What is a Stock Exchange ?
A stock exchange is a centralized location where the shares of a publicly traded companies are bought and sold. In a stock exchanges, financial assets like stocks, bonds, ETFs and Financial Derivative Instruments like Futures and Options are traded.
Examples of Stock Exchanges
There are numerous stock exchanges around the world. Some of the largest exchanges are the New York Stock Exchange (NYSE), the NASDAQ, and the Tokyo Stock Exchange (JPX), London Stock Exchange (LSE). Prominent stock exchanges in India are, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in India.
A stock exchange brings together buyers and sellers, enabling them to exchange securities. The term securities inludes investment products like shares, bonds, investment trusts and exchange traded funds. Participants in a stock market include individuals, corporates, institutional investors, etc. Institutional investors means fund managers, insurance companies, banks and pension funds. An institutional insvestor could be a domestic or foreign institution.
History of stock exchanges in India dates back to 1875, when the modern BSE was started by a group of people under a tree. In 1965, BSE got permanent recognition from the Government of India. Thereafter, other stock exchanges were given approval by Ministry of Finance. After the formation of SEBI, it was given powers to regulate the Indian Stock market.
Today BSE and NSE represent themselves as synonyms of Indian Stock market. The history of Indian Stock market is almost the same as the history of BSE. Till 1992, Indian Stock Exchanges were a kind of self-regulated stock exchanges. After the setup of Securities and Exchange Board of India (SEBI) all stock exchanges came under its fold and the SEBI became the regulator of the Indian Stock market.