AN INTERNAL ASSIGNMENT

ON
ASIAN STOCK EXCHANGES

Submitted by

Yogesh sahu

(Y151805385)

BBA- 5th Semester

Under the guidance of:

Dr. Shree Bhagwat Sir

Department of Business Management

Dr. Hari Singh Gour Central University

Sagar (M.P.)

SESSION – 2017-18
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 TABLE OF CONTENTS
CHAPTER NO. TITLE PAGE
NO.
1. INTRODUCTION OF STOCK MARKET 3-12
Concept of stock market 3-4
Indian stock market 4-5
Origin of stock market 5-7
Features of stock market 7-9
Introduction of Asian stock exchanges 9-10
About Asia Pacific stock market 10-11
History of Asian stock exchanges 11-12

2. REVIEW OF LITERATURE 13-16

Introduction 13
Reviews of different authors 13-15
Objective of the study 15
Methodology 16

3. STOCK EXCHANGES IN INDIA 17-25

About NSE & BSE 17-18
Stock exchange indices 18-20
4. ASIAN STOCK EXCHANGES 21
New York stock exchange 21-28
London stock exchanges 29-35
Hong Kong stock exchange 36-41
Shanghai stock exchange 42-47
Korea stock exchange 48-50

5. BIBLIOGRAPHY 51

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 CHAPTER -1

CONCEPT OF STOCK EXCHANGE:

Definition: It is a place where shares of pubic listed companies are
traded. The primary market is where companies float shares to the
general public in an initial public offering (IPO) to raise capital.

Description: Once new securities have been sold in the primary market,
they are traded in the secondary market—where one investor buys
shares from another investor at the prevailing market price or at
whatever prices both the buyer and seller agree upon. The secondary
market or the stock exchanges are regulated by the regulatory authority.
In India, the secondary and primary markets are governed by the
Security and Exchange Board of India (SEBI).
A stock exchange facilitates stock brokers to trade company stocks and
other securities. A stock may be bought or sold only if it is listed on an
exchange. Thus, it is the meeting place of the stock buyers and sellers.
India's premier stock exchanges are the Bombay Stock Exchange and the
National Stock Exchange.

Stock exchange is an organized market for buying and selling corporate

and other securities. Here, securities are purchased and sold out as per
certain well-defined rules and regulations. It provides a convenient and

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secured mechanism or platform for transactions in different securities.
Such securities include shares and debentures issued by public
companies which are duly listed at the stock exchange and bonds and
debentures issued by government, public corporations and municipal and
port trust bodies.

Stock exchanges are indispensable for the smooth and orderly

functioning of corporate sector in a free market economy. A stock
exchange need not be treated as a place for speculation or a gambling
den. It should act as a place for safe and profitable investment, for this,
effective control on the working of stock exchange is necessary. This
will avoid misuse of this platform for excessive speculation, scams and
other undesirable and anti-social activities. Stock Exchange (also called
Stock Market or Share Market) is one important constituent of capital
market. Stock Exchange is an organized market for the purchase and
sale of industrial and financial security. It is convenient place where
trading in securities is conducted in systematic manner i.e. as per certain
rules and regulations. It performs various functions and offers useful
services to investors and borrowing companies. It is an investment
intermediary and facilitates economic and industrial development of a
country.

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INDIAN STOCK EXCHANGES

Before liberalization, Indian economy was tightly controlled and

protected by number of measures like licensing system, high tariffs and
rates, limited investment in core sectors only. During 1980’s, growth of
economy was highly unsustainable because of its dependence on
borrowings to correct the current account deficit. To reduce the
imbalances, the government of India introduced economic policy in
1991 to implement structural reforms.

The financial sector at that time was much unstructured and its scope
was limited only to bonds, equity, insurance, commodity markets,
mutual and pension funds. In order to structure the security market, a
regulatory authority named as SEBI (Security Exchange Board of India)
was introduced and first electronic exchange National Stock Exchange
also set up. The purpose behind this was to regularize investments,
mobilization of resources and to give credit.

