4.01: Established in the year 1875 as a voluntary non-profit making association, the Stock Exchange in Mumbai has since then evolved over the years into its present status as the premier Stock Exchange in India. It is the oldest in Asia, even older than the Tokyo Stock Exchange which was founded in the year 1878. It is the most active Stock Market in India, accounting for over 70% of the listed capital in the country and having over 75% share in terms of Market Capitalization. The turn over on the Exchange accounts for nearly one-third of the total turn over in securities all over India.

4.02: Nine Elected Directors (one-third of which retire every year by rotation), an Executive Director, three Government Nominees, a Reserve Bank of India Nominee and five public representatives constitute the Governing Board of this Exchange which regulates the Exchange and decides its policies. A President, a Vice President and Hon. Treasurer are annually elected from among the elected Directors by the Governing Board following the election of Directors. The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange.

4.03: Before 1850 the business of dealing in shares of banks and securities of the East India Company was conducted in Mumbai under a sprawling Banyan Tree in front of the Town Hall which is now in the Horniman Circle Park. In 1874, the Dalal (meaning "Broker") Street became the prominent place of meeting of the share brokers to conduct their business. In January 1899, the Brokers' Hall was inaugurated. After the first world war, the Stock Exchange was housed properly at an old building near the Town Hall. In 1928 the present premises of the Stock Exchange were acquired surrounded by Hamam Street, Bombay Samachar Marg and Dalal Street. A building was constructed and was occupied on 1st December 1930. The present 28 story two faced building called "Phiroze Jeejeebhoy Towers" named after the late Phiroze Jamshedji Jeejeebhoy (who was the Chairman of the Exchange from 1st April 1966 till his death on 9th February 1980) was constructed between the years 1973 to 1983. This Tower was occupied in phases from 1980-81 onwards.

4.04: In 1995, the exchange rapidly computerized its trading operations and the open outcry system of share trading was replaced by screen based trading. In 1996, the revised carry forward system was introduced. Trading sessions are usually held from 10.00 a.m. to 3.30 p.m., from Monday to Friday. On special occasions special trading sessions are also held. In order to avoid settlements of too many transactions on day-to-day basis, the Mumbai Stock Exchange has divided the period of one year into settlement periods which is generally a fortnight. The transactions entered during this period of a fortnight are to be settled by way of payment by purchase or by delivery of share certificates sold on notified days which are made known to the members of the exchange through a clearing programme. There is a pay-in-day on which the broker has to make payment to the clearing house for all the purchases made by him and shares are to be delivered for all sales made by him in the previous settlement period. The pay-out-day is the date on which the broker receives payment for sales made and share certificates together with the transfer deeds delivered to the clearing house.

4.05: All listed securities on the Mumbai Stock Exchange are classified as either specified shares - "A" Group shares or non-specified securities - "B" Group Securities. The Mumbai Stock Exchange Authorities from time to time notify the shares which shall be included in the specified list. At present there are 1994 shares in the specified group. The difference between the two is in the process of settlement of transaction.

4.06: Trading in equity shares on the exchange is confined to market lots which is generally 50 or 100 shares in the case of shares having paid up value of Rs.10/- and 5 or 10 shares in the case of shares having paid up value of Rs.100/-. Every Company maintains a register of its shareholders and closes the said book known as "Book Closure" during which period no transfer of share is undertaken. This is at a time when the company declares a dividend or announces bonus shares or right shares or wants to convene a meeting of the shareholders.

4.07: At the end of year 1996 there were 636 members including 84 corporate members of the BSE. The day to day administrative work of BSE is carried out under the supervision and control of the Executive Director by its various departments such as Listing Department, Market Operations Department, Quotation and Surveillance Department, Inspection Department, Information System Department, Research, Statistics & Publications Department, Investors' Service Cell, Bad Delivery Cell, etc. The BSE also has a full-fledged Training Institute to provide training facilities to professionalize the brokers/sub-brokers and other intermediaries to enable them to render better services to the investors. Programmes are also conducted by BSE for investors to acquaint them with the market operations and to guide them to take the right investment decisions.

4.08: Basic listing requirements on the BSE are as follows:

i) The Memorandum and Articles of Association must not contain any provisions that restrict free transfer of shares.
ii) The company must offer for public subscription at least 25% of its issued capital.
iii) The minimum issued capital of the company should be at least Rs.10 crores.
iv) Application should be invited in denominations of market units of trading.

4.09: INTRA-DAY TRADING LIMITS:

In the interest of market safety, the trading limit of members is restricted to a multiple of their capital. As soon as a member's trading limit approaches the limit, the system flashes warning messages to indicate the same.

4.10: MARGINS:

Margins are collected on a member's trading position for reasons of market safety. The Exchange judiciously uses a combination of different types of margins like Mark-to-Market Margin, Margin on Gross turnover/Net turnover, Carry-forward Margin, Special Margin, Daily Margin and Margin on Concentrated Ratio. An ad hoc Margin is imposed on members whose outstanding position is not in parity with their net worth.

4.11: SETTLEMENT SYSTEM:

4.11 (a) Securities traded on the Exchange are classified into five groups, namely, specified shares or "A" group, non-specified securities which are sub-divided into B1 and B2 groups, odd-lot group and group for debentures and debt instruments.

4.11 (b) Presently, equity shares of 80 companies are classified as specified shares. These companies typically have a large capital base with widespread shareholding, a steady dividend, good growth record and a large volume of business in the secondary market. Contracts in this group are allowed to be carried over to subsequent settlements upto a maximum permissible period of 75 days.

4.11 (c)At present 637 relatively liquid scrips are placed in a category called B1 group.

Excluding non-convertible debentures other securities are placed in category called B2 group.

4.11 (d) Non-convertible debentures are placed in a category called "F" group. "F" group securities have a separate trading platform. Odd Lot shares also have a separate trading platform along with negotiated deals and crossed deals.

4.11 (e) Settlement of transactions is done on an "Account Period" basis. The period is of a week's duration in the case of all groups. During an account period, buy or sell positions in a particular security can either be squared up or can be further accumulated by entering into more buy or sell transactions.

4.12 FUTURE PLANS: Expansion of the BSE On Line Trading system [BOLT]