Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock). Let us take an example for a better understanding of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. More and more people would want to buy this stock (i.e. high demand) and very few people will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market its price will fall down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost paperless. Now investor’s don’t have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet. The Securities Contract Regulation Act, 1956, under Section-2(j) defines stock exchange. A stock exchange thus, imparting marketability & liquidity to securities, encourages investments in securities & assists corporate growth. Stock exchange is regarded as “an essential concomitant of the capitalistic system of economy. It is indispensable for the proper functioning of corporate enterprise. It brings together large amount of capital necessary for the economic progress of a country. It is citadel of capital & the pivot of money market. It provides necessary mobility to capital & directs the flow of capital into profitable & successful enterprises. It is the barometer of general economic progress in a country & exerts a powerful & significant influence as a depressant or stimulate of business activity. It may be defined as the place or market where securities of joint stock companies & of government or semi-government bodies are dealt in”. The London Stock Exchange is the heart of global financial markets & is the home to some of the best companies in the world. It enables co. from around the world to raise the capital they need to grow, by listing securities on our highly-efficient, transparent & well-regulated markets through two primary markets i.e. the Main Market & Alternative Investment Market). It gives co’s to access to one of the world’s deepest & most liquid pools of investment capital. Once co. have been admitted to trading, expertise of the global financial markets help them maximize the value of their listing in London. It provides the trading platforms used by broking firms around the world to buy & sell securities. More than 300 firms worldwide trade as members of the London Stock Exchange. EDX London is the international equity derivatives exchange & its aim is to become the world’s most efficient & liquid market for equity derivatives. The UK covered warrants market is one of the world’s fastest growing investment markets. It host five blue-chip issuers offering over 800 warrants & certificates on single stocks & indices in the UK & around the world. The project explores the regulatory framework of the Indian & London Stock Exchange. Whereas, my first chapter deals with the Overview of Indian stock exchange and second chapter deals with the Overview of London stock exchange and third and the last chapter deals with the comparative analysis of regulatory framework of stock exchange of both the countries.
STOCK EXCHANGE IN INDIA
During the eighteenth and nineteenth centuries, India supplied Britain with raw materials and a market for manufactured products. Britain became increasingly reliant on India for raw...