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Perfect Competition – Case Study on Stock Exchange By: Amit Sheth Gagan Pareek Sainatth Wagh   Samir Daddikar
Perfect Competition	 A perfectly competitive market must meet the following requirements: ,[object Object]
The number of firms is large.
There are no barriers to entry.
The firms' products are identical.
There is complete information.,[object Object]
Poultry
Stock Market
Fisheries
Forex ,[object Object]
Constituents of Stock Market Types of Securities
List of Stock Exchanges India
Open Out Cry System ,[object Object]
Investors were allowed to watch from the investors’ gallery and they had to physically visit the broker’s office to place an order. A representative of the broker would then rush to the Ring and execute the trade. Disadvantages of Open Out Cry: This was time consuming and inefficient Imposed limits on trading volumes and efficiency. Share of Mumbai was 80% , whereas rest part was not able to participate.
Screen-based trading and Dematerialization ,[object Object]
This enabled it to spread across to various towns and cities in India by setting up terminals connected to the central system through VSAT.
Trading in 1363 securities through 2856 VSAT terminals (servicing 9000 users) spread across 354 cities,[object Object]
Transaction Stages –Micro Level Pay In and Pay Out Period
From outcry to screenplay 2009 :NSE turnover almost 70% of total stock market  Trade settlement reduced from three weeks to T+15 and now  T+2.	  Mumbai shares compare with India reduced from 70% to 40% , thereby giving large players fare chance.
Harshad Mehta Scam ,[object Object]
The amount involved in the scam was around 4000  cr INR.
The scam was a result because of the loopholes in the banking system which were exploited.Following were the causes: ,[object Object]
Ready Forward Deal.,[object Object]
 In the mean time the seller holds the securities in trust of buyer.
For this operation, banks such as the bank of Karad (BoK) and Metropolitan Co-operative Bank (MCB)  came handy which issued Mehta with fake BR or BR without any backing from government.
When Mehta gave this fake receipt for the same the bank would give the money without checking the credentiality of the document.,[object Object]
Drawbacks in Banking System ,[object Object]
In this settlement process, the buyer and the seller might not even know whom they had traded with, either being know only to the broker.
Since the market prices were made by the brokers they had become market makers. There was no concept of price taker and price maker. Also the concept of ready forward deal was banned after this scam.,[object Object]

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Perfect competition case study on stock exchange