) ?Stock Exchange – Meaning -A Specialized market place – facilitates- exchange- securities- already exist. -A market- industrial securities – bought – sold – code of rules & regulations. ( Refer Financial Markets and Services – Dr.S.Gurusamy - 2010 Edition – Page no.470) -Sine-qua-non for the primary market – essential condition – absolutely necessary (Refer Wikipedia)
- 5. Stock Exchange – Definition: Hastings “Stock exchange or securities market comprises all the places where buyers and sellers of stocks and bonds or their representatives undertake transactions involving the sale of securities”. Sec 2(3) Securities Contract Regulation Act 1956 “The stock exchange has been defined as any body of individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities”. ( Refer Financial Markets and Services – Dr.S.Gurusamy - 2010 Edition – Page no.470-471) ?Stock Exchange Video URL: https://youtu.be/l3t406oTmss
- 6. ?Functions of Stock Exchange •Ideal Meeting Place – Convenient-meeting place- common platform – buyers and sellers •Mobilisation of savings – public savings- channelization – productive purposes – surplus funds •Providing safety to investors – Genuine investors – adequate safety – fraud - manipulation •Distribution of new securities – Already established companies – additional capital •Ready market – continuous – ready – open – broad based •Liquidity – Efficiency – Quickly - Easily •Capital formation – Quick formation – people – current market price
- 7. ?Functions of Stock Exchange •Speculative trading – healthy – adequate liquidity •Economic barometer – price movement – company – industry - Economy •Perfect market conditions – Prevailing – carrying cost – least – activities – standardized – free competition •Seasoning of securities – players – underwriters – dealers – brokers – speculators – temporarily – hold – issue – new - company •Evaluation of securities – reasonable – fair – price. •Investor education – information technology •Company Regulation – listing – public interest ( Refer Financial Markets and Services – Dr.S.Gurusamy - 2010 Edition – Page no.471-475) Video URL for further reference : https://youtu.be/zBih_r7r5zk