Introduction- Stock Exchanges are the most crucial agents and facilitators of entrepreneurial progress among modern service institutions. A stock exchange is a form of exchange which provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. Primary role of a Stock Exchange is to provide companies with the facility to raise capital for expansion through selling shares to the investing public Below are mentioned some common forms of raising capital:
Capital intensive companies, particularly high tech companies, always need to raise high volumes of capital in their early stages. For this reason, the public market provided by the stock exchanges, has been one of the most important funding sources for many capital intensive startups. Limited partnerships
A number of companies have also raised significant amounts of capital through R&D limited partnerships. Tax law changes that were enacted in 1987 in the United States changed the tax deductibility of investments in R&D limited partnerships. In order for a partnership to be of interest to investors today, the cash on cash return must be high enough to entice investors. As a result, R&D limited partnerships are not a viable means of raising money for most companies, especially hi-tech startups. Venture capital
A third usual source of capital for startup companies has been venture capital. This source remains largely available today, but the maximum statistical amount that the venture company firms in aggregate will invest in any one company is not limitless. Corporate partners
A fourth alternative source of cash for a private company is a corporate partner, usually an established multinational company, which provides capital for the smaller company in return for marketing rights, patent rights, or equity. Corporate partnerships have been used successfully in a large number of cases.
INDIAN STOCK EXCHANGE---------
Indian Stock Exchange primarily consists of two stock exchanges 1.National Stock Exchange- The National Stock Exchange of India was set up by Government of India on the recommendation of Pherwani Committee in 1991.Promoted by leading Financial institutions essentially led by IDBI at the behest of the Government of India, it was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.
1. Establishing nationwide trading facilities for all types of securities. 2. Ensuring equal access to investors all-over the country through an appropriate communication network. 3. Meeting international benchmarks and standards.
4. Enabling shorter settlement cycles and book entry settlements
Currently, NSE has the following major segments of the capital market: Equities
* Mutual Funds
* Exchange Traded Funds
* Initial Public Offerings
* Security Lending and Borrowing Scheme
* Equity Derivatives (including Global Indices like S&P 500, Dow Jones and FTSE ) * Currency Derivatives
* Interest Rate Futures
* Retail Debt Market
* Wholesale Debt Market
* Corporate Bonds
NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market uses state-of-art...
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