Objectives of NSE, BSE & OTCEI

02/07/2022 0 By indiafreenotes

Objectives of NSE

National Stock Exchange of India (NSEI) commenced operations in Whole- sale Debt Market (WDM) in June 1994 and trading in equities has been started in the Capital Market Segment (CM) in November 1994.

  • To establish nationwide trading facility for equities and debt instruments.
  • To provide a fair, transparent and efficient securities market to investors using electronic trading system.
  • To ensure equal access to investors all over the country through an appropriate communication network.
  • To improve the standard of securities market to international level.

Objectives of BSE

The full form of BSE is the Bombay Stock Exchange. The BSE is the oldest stock exchange of Asia which was established in the year 1875 as Native Shares and Stock Broker’s Association and is the first exchange in India that was recognized as the exchange in the year 1957 under the Securities Contract (Regulation) Act by the government. Since then, it is playing a pivotal role in the development of the capital market of the country.

  • To provide a trading platform for equities of small and medium enterprises.
  • To provide an efficient and transparent market for trading in equity, debt instruments, derivatives, and mutual funds.
  • To ensure active trading and safeguard market integrity through an electronically-driven exchange.
  • To provide other services to capital market participants, like risk management, clearing, settlement, market data, and education.
  • To conform to international standards.

Objectives of OTCEI

The establishment of the Over the Counter Exchange of India (OTCEI) marked the down of a new era in the history of a stock exchanges in India. It is regarded a blessing for the small, both existing and new, companies and for investors, particularly small investors. The OTCEI which was incorporated in 1990 become fully operational in 1992.

Over The Counter Exchange of India allows nationwide listing and trading in securities, widely disbursed trading across centres provides for greater liquidity and less risk of intermediary charges, there is no arbitrage. The main feature is screen based scrip less trading, settlement is faster and no physical delivery of scrips is involved. The approach is highly professional.

  • National Network:

Unlike other Stock Exchanges, the Over the Counter Exchange will have a nationwide reach enability widely dispersed trading across the cities, resulting in greater liquidity. Companies, thus, have the unique benefit of nationwide listing and trading of their script by listing at one exchange, Over the Counter Exchange.

  • Ringless Trading:

Over the Counter Exchange has eliminated the traditional trading ring with a view to have greater accessibility to the investors. Trading will instead take place through a network of computers (screen based) of Over the Counter dealers at located several places within the same city and even across cities. These computers allow dealers to quote, query and transact through a central Over the Counter computer using telecommunication links. Investors can walk into any of the counters of members and dealers and see the quote display on the screen, decide to deal and conclude the transaction.

  • Computerized Totally:

All the activities of the Over the Counter trading process will be computerized, making for more transparent, quick and disciplined mark. The trading mechanism brings on these features of the system.

  • Two Ways of Making Public Offer:

Another unique of Over the Counter Exchange of India is its two ways of making public offer. Under ‘direct offer’ a company can offer its shares directly to the public after getting it sponsored by sponsored but under indirect offer’, the company may give its shares first to the sponsor who along with the company can at a later and convenient time make a public offer.

  • Exclusive List of Companies:

The Over the Counter Exchange will not list and trade in companies listed on any other stock exchange. It will therefore list an entirely new set of companies sponsored by members of the Over-the-Counter Exchange.

  • Faster Transfers and Trading Without Shares:

Over the Counter trading also provides for transfer of shares by Registrars, up to a certain percentage per folio. This results in faster transfers. The concept of immediate settlement makes it better for the investors. Investors will trade, not with share certificates, but with a different tradable documents called Counter Receipt (CR). However, an investor can always exercise his right of having a share certificate for Counter Receipt surrendering the Counter Receipt and again exchanging the share certificate for Counter Receipt when he wants to trade. There will be a custodian who will provide this facility along with a settler who will do the signature verification and Counter Receipt validation.

  • Investor Registration:

Yet another feature of Over the Counter Exchange of India is investor registration, introduced for the first time in India. The investor registration is required to be done only once and is valid for trading on any Over the Counter in the country in any scrip. The purpose of the investor registration is to facilitate computerized trading. It also provides greater safety of operations to the investors.