Historical evolution of stock market in India

History

    • Security trading in India goes back to the 18th century when the East India Company began trading in loan securities.
      • Corporate shares started being traded in the 1830s in Bombay with the stock of Bank and Cotton presses
      • The simple and informal beginnings of stock exchanges in India take one back to the 1850s when 22 stockbrokers began trading opposite the Town Hall of Bombay under a banyan tree
      • The shift continued taking place as the number of brokers increased, finally settling in 1874 at what is known as Dalal Street
      • This as yet informal group known as the Native Share and Stockbrokers Association organized themselves as the Bombay Stock Exchange (BSE) in 1875
    • The BSE is the oldest stock exchange in Asia and was the first to be granted permanent recognition under the Securities Contract Regulation Act, 1956
      • The BSE was followed by the Ahmedabad Stock Exchange in 1894 which focused on trading in shares of textile mills
      • The Calcutta Stock Exchange began operations in 1908 and began trading shares of plantations and jute mills
      • The Madras Stock Exchange followed, being set up in 1920
    • In post-Independent India
      • The BSE dominated the volume of trading after Independence. However, the low level of transparency and undependable clearing and settlement systems, increased the need for a financial market regulator
        • It was at this time, the Securities and Exchange Board of India(SEBI) was born in 1988 as a non-statutory body, which was further given statutory status in 1992
      • The need for another stock exchange large enough to compete with BSE and need for transparency in stock market, gave birth to the National Stock Exchange(NSE)
    • The Current Stock Exchange scenario
      • After the country gained independence, 23 stock exchanges were added apart from the BSE
      • However, at present, there are only seven recognized stock exchanges, along with BSE & NSE as follows:
        • Calcutta Stock Exchange Ltd.
        • Magadh Stock Exchange Ltd
        • Metropolitan Stock Exchange of India Ltd
        • India International Exchange (India INX)
        • NSE IFSC Ltd