A widely neither distributed nor such distress followed so quickly on the heels 1the equity brokerage industry in India is one of the oldest in the Asia region. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. Nsdl Pan Status The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. This trend was akin to the rapid growth of securities markets in Europe and the North America in the background of expansion of railroads and exploration of natural resources and land development.
Historical records show that as early as 1864, there were about 1,000 brokers with the stock markets functioning from three places in Mumbai; Nsdl Pan Status between 9 am to 7 pm at the junction of Meadows Street and Rampart Row, from day break till 9 am and from 7 pm to early hours of next morning at Bazargate. Share prices rose sharply even at that time. A share of Colaba Land Company during the boom period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went up from Rs 2,000 to Rs 54,000. Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies and 62 joint stock companies.
Reports on stock markets around that time indicate that an ordinary broker in 1864 earned about Rs 200 per day, a huge sum in those days. The boom period came to an abrupt end in 1865. Nsdl Pan Status In Jul 1865, what was then used to be called the share mania ended with burst of the stock market bubble? “Never had I witnessed in any place a run s of such prosperity” thus wrote Richard Temple, who served as the Governor of Bombay at that time. An interesting aspect is that despite the collapse of the stock market, most of the brokers met their payment commitments. In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known as the “Native Share and Stock Brokers Association”. A unique feature of the stock market development in India was that that it was entirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Nsdl Pan Status Following the establishment of the first stock exchange in Mumbai, other stock exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904 and 1908) etc, at different points of time.
Beginning of a new equity culture
A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, Nsdl Pan Status which created a surge in retail investing. The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilisation that evinced huge interest from retail investors. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. As a part of the reform process, it became imperative to strengthen the role of the capital markets that could play an important role in efficient mobilisation and allocation of financial resources to the real economy. Towards this end, several measures were taken to streamline the processes and systems including setting up an efficient market infrastructure to enable Indian finance to grow further and mature. The importance of an efficient micro market infrastructure came into focus following the incidence of market abuses in securities and banking markets in 1991 and 2001 that led to extensive investigations by two respective Joint Parliamentary Committees. Nsdl Pan Status The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include
· to protect the interests of the investors in securities
· to promote the development of securities markets and to regulate the securities markets
The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities markets in India in the last fifteen years. Following the recommendations of the High Powered Study Group on Establishment of New Stock Exchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions with an aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993.
It commenced operations in wholesale debt segment in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian capital markets several innovations and modern practices and procedures such as nationwide trading network, Nsdl Pan Status electronic trading, greater transparency in price discovery and process driven operations that had significant bearing on further growth of the stock markets in India. Faster and efficient securities settlement system is an important ingredient of a successful stock market. To speed the securities settlement process, The Depositories Act 1996 was passed that allowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer of securities through electronic book entry. The National Securities Depository Limited (NSDL) set up by leading financial institutions, commenced operations in Oct 1996. Regulations governing selection of various types of market intermediaries as depository participations were made. Nsdl Pan Status Subsequently, Central Depository Services (India) Limited promoted by Bombay Stock Exchange and other financial institutions came into being.
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