1. Stock exchange
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2. Stock Exchange :
Stock exchange is defined as
“ A centralised market for buying and
selling stocks, where the price is
determined through supply and demand
mechanisms”
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3. Stock exchange is any body of individuals
which is constituted for the purpose of
Assisting
Regulating
Controlling
the business of buying and selling of securities.
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4. Functions of Stock Exchange
• Motivates individual to save and invest funds.
• A safe and productive channels for investment of
savings.
• Provides liquidity to the savings of the investors,
by developing a secondary capital market.
• Meeting the large capital needs of organized
industry, trade and business.
• Stock exchange play the role of a Barometer.

5. FUNCTIONS
 It provides a trading place for securities.
 Listing of securities
 Distribution of new securities.
 Mobilization of savings.
 Flow of capital to profitable ventures.
 Economic barometer.
 Capital formation.
 Motivating for improved performance.

6. Players in secondary market
Client brokers
 Floor brokers
 Jobbers
 Badla financiers
 Arbitragers
 Bulls
 Bears
 Stags
 Wolves
 Lame ducks
 Brokers
 FII’S
 Merchant bankers
 Custodians
by Jagannath and Santosh (R.N.S.I.T

7. • Jobber :
A jobber is a professional independent broker
who deals in securities on his own behalf, he
purchases and sells securities in his own name.
His main job is to earn a profit due to price
variations of securities.
He is professional broker who carefully
judges the worth of securities and makes a good
forecast of their future price movements.
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8. CHARACTERISTICS OF JOBBERS
 He is an independent dealer in
securities.
 He is dealer only with the brokers
but not with general public.
 He is always ready to buy or sell
securities
 He acts as a speculator.

9. Tarawaniwalas :
Tarawaniwalas is an active member of Bombay
stock exchange, he is similar to jobber.
He can acts as both as a broker or jobber.
Brokers :
He buys and sells a securities on behalf of his
clients for a commission.
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10. Sub-Broker :
A sub-broker is an agent of stock
broker, he helps the clients to buy and sell
securities only through the broker.
Authorised clerks :
Authorised clerks is one who is appointed by
a stock broker to assist him in the business of
securities trading.
As per the rules of the stock exchange,
each broker can employ a specified number of
authorised clerks to transact the securities
trading business also called as “Assistant
members”
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11. Client Brokers :
These brokers do simple brokering
business by acting as intermediaries between the
buyers and sellers and earn a commission for
their services.
Floor Brokers :
Floor brokers refers to those authorised
clerks and brokers who enter the trading floor
and execute orders for their clients
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12. Badla Financiers :
Badla financiers are those members whose main
function is to give finance for carry forward
deals in specified securities in return for interest.
• This interest rate is called Badla rate.
• They also lend securities to brokers who have
oversold at the time of settlement.
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13. Arbitragers :
Arbitragers are those who buy securities in one
market at low prices and sell them in another
market at an higher prices to take advantage on
the price differences prevailing in different
markets.
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14. Types of Speculators :
Bull
A bull is a speculator who indulges in
speculative buying activity with the
expectation that there will be a rise in
the price of certain security in the
future.

15. Bear
Bear is a speculator who indulges in
speculative selling activity with the
expectation that will be a fall in the
price of certain security in the future

16. Bull and Bear :
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17. Lame ducks
• A lame duck is a bear speculator who has
contracted to sell certain security on a certain
date at a price , but finds it difficult to meet his
commitment on the settlement days , as the
concerned security is not available in the a market
and the other party is not agreeable to the
postponement or carry over of the transaction.
• Bear brokers who sell ultimately short by
making wrong moves, hence they lose in the
market.

18. stag
A stag is a speculator who applies for a
large number of shares in a new issue
with the expectation of selling them to
the public immediately after allotment
at a premium and making profit.

