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Case
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Reference no. 106-018-1
Published by:
IBS Research Center (2006)
Length:
15 pages
Data source:
Published sources

Abstract

Bombay Stock Exchange (BSE), established in 1875 by an association of brokers, was the prominent stock exchange in India and the oldest in Asia. The BSE index SENSEX (Sensitive Index), consisting of 30 representative stocks, emerged as a prominent brand in the country. Over the period of time BSE brought about various technological upgrades and made training on-line, from an initial outcry system of trading. However, a severe scam in 1991-1992 raised questions of transparency in trading. In order to provide more transparency and a fair trading platform for investors, NSE (National Stock Exchange) was established in 1995, by a group of leading financial institutions in India. Being a professionally managed, for-profit exchange, NSE brought various product differentiations and facilitated investors. Within a short span of 10 years, it became the leading stock exchange in India and the third largest in the world. In 2005, in order to sustain competition from NSE, BSE transformed into a corporate entity (ownership and management were separated). The case discusses the growth of BSE and how a comparatively more professionally managed NSE gave it tough competition. Whether the restructuring exercise carried out by BSE would benefit it in regaining its glory was to be seen.

Topics

NSE (National Stock Exchange); BSE (Bombay Stock Exchange); SENSEX (Sensitive Index); NSDL (National Securities Depository Limited); Central Depository Services Limited (CDSL); Stock exchanges; Cash segment; Derivative segment; Future and options; SEBI (Stock Exchange Bureau of India); Demutualisation; Restructuring; Management dilemma; Badla system
Location:
Industry:
Size:
Market capitalisation INR1,698,428 crores (2004-2005)
Other setting(s):
1875-2005

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