BUSINESS FINANCEPRESENTATION ON:

STOCK EXCHANGE – ITS SIGNIFICANCE & STRUCTUREFUNCTIONAL LISTING OF SECURITIES

PRESENTED BY:N I S H A G A N G W A N I

Y E A R - I IB A C H E L O R O F B U S I N E S S A D M I N I S T R AT I O N

WHAT IS

“STOCK EXCHANGE” ?

The Securities Regulation Act of 1956 defined stock

exchange as:

“an association , organization , or a individual which is

established for the purpose of assisting , regulating , and

controlling business in buying ,selling and dealing in

securities.”

DEFINITION OF STOCK EXCHANGE

This comes under treasury sector, which provides service to

stock brokers & traders to trade stocks ,bonds and securities.

Stock exchanges helps the companies to raise their fund.

Therefore, the companies needs to list themselves in the Stock

Exchange and the shares will be issued which is known as

equity or an ordinary share and these shareholders are the

real owners of the company. The Board Of Directors of the

Company are elected out of these Equity Shareholders only.

MEANING OF STOCK EXCHANGE

SIGNIFICANCE OF

“STOCK EXCHANGE” ?

The stock exchange is a necessary aspect of commerce world-wide. Without a stock exchange in which people could quickly and easily trade assets, the global economy would quickly grind to a halt.

Although a stock exchange is not in itself a source of new equity capital of risk funds essential to developing new industries, it is true that the flow of new capital soon would slow to a trickle without it. If there were no stock exchange, no market place where people could sell their securities for cash, capital would soon become sluggish and the financing of new ventures, no matter how promising, would be heavily curtailed.

9 VITAL FUNCTIONS

OF

“STOCK EXCHANGE” ?

1) ECONOMIC BAROMETERA stock exchange is a reliable barometer to measure the economic condition of a country. Every major change in country and economy is reflected in the prices of shares. The rise or fall in the share prices indicates the boom or recession cycle of the economy. Stock exchange is also known as a pulse of economy or economic mirror which reflects the economic conditions of a country.

II) PRICING OF SECURITIESThe stock market helps to value the securities on the basis of demand and supply factors. The securities of profitable and growth oriented companies are valued higher as there is more demand for such securities. The valuation of securities is useful for investors, government and creditors. The investors can know the value of their investment, the creditors can value the creditworthiness and government can impose taxes on value of securities.

III) SAFETY OF TRANSACTIONSIn stock market only the listed securities are traded and stock exchange authorities include the companies names in the trade list only after verifying the soundness of company. The companies which are listed they also have to operate within the strict rules and regulations. This ensures safety of dealing through stock exchange.

IV) CONTRIBUTES TO ECONOMIC GROWTHIn stock exchange securities of various companies are bought and sold. This process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and economic growth.

V) SPREADING OF EQUITY CULTStock exchange encourages people to invest in ownership securities by regulating new issues, better trading practices and by educating public about investment.

VI) PROVIDING SCOPE FOR SPECULATIONTo ensure liquidity and demand of supply of securities the stock exchange permits healthy speculation of securities.

VII) LIQUIDITYThe main function of stock market is to provide ready market for sale and purchase of securities. The presence of stock exchange market gives assurance to investors that their investment can be converted into cash whenever they want. The investors can invest in long term investment projects without any hesitation, as because of stock exchange they can convert long term investment into short term and medium term.

VIII) BETTER ALLOCATION OF CAPITALThe shares of profit making companies are quoted at higher prices and are actively traded so such companies can easily raise fresh capital from stock market. The general public hesitates to invest in securities of loss making companies. So stock exchange facilitates allocation of investor’s fund to profitable channels.

IX) PROMOTES THE HABITS OF SAVINGS & INVESTMENTThe stock market offers attractive opportunities of investment in various securities. These attractive opportunities encourage people to save more and invest in securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc.

STRUCTUREOF

“STOCK EXCHANGE” ?

STRUCTURE OF STOCK EXCHANGE

Stock Exchange

Industrial Stock

Exchange

Secondary Stock Exchange

Over-the-Counter Stock

Exchange

New Issue Stock Exchange

Government Stock

Exchange

Organized Stock Exchange

Preference Shares

EquitiesBonds

Over-the-Counter Stock

Exchange

New Issue Stock Exchange

Secondary Stock Exchange

FINANCIAL LISTING OF

“SECURITIES”

FINANCIAL LISTING OF SECURITIES

The process of listing of securities is called Financial Listing of Securities.

LISTING OF SECURITIES

In corporate finance, a listing of securities refers to the company's shares being on the list (or board) of stock that are officially traded on a stock exchange. Normally the issuing company is the one that applies for a listing but in some countries the exchange can list a company, for instance because its stock is already being actively traded via informal channels. Initial listing requirements usually include a history of a few years of financial statements (not required for "alternative" markets targeting young firms); a sufficient size of the amount being placed among the general public (the free float), both in absolute terms and as a percentage of the total outstanding stock; an approved prospectus, usually including opinions from independent assessors, and so on. Stocks whose market value and/or turnover fall below critical levels can get officially delisted; delisting is often the result of a merger or takeover, or the firm going private.

LISTING OF SECURITIES

Listing refers to the admission of the securities of a company on a recognised stock exchange for trading.

Listing of securities is undertaken with the primary objective of providing marketability, liquidity and transferability of shares.

OBJECTIVES OF LISTING Provide ready marketability, liquidity & negotiability to securities; Mobilize savings for economic development; Ensure proper supervision and control of dealing; Protect interest of investors by ensuring full disclosures.

ADVANTAGES OF LISTING Provides Liquidity to securities. Regular information Easy Transferability Income tax benefit Transparency in dealing. Helps the company to gain national importance and widespread

recognition. Helps in raising additional capital.

DISADVANTAGES OF LISTING

Listed companies are subjected to do various regulatory measures of the stock exchange and SEBI.

Essential information has to be submitted by the listed companies to stock exchange.

Annual meeting and annual general report.

LISTING REQUIREMENTS

For this purpose companies have been classified into 2 groups:- 1. Large Cap Companies (minimum issue size of Rs.10 crores and market capitalization of not less than Rs.25 crores) 2. Small Cap Companies (minimum issue size of Rs.3 crores and market capitalization of not less than Rs.5 crores)

STEPS IN LISTING

1. •Submission of Letter of Application along with the necessary documents.

2. •Payment of Listing Fees.

3. •Collection of Listing Fees.-HDFC Bank

STEPS IN LISTING

4. •Trading Permission by SEBI.

5. •Payment of 1% Security with the designated SE.

6. •Advertisement.

DELISTING OF SECURITIES

Delisting is the process of termination of permission given to a listed company from trading its securities on the stock exchange. They can be in 2 ways:- 1. Compulsory Delisting 2. Voluntary Delisting