Share market full course day -2 | what is IPO? | BSE & NSE

Share market full course day -2 | what is IPO? | BSE & NSE
Bombay Stock Exchange
BSE full form stands for Bombay Stock Exchange. It is the oldest stock exchange in India as well as Asia. Bombay Stock Exchange was established by Premchand Roychand in 1875 and is currently headed by Shri Sundararaman Ramamurthy (Managing Director & CEO).
What is Bombay Stock Exchange
The Bombay Stock Exchange is one of the largest securities markets. It is located on Dalal Street, Mumbai and lists over 6000 companies.
BSE has contributed significantly to developing and shaping India's capital markets. Through BSE, investors get the opportunity to trade in equities, mutual funds, debt instruments, etc.
It also offers capital market trading services that include investor education, risk management, clearing, settlement, and many more.
How Does BSE Work
Financial transactions in BSE are done online through an electronic trading system. Market orders can be directly placed in BSE online without the requirement of external specialists through direct market access. Due to the absence of such limit orders, the focus is shifted from buyers/sellers to the total value of transactions in a day.
Trading in the BSE share market has to be done through a brokerage agency against a stipulated charge. However, direct investment access is given to certain preferential investors making large transactions in the BSE stock market. BOLT- Bombay Online trading platform is used by this stock exchange for efficient trading.
Transactions made in BSE online are done through a T+2 rolling settlement, wherein all transactions are processed within two days. Securities and Exchange Board of India (SEBI) is responsible for the regulation of this stock exchange, continuously updating rules for its smooth operation.
Background of BSE
BSE has an interesting backstory to it. In the 19th century, some traders, with businessman Premchand Roychand, would gather under a Banyan tree in current Dalal Street. Popularly known as the Native Share and Stockbrokers Association, this gathering would engage in purchasing and selling stocks.
Earlier, the BSE worked on a floor trading system in which a licensed broker stands in the ring and calls out the rising price. The investors, who were outside the BSE, would only find out about the stock prices in the newspapers. That is why the NSE, or the National Stock Exchange, went digital, and the prices became public to all investors. Consequently, the NSE became the favourite spot for investing.
Seeing the shift to digital, the board of BSE decided to change their system as well. In 1995, BSE received technological aid from CMC Ltd and went digital. Today, the BSE trading area is called BSE online trading.
Advantages Of Listing on BSE
A company listed under the Bombay Stock Exchange can enjoy several benefits, such as:
Hassle-free Capital Generation
Listed companies enjoy the trust of all kinds of investors present in the market. It spreads market knowledge regarding a budding business, allowing individuals to carefully analyse the imminent condition of such companies and invest accordingly.
Paid-up capital for a business can only be raised effectively if a company is listed with a prevalent stock exchange in a country.
Market securities can be readily sold in a financial market if it is listed on the Bombay Stock Exchange, thereby sufficing the liquidity needs of both businesses and individual investors. Funds to meet any requirement of a company can be obtained through the issuance of debt and equity securities, which investors purchase for the purpose of wealth creation.
Securities purchased can be readily sold through the electronic trading settlement of BSE, thereby allowing investors to encash their investment as and when the need arises effectively.
Legal Supervision
Investors can skim through fraudulent companies if they choose to invest in organisations listed with BSE.
Several rules and regulations are mandated by SEBI to monitor the actions of registered companies, minimising the chances of investors incurring a loss due to illicit activities of a business.
Timely Information Display
Adequate information about total revenue generation and reinvestment patterns has to be published annually by all companies listed under the BSE stock exchange.
Total dividend disbursed, bonus and transfer issues, book-to-closure facility, etc., have to be displayed as per SEBI regulations.
Adequate Pricing Rules
The price of securities trading in the BSE share market is determined by the demand and supply of the same currently prevailing. This reflects the real value of a share, affecting a company’s market capitalisation and ease of procurement of funds.
Collateral Guarantee
Securities issued by a company act as a collateral guarantee at the time of availing loans. Most financial institutions accept equity shares listed in BSE as leverage against which funds can be obtained.