Key Points
Key Points: Functions of Stock Exchange
- Stock exchange provides liquidity and marketability by allowing easy buying and selling of securities.
- Security prices are determined by the forces of demand and supply.
- It provides a fair, safe and legally regulated platform for trading.
- It promotes economic growth by directing savings into productive investments.
- It encourages investment in securities, leading to the spreading of equity cult.
- It provides scope for healthy speculation, helping maintain market activity.
- Overall, a stock exchange makes trading in securities easy, safe and efficient.
Key Points: Secondary Market/Stock Exchange
- Secondary market is the stock exchange / stock market.
- It deals in existing or second-hand securities.
- Stock exchange is a platform for trading securities.
- Companies Act 1850 was introduced to promote investment in corporate securities.
- First stock exchange: Bombay, 1875, later called BSE.
- Other exchanges came up in Ahmedabad, Calcutta and Madras.
- Post-1991, Indian secondary market has a three-tier structure: Regional Stock Exchanges, NSE and OTCEI.
