INTRODUCTION OF STOCK  EXCHANGE TRADING MECHANISM :

There are 19 stock exchanges at present in India. All of them are regulated in terms of Securities Contract (Regulation) Act, 1956 and SEBI Act, 1992 and the rules and regulations made thereunder. Some of the exchanges started of as voluntary non-profit associations such as Bombay Stock Exchange (BSE) and Indore Stock Exchange. The Stock Exchanges at Chennai, Jaipur, Hyderabad and Pune were incorporated as companies limited by guarantee. The other stock exchanges are companies limited by shares and incorporated under the Companies Act, 1956 (now Companies Act, 2013) or earlier acts.

Pursuant to Section 131 of the Finance Act, 2015 and Central Government Notification F. No. 1/9/SM/2015 dated 28th August, 2015 all recognized association (commodity derivatives exchanges) under the Forwards Contracts Act, 1952 and deemed to recognized stock exchange under the SCRA, 1956.

The stock exchanges are managed by Board of Directors or Council of Management consisting of elected brokers and representatives of Government and Public appointed by SEBI. The Boards of stock exchanges are empowered to make and enforce rules, bye-laws and regulations with jurisdiction over all its members.

The Acts, Rules and Regulations governing the stock exchanges have been separately discussed in a lesson in of this study material.

Membership of stock exchanges is generally given to persons financially sound and with adequate experience/ training in stock market. Their enrolment as member is regulated and controlled by SEBI to whom they have to pay an annual charge. A member of the stock exchange is called ‘broker’ who can transact on behalf of his clients as well as on his own behalf. A non-member can deal in securities only through members. A broker can also take the assistance of sub-broker whom he can appoint under the procedure of registration.