BOMBAY STOCK EXCHANGE

Bombay Stock Exchange Limited (the Exchange) is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE(Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).Bombay Stock Exchange Limited received its Certificate of Incorporation on 8th August, 2005 and Certificate of Commencement of Business on 12th August, 2005. The 'Due Date' for taking over the business and operations of the BSE, by the Exchange was fixed for 19th August, 2005, under the Scheme. The Exchange has succeeded the business and operations of BSE on going concern basis and its recognition as an Exchange has been continued by SEBI. With demutualisation, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organisation structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The day-to-day operations of the Exchange are managed by the Managing Director & CEO and a management team of professionals. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietory system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

Heritage
The oldest exchange in Asia and the first exchange in the country to be granted permanent recognition under the Securities Contract Regulation Act, 1956, Bombay Stock Exchange Limited (BSE) has had an interesting rise to prominence over the past 130 years. While the BSE is now synonymous with Dalal Street, it wasnt always so. In fact the first venues of the earliest stock broker meetings in the 1850s were amidst rather natural environs - under banyan trees - in front of the Town Hall, where Horniman Circle is now situated. A decade later, the brokers moved their venue to another set of foliage, this time under banyan trees at the junction of Meadows Street and Mahatma Gandhi Road. As the number of brokers increased, they had to shift from place to place, and wherever they went, through sheer habit, they overflowed in to the streets. At last, in 1874, found a permanent place, and one that they could, quite literally, call their own. The new place was, aptly, called Dalal Street. The journey of BSE is as eventful and interesting as the history of Indias securities markets. Indias biggest bourse, in terms of listed companies and market capitalisation, BSE has played a pioneering role in the Indian Securities Market - one of the oldest in the world. Much before actual

legislations were enacted, BSE had formulated comprehensive set of Rules and Regulations for the Indian Capital Markets. It also laid down best practices adopted by the Indian Capital Markets after India gained its Independence. Perhaps, there would not be any leading corporate in India, which has not sourced BSEs services in resource mobilization. BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the benchmark equity index that reflects the robustness of the economy and finance. At par with international standards, BSE has been a pioneer in several areas. It has several firsts to its credit even in an intensely competitive environment. First in India to introduce Equity Derivatives First in India to launch a Free Float Index First in India to launch US$ version of BSE Sensex First in India to launch Exchange Enabled Internet Trading Platform First in India to obtain ISO certification for Surveillance, Clearing & Settlement 'BSE On-Line Trading System (BOLT) has been awarded the globally recognised the Information Security Management System standard BS7799-2:2002. First to have an exclusive facility for financial training Moved from Open Outcry to Electronic Trading within just 50 days An equally important accomplishment of BSE is the launch of a nationwide investor awareness campaign - Safe Investing in the Stock Market - under which nationwide awareness campaigns and dissemination of information through print and electronic medium was undertaken. BSE also actively promoted the securities market awareness campaign of the Securities and Exchange Board of India. In 2002, the name The Stock Exchange, Mumbai, was changed to BSE. BSE, which had introduced securities trading in India, replaced its open outcry system of trading in 1995, when the totally automated trading through the BSE Online trading (BOLT) system was put into practice. The BOLT network was expanded, nationwide, in 1997. It was at the BSE's International Convention Hall that Indias 1st Bell ringing ceremony in the history Capital Markets was held on February 18th, 2002. It was the listing ceremony of Bharti Tele ventures Ltd. BSE with its long history of capital market development is fully geared to continue its contributions to further the growth of the securities markets of the country, thus helping India increase its sphere of influence in international financial markets.

OVER THE COUNTER EXCHANGE OF INDIA.

The OTCEI allows listing of small and medium sized companies. The first issue listed on the OTCEI was in July 1992. The minimum issued share capital required of a company that wants to be listed on OTCEI is Rs.3 million and the maximum Rs.250 million. Listing on OTCEI is advantageous to companies because of the high liquidity of these securities, which is a result of compulsory market making, improved access and speed of transactions resulting from the extensive network of electronically interlinked counters. Companies engaged in investment, leasing, finance, hire purchase, amusement parks etc., and companies listed on any other recognized stock exchange in India are not eligible for listing on OTCEI. Also, listing is granted only if the issue is fully subscribed to by the public and sponsor.

As part of the Dave Committee report in 1996, it was suggested that equity shares of unlisted
companies should be allowed to be traded on OTCEI. In this context, the exchange has designed the trading rules and the market guidelines for the initiation of Trading in Unlisted Securities and the same has been submitted to SEBI for approval. This market is quite active and robust in the financial sector abroad (PORTAL market in the U.S.) and is expected to receive a positive response from investors in the Indian markets. OTCEI proposes to introduce a vibrant and a well regulated market structure for trading in unlisted securities thereby giving an exit option for venture capital / Private equity, offshore funds and other institutions and corporates. This provides improved investment opportunities in start-up enterprises, especially in the growth sectors.

