The functions performed by BSE are very important for the Indian financial system as it is one of the world’s oldest and most reliable stock exchanges. It facilitates trading in stocks, bonds, mutual funds, and other instruments such as government securities, commercial paper, etc. These operations help increase liquidity, regulate the stock market, protect investor interests, and promote economic growth. This article describes what BSE is, its features, and the key functions of BSE that make it an integral part of India’s financial system.
What is BSE?
The Bombay Stock Exchange, established in 1875, is the oldest and largest stock exchange in India, providing a forum for listing stocks, derivatives, mutual funds, and bonds for trading on a centralized platform by investors. BSE is of utmost importance for the Indian financial market because it ensures the transparent, efficient, and stable trading of stocks.
Features of BSE
BSE is a leading stock exchange with advanced trading technology, regulatory framework, and massive investment options. The major features of BSE are as follows:
- Largest and Oldest Stock Exchange in India: BSE, the oldest in India, has a history from 1875 when it was founded as Asia’s first stock exchange. It grew to become one of the biggest stock exchanges around the world today with over 5,500 listed companies.
- Benchmark Index: SENSEX is the Stock Exchange Sensitive Index that reflects the top 30 financially strongest companies on BSE. It is the economic indicator of India’s performance in the stock market.
- Advance trading platform: It is facilitated using the BOLT (BSE OnLine Trading) system on the exchange with rapid and highly secure electronic trades. It keeps updating investors through real-time stocks data.
- Equities Stocks Shares of listed companies: Derivatives Future and options trading. Mutual funds Professionally managed investment funds. Corporate bonds & government securities.
- Market Liquidity & Volatility: BSE gives high liquidity to the investors, so the stock can easily be bought or sold. It is a very volatile market since the change in stock prices depends automatically on demand and supply.
Functions of BSE
The functions of BSE are not relevant just in terms of share trading. Very importantly for India’s financial system, it ensures great bargains, economic growth, and investor confidence. Some of the significant functions of BSE are:
Providing a Marketplace for Securities Trading
BSE is a platform where one can buy and sell securities. It makes the exchange of stock among buyers and sellers easy. Investors find one place to trade in shares, bonds, or other financial instruments. This system makes the stock market accessible to everyone.
Companies use BSE to raise funds by offering shares to the public. Shareholders help organizations expand by purchasing shares. Stock prices keep on fluctuating so that investors can learn the value of their money. In this process, fair prices and smooth trade will be facilitated.
Ensuring Liquidity in the Stock Market
Liquidity measures the rate in which an asset can be either bought or sold without influencing the price. It ensures that on BSE stocks remain liquid; investors can effortlessly enter or withdraw from the market at any particular time. Hence, they have a reduced prospect of losses when prices fluctuate.
More investors will attract the liquid stock market. For example, when trading in stocks is easy, people are confident of its investment. The BSE ensures there are enough buyers and sellers in the market. This process keeps the stock prices stable and fair.
Facilitating Capital Raising for Companies
BSE provides the avenue through which companies raise funds to expand their businesses. Companies list their shares on BSE through an IPO. New companies issue shares to get funds from investors.
Existing companies can raise more money through follow-on public offerings. The money thus raised makes the companies invest in new projects and recruit more employees and expand their business.
Protecting Investor Interests
SEBI regulates BSE to a huge extent; by doing this, it guards its investors, in addition to this, ensuring authenticity of financial statements from companies help the investor reach a right judgment.
BSE also runs a mechanism that helps handle disputes related to investor-brokers conflicts. Investors could raise complaints should they face challenges. The exchange also runs enlightenment programs to inculcate information on safe investments.
Promoting Market Transparency & Efficiency
BSE ensures fair and transparent stock trading. It matches buyers with sellers automatically through electronic trading systems. This helps in getting real-time stock prices and market trends.
It enables the investors to access live stock data and makes better decisions. This transparent market creates trust among the investors. BSE also saves from price manipulation and unfair trading practices.
Monitoring and Regulating Stock Market Activities
BSE traces stock price movements to identify any suspicious activity. If it does, it immediately checks the validity of fraudulence, thus keeping the market safe for investors.
It also cooperates with SEBI to prevent insider trading. Insider trading is where a person uses confidential information in such a way so as to gain advantage over other individuals. BSE ensures all the investors get fair play in the stock market.
Encouraging Economic Growth
The stock market helps a nation’s economy expand. Firms raise money at BSE to invest in various new projects, enhancing employment opportunities in different industry sectors.
The growth of businesses is always a benefit to the entire economy. More investments result in better infrastructure, higher production, and economic stability. BSE is also important in national development through mobilizing funds for productive use.
Supporting Financial Innovation
BSE introduces new financial products for the investors. It introduces derivatives, mutual funds, and exchange-traded funds. All these investment channels assist an investor in increasing his wealth in different ways.
BSE also integrates modern technology, such as artificial intelligence and blockchain. It makes the market more efficient and secure. This exchange welcomes innovation, hence, trading remains fast, safe, and accessible.
Functions of BSE FAQs
1. What are the major operations of BSE?
BSE operates with the following goals: a trading platform which guarantees market depth as well as investor protection, regulation of the stock market function, and capital accrual in support of companies.
2. What is the role of SEBI in regulating BSE?
SEBI is involved in regulating BSE to ensure fair trading practices, transparency, and investor protection.
3. How does BSE assist companies in raising capital?
Companies raise capital through IPOs and FPOs on BSE, hence expanding their businesses.
4. What is the difference between BSE and NSE?
BSE and NSE are two Indian Stock Exchanges. BSE is an older exchange with a higher number of listed companies but less trade volume with an inferior technological setup. NSE is newer but has a higher trade volume and superior technology platform.
5. What is SENSEX?
SENSEX is the benchmark index of BSE comprising of top 30 financially sound listed companies on the exchange.
