Gone are the days when you needed a broker to help you buy and sell stocks, shares and make investments in the stock market. Online investing allows you to buy and sell stocks with just a few clicks. The economic and capital market in India cannot function without a stock exchange; there are two main exchanges where transactions take place; the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). While all major transactions take place here, there are more than 20 different exchanges spread across the country.
Online trading in India has changed the meaning of trading in the country. With no broker required, trading has become easier, faster and much more convenient than it used to be. Some of the major financial products and services offered through online trading include mutual funds, stocks, non-life insurance, life insurance, stock trading, portfolio management, commodities trading, and financial planning. Online trading requires the investor to pay less brokerage compared to offline trading. There is no paperwork involved in online investing and no middleman is needed. All stock accounts are stored in a Demat account where they can be viewed.
BSE online trading was founded in 1995 and is the first exchange to be established in Asia. It has the largest number of listed companies in the world and currently has 4937 companies listed on the stock exchange with over 7,700 instruments traded.
All an investor needs for online trading through BSE is an online trading account. Trading can then be done within trading hours from anywhere in the world. In fact, BSE has replaced the open cry system with automated trading. Open Cry system is a common method of communication among the investors in an exchange where they shout and use hand gestures to communicate and transfer information about buy and sell orders. It usually takes place in the ‘pit’ area of the trading floor and involves a lot of face-to-face interaction. However, with the use of electronic trading systems, trading is easier, faster and cheaper; and is less susceptible to manipulation by market makers and brokers/dealers.
The BSE provides an efficient and transparent market for trading debt, equity and equity instruments derivatives. This is conducted through a system known as BOLT – BSE’s Online Trading System.
In the stock exchange, a key index is used to track the important or the most traded stocks on the stock exchange. The index used with the BSE when trading is the SENSEX and is displayed in all major portals, newspapers and magazines. It is India’s first stock market index that enjoys iconic status and is followed worldwide. It is conducted on a free-float basis and is sensitive to market sentiment and reality.
There are also indices such as BSE small cap, BSE mid cap and BSE500 for medium and small companies. In addition, India Index Services and Products Limited has indices such as CNX Nifty Junior, S&P CNX Nifty, CNX 100, S&P CNX 500 and CNX Mid cap. The BSE offers 22 indices to meet a wide range of needs, including 12 sectoral indices. For example, the BSE PSU Index tracks the performance of listed PSY companies and also helps the national government to monitor its assets on the stock exchanges.
The BSE has become a fully ‘autonomous and demutualized stock exchange’ through the use of online exchanges. With partners such as Deutsche Borse (DB) and Singapore Stock Exchange (SGX), it has global competitiveness. BSE has strategic relationships in almost every part of the world – Europe (DB)), Hong Kong (ETF) and Asia (SGX), prominent public sector enterprises such as State Bank of India, Bank of India, Life Insurance Corporation of India and Central Bank of India.
Benefits of BSE Trading System in India for Stock Brokers or Newbies
There are a number of attractive services to enable investors and facilitate smooth transactions. Some of these are:
1) Investor services: A range of services is offered to investors. Being the first exchange in the country to provide an amount of INR 1 million to the Investor Protection Fund, the BSE had launched a nationwide investor awareness program; ‘Investing safely in the stock market’, under which 264 programs were implemented in more than 359 cities in India.
2) BSE has an online trading BOLT system: The Online Trading System (BOLT) facilitates online trading of securities on screens. Currently, it operates 25,000 Trader Workstations located in 359 cities across the country.
3) The BSE has the world’s first centralized exchange-based Internet trading system – BSEWEBX.com. This system helps investors around the world to trade on the BSE platform.
4) The BSE has an Online Surveillance System (BOSS) which monitors on a REAL-TIME basis price movements, volume positions and member positions, as well as real-time measurement of default risk, generation of cross-market alerts and market reconstruction.
5) The BSE has a training institute – known as the Bombay Stock Exchange Training Institute (popularly known as the acronym BTI). The BTI provides training and certification in the capital market; in collaboration with a number of reputed management institutes and universities. There are more than 40 courses to choose from on various aspects of the Bombay capital market and financial stock market.