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What is BSE: Here is All You Need to Know

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Published Date: 24 Jun 2024Updated Date: 27 Dec 20246 mins readBy MOFSL

Introduction

Indian stock market has significantly progressed over the years. Its growth from its humble beginnings is thanks to the establishment of BSE. In 1875, BSE took shape as the "Native Share & Stock Brokers' Association". It is the oldest stock exchange in India & Asia. The BSE's full form is the Bombay Stock Exchange.

Over the 143 years of its operation, BSE has paved the way for capital and economic growth. As an investor, you can use this trading platform to contribute to the country's development. Meanwhile, increase your returns. Let's learn more about the meaning of BSE, its working mechanism, and advantages.

What is BSE: Its history and evolution

BSE is the hub connecting publicly listed companies and investors. It is a seamless marketplace driven by technology for efficient trading. The BSE we see today as the pillar of India and Mumbai's share market is thanks to the years of evolution.  

In the 1850s, led by Premchand Roychand, stockbrokers engaged in informal trading around a banyan tree. To make the process more structured and regulated, Premchand established BSE in 1875. Ever since, the Bombay Stock Exchange, based in Dalal Street, Mumbai, has grown by leaps and bounds.

As it is close to major business sectors in Gujarat and Madras, this Mumbai-based Stock Exchange expanded rapidly. So much so that, the government, under the Securities Contracts Regulations Act, recognised it as India's first stock exchange in 1957.

Besides its physical presence in Dalal Street dominating the Mumbai Share Market, BSE has evolved to provide an electronic platform for trading - Bombay Online Trading Platform (BOLT). Additionally, it became the fastest exchange in the world with 6 microseconds median response speed.

How does BSE work?

You can trade on BSE via BOLT by following the simple process outlined below:

1. You can place your order to buy or sell securities through a brokerage. You may also get direct investment access for making large transactions.

2. The exchange system matches your order with the limit order, depending on time and volume.

3. On completion of the trade, your transaction gets processed through a T+1 rolling settlement.

At BSE, the general trading session happens between 9:15 am to 3:30 pm. You can also engage in pre and post-trading sessions. Throughout the process, you can track your trading activity and get relevant information in real-time.

Benefits of BSE to leverage as investors

The BSE is a multifaceted platform. It performs functions like facilitating trading through a robust platform, promoting capital accumulation, share price discovery, investor support, standardisation, and more. These functions benefit you as an investor. Some other advantages include:

  • Comprehensive Investment Segments

You can achieve your diverse investment goals through varied investment segments under BSE. They include equities, debt instruments, derivatives, government securities, etc.

  • Credible Investments

The Securities Exchange Board of India (SEBI) closely supervises the BSE operations. It plays a crucial role in protecting your rights and listing credible securities. 

  • Liquidity

You can buy and sell securities on BSE without any restrictions. As a result, you get equipped to manage your capital needs and restructure your portfolio as and when needed.

  • Collateral Provision

The securities you invest in BSE serve as collateral in times of emergencies. Most financial institutions accept shares listed on BSE as a guarantee against loans.

  • Transparent Trading  

Making an informed judgement while trading is crucial. Hence, BSE upholds companies to the stringent standards to disclose relevant information accurately.

Benchmark index of BSE

The Sensex is a performance-measuring metric used in BSE. Established in 1986, the Sensex represents the 30 largest stocks actively traded on the BSE. 

By analysing the Sensex, you can understand the market trends that affect the economy. Utilising such information, you can make calculated investment decisions. Besides being an extensively monitored stock market index in India, the Sensex is also traded globally. It appears on the EUREX and other leading exchanges globally. 

Other major indices on BSE include:

Conclusion

With its robust platform, market indices, and transparent trading opportunities, the BSE has taken India's economy to new heights. It has grown beyond the nascent Mumbai Stock Exchange to form a giant avenue. As an investor, you can leverage its numerous possibilities and grow your wealth efficiently. While doing so, you also contribute to the country's growth. The key is to understand the intricacies highlighted in this article and trudge carefully.

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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