What is BSE: Bombay Stock Exchange?
The BSE or the Bombay Stock Exchange is situated on Dalal Street, and it is the oldest stock exchange in Asia.
One can consider it to be the backbone of the capital market system of the country and it has extended its operations throughout India right now.
It happens to be the ninth biggest stock exchange when it comes to overall market capitalization.
Table of Contents
History
Now we will talk about the history of the Bombay Stock Exchange in the share market.
• Being established in 1875, the Bombay Stock Exchange is known as the Stock Exchange in Mumbai.
Before the establishment of the BSE, there had been a group of 5 stockbrokers who conducted different meetings under a banyan tree in front of the Mumbai town hall.
• However, there was an increase of the number of brokers in the gathering over time, and there was a change in the meeting venue quite often because of this.
The brokers shifted to Dalal Street after several decades in the year 1874 for the purpose of conducting meetings, and it became their permanent location.
• The following year it was established as the Native Shares and Stock Broker’s Association.
It became India’s first exchange after many years of working and was recognized under the Securities Contracts (Regulation) Act as the exchange in the year 1957.
• In 1986, after several years of its recognition, a tool called the SENSEX was developed to figure out the overall performance of the Bombay Stock Exchange.
It happened to be the stock market index comprising the 30 financially sound companies listed on the Bombay Stock Exchange.
• The Bombay Stock Exchange switched to BOLT, an electronic trading system, in 1995.
Apart from this, it became the first stock exchange on the planet responsible for introducing an Internet trading system.
How does the Bombay Stock Exchange function?
The BSE worked on an open floor system till 1995.
After that, it shifted to a digital trading system that became quite popular worldwide and was used by the NASDAQ, NYSE, and so on.
The electronic trading system provided some benefits like fewer mistakes, faster execution, as well as better efficiency.
The SENSEX or Sensitivity Index is accountable for measuring the overall performance of the BSE. SENSEX happens to be a benchmark index of the biggest and most actively traded stocks of the BSE that covers 12 sectors.
Transactions done in BSE online are performed via a T+2 rolling settlement basis, and all the transactions will be processed within a couple of days.
It is imperative to perform trading in the Bombay Stock Exchange share market via a brokerage agency alongside a specified charge.
It will be feasible for the investors to make the investment in these stocks by means of a registered share broking organization.
SEBI (Securities and Exchange Board of India) is accountable for the hassle-free functioning of the stock exchange mentioned here.
Importance
• BSE is a reliable source from where the securities are transacted in the financial market, and therefore, it is simple to raise funds by delivering debt securities and equity through it.
• It is simple to buy and sell securities in the financial market in case the security is listed on the Bombay Stock Exchange, thus gratifying the liquidity needs of the prospective investor.
• An open platform is provided by them for conjecture within a legitimate framework. BSE is the most effective platform for healthy speculative trading that helps to fulfill the liquidity requirement of an investor.
Benefits
• They provide education regarding the advantages of making investments in the stock market and make sure that the transactions are done smoothly.
• The transactions at the BSE are controlled within the legal framework strictly.
The functions of BSE are governed by the Securities Exchange Board of India.
Consequently, it guarantees the investor that their money isn’t wasted and that they are dealing in a secure place.
• An investor can keep the securities listed on it as collateral while getting loans from financial institutions and banks.
