Stock Exchange

Presentation
by
Mr. R Siva Prasad
 Primary market
 Secondary market
 Stock Exchange
 Floor trading
 Auction process
 Electronic exchange
 Exchange facilitate
 Flow of supply and demand
 Sets the price of security.
 Bid price – buying price
 Offer price – selling price
 Bid offer spread – difference between the
bid price and offer price.
 Stock exchange….
 “ a centralised market for buying and selling stocks
where the price is determined through supply-
demand mechanism”

 According to the Securities Contracts (Regulation)

Act,1956, which is the main law governing stock
exchanges in India,
“stock exchange means 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”.
 Functions
 Market place
 Liquidity
 Valuation of securities
 Barometer
 Linkage b/w the savings in the household
sector and the investments in the
corporate sector.
 Listing of securities
 Listing is the process of including the securities of a
company in the official list of the stock exchange for the
purpose of trading.

 Different groups – A,B1,B2,F,G, and Z groups.

 Equity shares – A, B1, and B2
 F group – fixed income securities.
 G – government securities
 Z – failed to comply with listing requirements.

 Permitted Securities.
 Trading System in Stock
Exchanges
 Two phases for trading
 I phase – the member brokers execute
there buy or sell orders.
 II phase – the securities and cash are
exchanged.
 Two other agencies
 Clearing house
 Depositories
 Clearing House
 Each exchange has a clearing house
 Clearing house arranges for delivery of asset and
payment of money
 Clearing house becomes the counter party to the
original parties
 Original parties: buyer and seller
 Clearing house becomes counter party to buyer ( to
deliver the asset)
 Clearing house becomes counter party to seller ( to
make payment)
 Depositories – the transfer of securities
 selling of a security – debit entry
 Buying of a security – credit entry
 Two depositories are in India..
 National Securities Depository Ltd. (NSDL)
 Central Depositories Services (of India ) Ltd.
(CDSL)
 Trading system.
 Types of order.
 Settlement.
 Speculation.
 Long buy
 Short sale
 Types of speculators
 Bull
 Bear
 Lame duck
 Stag
 Margin Trading.
 Thank You
Don’t waste your time.