What is the Bombay Stock Exchange?
The Bombay Stock Exchange, shortened BSE, located on Dalal Street, is an Indian Stock Exchange with the highest number of companies listed on it. As of 2024, BSE has over 5500 companies listed on it. Established in 1875, the BSE is the oldest stock exchange in Asia, the tenth oldest in the world, and the world's 6th largest stock exchange, with a massive Capitalization exceeding US$5 trillion on May 21, 2024.
BSE primarily serves as a platform for both primary and secondary markets where securities like bonds, equities(stock), currencies, debt instruments, derivatives, and mutual funds are traded by investors.
Apart from the existing securities on the BSE, companies also offer securities via initial public offering(IPO). Investors get to buy and sell these assets via brokers or stock brokerage firms.
The BSE also offers indices, like the SENSEX among others.
Type: Stock exchange
Regulated: SEBI
Location: Mumbai, Maharashtra
Founded: July 9, 1875
Currency: Indian rupee (₹)
No. of companies listed: 5,512
Market cap: Exceeds US$5 trillion
Managing Director & CEO: Shri Sundararaman Ramamurthy
How does the Bombay Stock Exchange work?
- BSE offers a platform for buying and selling securities such as stocks and bonds, commodities, and mutual funds. Market orders are placed through brokers or trading platforms provided by brokerage firms.
- Trading happens entirely online through an electronic trading system, and from Monday to Friday, 9.15am to 3.30pm. Weekends are exempted.
- Trading primarily takes place through brokers or brokerage agencies who charge clients a fee.
- Both brokers and brokerage firms access the BSE through trading terminals linked to the BSE.
- BSE relies on BOLT which stands for the Bombay Online Trading Platform.
- BSE runs an open market - prices are determined by the forces of demand and supply.
- The goal of investors is to buy securities low, with the hope of selling them high.
- The operations of the BSE are regulated by the Security and Exchange Board of India(SEBI), ensuring the protection of the interest of investors, as well as enforcing fair trading practices.
What is the role of the Bombay Stock Exchange in Indian Economy?
- Investment Opportunities
BSE offers investors opportunities to buy and sell financial assets, and securities across a wide range of investment vehicles. This directly impacts the overall capacity of wealth creation for both investors and individuals who intend to become investors.
- Listing
Companies that seek to raise capital offer securities to investors by listing their business on the BSE. The process of listing the business on the BSE is strict and follows strict guidelines as determined by the SEBI to ensure the transparency and the security of the investment of investors. However, this directly and positively leads to:
1. Higher employment
2. Development of more companies
3. Increased Productivity
4. Infrastructural Development
- Investment Inclusion
With the several index options available in BSE, just about anybody can participate in investment and own equity across several companies. What this means is that middle-class and low-income earners can also benefit directly from the economic growth of India, thereby reducing the gap between the rich and poor, as well as ensuring financial security for many.
- Economic Indicator
The performance of the BSE index is used by many economists and speculators as an indicator of the economic health of India.If the index is performing well and there is positivity all around, Indian economical system is working well.
- Market Transparency
The operation of the BSE, from companies being listed to the day-to-day trading of securities, is done to the highest standard set by the SEBI. This ensures transparency and integrity, which helps to build investor's confidence, leading to a more robust investment ecosystem.
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What are the benefits of trading at Bombay Stock Exchange?
1. Transparency
Information is key to investment, and the BSE has strict guidelines that require the companies listed on it to disclose necessary information, like financial reports and performance updates, at the right time to investors to foster complete transparency. This transparency affords investors a much safer environment to grow wealth.
2. Wide range of investment assets
The BSE offers investors a wide range of investment drivers for investors, including stocks, bonds, commodities, mutual funds, derivatives, and others.
3. Anyone can invest
The BSE is known for its indices, which are the primary driver to aid in the inclusion of middle and low-income earners in investment opportunities. A major one is the SENSEX, which comprises stocks of major companies that reflect the market trend.
4. Regulation and Oversight
The entire operation of the BSE is built to standards set by the SEBI. This ensures transparency, integrity, and fair trading practices by ensuring investors are protected from malpractices like insider trading.
5. Standard Pricing Rules
The BSE operates an open market where demand and supply primarily determine prices. But more importantly, the BSE enforces stringent pricing rules to further ensure fair pricing of securities and assets.
6. Open Participation and inclusion
BSE is designed to be inclusive of a wide range of types of investors including individual investors, institutions, and also foreign investors.
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What are the benefits of listing on the Bombay Stock Exchange?
1. Capital Generation
The long-standing integrity of the BSE - thanks to the regulation of SEBI, as well as the rules that guide the procedures for listing companies - has created a system of an ever-increasing number of different types of trusting investors and increasing the chances of higher participation and capital generation.
2. Adequate Pricing Rules
The prices of securities in the BSE are largely determined by the open market- their demand and supply. Hence, the value of shares on BSE is a true reflection of the value of the companies. In essence, companies listed on BSE can easily procure funds, and perform other functions, as their real value is known.
3. Legal Supervision
As much as the BSE is regulated to protect the interest of investors, it also prioritizes the interest of the companies, as well. By holding companies to high standards like the timely display of information, investors can rest easy and invest with knowledge.
4. 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.
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FAQ;
1. Who established the Bombay Stock Exchange?
Premchand Roychand established the BSE.
2. Where is the Bombay Stock Exchange located?
The BSE is located on Dalal Street in Mumbai India (the financial capital of India)
3. Who is the current head of the Bombay Stock Exchange?
Shri Sundararaman Ramamurthy is the current managing director and CEO of the Bombay Stock Exchange.
4. What is the current market cap of the Bombay Stock Exchange?
The current market cap of the BSE currently exceeds US$5 trillion.
5. What are the BSE working hours?
BSE working hours means; the trading hours or the time in between we can buy or sell share. It is usually from 9.15 a.m. to 3.30 p.m. on weekdays alone. Weekends are exempted i.e. on Saturdays and Sundays there is holiday.
Ready to start your trading journey on the BSE? Explore our beginner's guide to investing today!