Indian Stock Exchanges Research Paper Example | Topics and Well Written Essays - 2250 words

Indian Stock Exchanges - Research Paper Example The researcher states that the Bombay Stock Exchange is â€Å"the oldest stock exchange in Asia† and one of the older ones in the world, having been in operation for 135 years. In 1875, it was known as the Native Share and Stock Brokers Association, and is sometimes known as the Stock Exchange Mumbai. It is astonishingly large: It has the most companies traded and is one of the top ten stock exchanges in the world with a total capitalization of $1.28 trillion. Its electronic trading handles the fifth largest number of trades in the world. It is the second stock exchange in the world to obtain ISO 9001:2000 certification and the second in the world to receive the â€Å"Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-Line Trading System†. The BSE Index, SENSEX, is traded in Hong Kong. The BSE is a hybrid between an order-driven and market maker, quote-driven system. Historically, it used quote-driven systems, but anonymous scree n-based trading systems and the trading of debt and other loan-based assets is done using an order-driven system. However, quote-driven mechanisms still guide trading in many illiquid stocks. Trading occurs between 9:00 AM and 3:30 PM under most circumstances. This is about as long as the NYSE, which trades from 9:30 AM to 4:00 PM normally. The securities and stocks exchanged on the BSE are classified into a few different types of groups. â€Å"BSE has, for the guidance and benefit of the investors, classified the scrips in the Equity Segment into 'A', ‘B’,'T', ‘S', ‘TS' and 'Z' groups on certain qualitative and quantitative parameters†. These groups are classified based on the type of asset being traded, the way the asset is traded and an estimation of quality. F Group trading, for example, is of fixed income securities, while T Group trading are scrips traded per trade which is used for surveillance. S Groups are Indonext segment stocks, which means that TS Group stocks are Indonext stocks traded under trade-to-trade surveillance. Government securities are traded in the G Group. Z Group trades are companies that have failed to comply with listed requirements â€Å"and/or have failed to resolve investor complaints and/or have not made the required arrangements with both the depositories, viz., Central Depository Services (I) Ltd. (CDSL) and National Securities Depository Ltd. (NSDL) for dematerialization of their securities†. The BSE Sensex is calculated using a Free-float Market Capitalization Model. It is thirty blue-chip stocks, similar to the Dow Jones, which account for one-fifth of the capitalization of the exchange and are safe stocks with a proven track record. â€Å"The market capitalization is determined by multiplying the stock by the numbers of outstanding shares. This calculation is performed for all 30 stocks and then divided by the Sensex Divisor. The Divisor is derived from the original base value of 100 for the Sensex, so the index can be tracked over time. The Sensex is calculated every 15 seconds and then published to investors around the world in real-time† (. One study of the BSE found that a contrarian strategy, a strategy that tries to defy traditional wisdom such as Soros' famous pound-sterling coup.