The Business Objectives To promote organised trading in Unlisted Securities To broadbase the existing informal market in order to make it more liquid To provide a source of valuation for securities To act as a launch pad to an IPO

Benefits to the Participants Act as a benchmark to value securities Creating an exit option for illiquid stocks / venture capitalists Introducing transparency for trading in Unlisted Securities Platform for issuers and first level investors (QPs) like financial institutions, State level Financial corporations, Foreign Institutional Investors to trade System for defining benchmark for securities Organising and broadbasing trading in the existing market Shuffling portfolios for the investors Increasing business for the market constituents Easier launch pad for an IPO

Over-the-Country Exchange of India (OTCEI) was incorporated in the year 1990 as a Section 25 company under the Companies Act 1956. It is recognised by the Securities Contracts Regulation Act, 1956 as a stock exchange. The purpose of the formation of OTCEI was to aid enterprising promoters in raising finance for new projects in a cost effective manner and to provide transparent and efficient mode of trading to the investors.

It is modelled along the lines of the NASDAQ market and has introduced several novel concepts to the Indian capital markets, like screen-based nationwide trading, sponsorship of companies, market making and scripless trading. Presently the exchange has 115 listings and has helped in providing capital for enterprises which have walked on to build successful brands for themselves. They are VIP, Advanta, Sonora Tiles & Brilliant mineral water, etc.
OTCEI Motto

"To assist in efficient capital formation by developing a vibrant, dynamic and selfregulated capital market conferring benefits to the investors, issuers, capital market and the nation at large."
OTCEI Brokers

There are three types of intermediaries in this exchange.

Members Dealers Sponsors

The above three contributes to the activities of the exchange through trading and enabling listing of companies on the Exchange. Members and Dealers can carry out activities like trading, underwriting, market making and participation in bought out deals. Dealers can never sponsor an issue for listing. Sponsors can perform the function of sponsorship of issues, but they are not permitted to take part in secondary market activities.
OTCEIs Five Years Total Turnover

OTCEIs Fact

It is the first screen based nationwide stock exchange in India. It is the first exchange to introduce Market Making in India. It is the first exchange to introduce Sponsorship of companies in India. It is the only exchange which allows the listing of companies with a paid-up capital below Rs. 3 crores. It is the only exchange which allows the companies with less than 3 year track record to tap capital market. It has shifted trading from counter receipts to share certificates. It has introduced Weekly Settlement Cycle. It allows short selling. It allows the demat trading through NSDL. It has tied-up with NSCCL for Clearing.

OTCEIs Trading in Unlisted Securities

According to the Dave Committee report in 1996, it was suggested to allow trading the equity shares of unlisted companies. The exchange has also designed trading rules and market guidelines in this context and it has also been submitted to SEBI for approval. The exchange also proposes to introduce a vibrant and well structured and regulated market for unlisted securities trading, giving an exit option for venture capital/ Private equity, offshore funds and other institutions and corporates. This results in an improved investment opportunities in start-up enterprises, particularly in the growth sectors.
OTCEI Grievance Cells

OTC Exchange of India became the first Exchange in the country to open the Investor Grievance Cells (IGCs) at the four Metros. The cell was opened in 1993 and it handles complaints/queries from the investors against the brokers and/or OTCEI listed companies. POLICIES AND PROGRAMMES This Annual Report of the Securities and Exchange Board of India (SEBI) reviews the policies and programmes of the SEBI, its working and operations in the financial year, 1998-99. The Report gives the account of operations and the manner in which the SEBI has been discharging its functions and exercising its powers in terms of the Securities and Exchange Board of India Act, 1992; the Securities Contracts (Regulation) Act, 1956; the Depositories Act, 1996; as well as in terms of the delegated powers under the Companies Act, 1956. The Report also gives details of developments in Indian securities markets and their bearing on and relation with the work of the SEBI. The Report has been prepared in accordance with the format prescribed in the Securities and Exchange Board of India (Annual Report) Rules, 1994, notified in the Official Gazette on April 7, 1994. During 1998-99, the SEBI continued its operations and initiatives in regulating and promoting the development of Indian securities markets in fulfillment of the twin objectives of investor protection and market development mandated by the SEBI Act, 1992. Throughout its seven-year existence as a statutory body, the SEBI has sought to balance these two objectives by constantly reviewing and reappraising its existing policies and programmes, formulating new policies and crafting new regulations to nurture areas hitherto unregulated and to implement them to ensure growth of the markets with efficiency, integrity and protection of investors interest.