19. Wolves :
These are the brokers who are fast
speculators called wolves.
• These brokers are very quick to perceive
changes in the trends in the market.
• They are not generally caught in the
wrong foot.
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20. Method of trading in a stock exchange :
• Choice of a broker
• Placement of order
• Execution of orders
• Preparation of contract notes
• Settlement of transactions
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21. 1. Choice of a Broker
• Investors who want to buy or sell his securities,
he need to transact only through the brokers.
• They can also appoint Banker for this
transaction, Bankers can also become a member
of stock exchange.
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22. 2. Placement of order :
• The next step is placing an order by
telegram, telephone, letter, fax, in recent
days through online.
• Order is placed in abbreviations are :
At Best order
Limit order
Immediate or cancel order
Discretionary order
Open order
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23. • At best order :
It is an order which does not specify any
specific price, it is executed immediately at the
best possible price.
Eg ; The investor may place a order like this
“ Buy 50 Reliance@ Best”
• Limit order :
It is an order for the purchase or sell of
securities at a fixed price specified by the
investor.
Eg : “Sell 200 HCL @ Rs. 76”
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24. • Immediate or cancel order :
It is an order for the purchase or
sell of securities immediately at the
quoted prices.
If the order could not be executed at
the quoted prices immediately, it should
be treated as cancelled.
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25. Discretionary order :
It is an order to buy or sell shares at whatever
price the broker thinks reasonable. This is
possible only when the investor has complete
faith on the broker.
Limited discretionary order :
Traded at a specified price range or within
the given time period as per the best judgement
of the broker.
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26. Stop loss order :
It is an order to sell as soon as the price falls
up to a particular level or to buy when the price
rises up to a specified level.
This is mainly to protect the investors
against a heavy fall or rise in prices.
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27. 3. Execution of orders :
orders are executed in the trading ring of
a stock exchange, if the buyer order
matches with the seller order then the
order is executed.
The floor of the stock exchange is
divided into number of markets according
to the nature of the security is called pits.
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28. 4. Preparation of contract note :
• Once the order is executed and all the
transaction are recorded and make ready of
contract note and delivered to respective
investors.
• A contract note is a written agreement between
the broker and the investor for the transactions
executed and contains the details like
Purchase/Sale of securities
Name of the company
Number of shares bought/sold and price
Brokerage commission
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29. 5. Settlement of transactions :
Finally the settlement is made by delivering the
shares certificates along with the transfer deed.
• The transfer deed is duly signed by the
transferor that is seller.
• It bears the stamp of the selling broker
• The buyer then fills up the particulars in the
transfer deed.
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30. Settlement can be made from the following
methods are :
• Spot delivery settlement
The delivery of securities and the payment
is made on the contract day itself.
• Hand delivery settlement
With in the time stipulated in the
agreement or 14 days from the contract date.
• Clearing settlement
Under this method, the delivery of
securities and payments are cleared through the
clearing house.
• Special delivery settlement
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31. Online Trading
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The information technology brought out
revolutionary changes in the operations of stock
exchanges in India.
The traditional method was time
consuming and inefficient. To overcome this
NSE has introduced a nation wide online fully
automated Screen Based Trading System
(SBTS).
All other stock exchanges also this technology
online trading.

32. Online trading :
Trading Network Satellite
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Satelli
te
NW 2
P1 p2
p3
NW 1
P1 p2
p3NSE
Main Frame
Computer

33. Benefits of Online Trading :
• Faster Trading
• Accessible to all
• Widening the market
• Saving of time and cost
• Fully transparent
• No errors and frauds
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34. Securitisation Masterclass Sept 2006
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Stock Exchanges
In India
Bombay
Stock
Exchange
(BSE)
National
Stock
Exchange
(NSE)
Regional
Stock
Exchanges

35. Bombay Stock Exchange
The stock exchange, Bombay, popularly
known as “BSE” was established in
1887 as “The Native Share and Stock
Brokers Association”. It is the oldest
one in Asia.
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36. Type Stock Exchange
Location Mumbai, India
Owner
Bombay/Mumbai Stock
Exchange Limited
Key people Mahesh L. Soneji
Currency INR
No. of listings 4,700
Market Cap US$ 1.79 trillion
Indexes BSE Sensex
Website www.bseindia.com
by Jagannath and Santosh (R.N.S.I.T

37. by Jagannath and Santosh (R.N.S.I.T

38. National Stock Exchange :
Type Stock Exchange
Location Mumbai, India
Owner
National Stock Exchange
of India Limited
Key people
Mr. Ravi Narain
Managing Director
Currency INR
No. of listings 1587
Indexes
S&P CNX Nifty
CNX Nifty Junior
S&P CNX 500
Website www.nse-india.com
by Jagannath and Santosh (R.N.S.I.T

39. Bombay Stock Exchange :
 In 1860, the exchange flourished with 60 brokers.
 At the end of the war in 1874, the market found a place
in a street (now called Dalal Street).
 In 1887, "Native Share and Stock Brokers' Association"
was established.
 In 1895, the exchange acquired a premise in the street
which was inaugurated in 1899.
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40. LONDON INTERNATIONAL
STOCK EXCHANGE

41. FRANKFURT STOCK
EXCHANGE

42. TOKYO STOCK EXCHANGE

43. PARIS BOURSE

44. ISTANBUL STOCK
EXCHANGE