ORIGIN OF INDIAN STOCK MARKET

The origin of the stock market in India goes back to the end of the
eighteenth century when long-term negotiable securities were first
issued. However, for all practical purposes, the real beginning occurred
in the middle of the nineteenth century after the enactment of the

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companies Act in 1850, which introduced the features of limited liability
and generated investor interest in corporate securities.

An important early event in the development of the stock market in India

was the formation of the native share and stock brokers ‘Association at
Bombay in 1875, the precursor of the present day Bombay Stock
Exchange. This was followed by the formation of
associations/exchanges in Ahmadabad (1894), Calcutta (1908), and
Madras (1937). In addition, a large number of ephemeral exchanges
emerged mainly in buoyant periods to recede into oblivion during
depressing times subsequently.

The task of mobilization and allocation of savings could be attempted in

the old days by a much less specialized institution than the stock
exchanges. But as business and industry expanded and the economy
assumed more complex nature, the need for ‘permanent finance’ arose.
Entrepreneurs needed money for long term whereas investors demanded
liquidity – the facility to convert their investment into cash at any given
time. The answer was a ready market for investments and this was how
the stock exchange came into being.

Stock exchange means any body of individuals, whether incorporated or

not, constituted for the purpose of regulating or controlling the business
of buying, selling or dealing in securities. These securities include:

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(i) Shares, scrip, stocks, bonds, debentures stock or other marketable
securities of a like nature in or of any incorporated company or other
body corporate;

(ii) Government securities; and

(iii) Rights or interest in securities.

Or trading in derivative market you have to buy either the future contract
or the option contract. In a future contract you are bound to close the
deal within a specific time and at a fixed rate. While in case of option
contract you can also choose to ignore the contract.

FEATURES OF STOCK EXCHANGE

Characteristics or features of stock exchange are:-

1. Market for securities: Stock exchange is a market, where

securities of corporate bodies, government and semi-government
bodies are bought and sold.
2. Deals in second hand securities: It deals with shares, debentures
bonds and such securities already issued by the companies. In short
it deals with existing or second hand securities and hence it is
called secondary market.
3. Regulates trade in securities: Stock exchange does not buy or sell
any securities on its own account. It merely provides the necessary
infrastructure and facilities for trade in securities to its members

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 and brokers who trade in securities. It regulates the trade activities
so as to ensure free and fair trade
4. Allows dealings only in listed securities: In fact, stock exchanges
maintain an official list of securities that could be purchased and
sold on its floor. Securities which do not figure in the official list
of stock exchange are called unlisted securities. Such unlisted
securities cannot be traded in the stock exchange.
5. Transactions effected only through members: All the
transactions in securities at the stock exchange are affected only
through its authorized brokers and members. Outsiders or direct
investors are not allowed to enter in the trading circles of the stock
exchange.
6. Association of persons: A stock exchange is an association of
persons or body of individuals which may be registered or
unregistered.
7. Recognition from central government: Stock exchange is an
organized market. It requires recognition from the Central
Government.
8. Working as per rules: Buying and selling transactions in
securities at the stock exchange are governed by the rules and
regulations of stock exchange as well as SEBI Guidelines. No
deviation from the rules and guidelines is allowed in any case.

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 9. Specific location: Stock exchange is a particular market place
where authorized brokers come together daily (i.e. on working
days) on the floor of market called trading circles and conduct
trading activities. After the working hours market is closed. All the
working of stock exchanges is conducted and controlled through
computers and electronic system.
10. Financial barometers: Stock exchanges are the financial
barometers and development indicators of national economy of the
country. Industrial growth and stability is reflected in the index of
stock exchange.

INTRODUCTION
In the recent years, more and more countries have liberalized their
capital markets. If capital market liberalization is effective, it is expected
to lead to capital market integration. This enables investors, to buy
foreign equity securities and diversify their investment portfolios. Based
on the information about the integration or segmentation of capital
markets, investors can optimize their portfolios to minimize their risks.
Globalization measures of the world economies attract considerable
attention of academicians and investors of stock market to the subject of
co-movement. According to portfolio diversification theories, when inter
linkages in stock markets are noticed, then the international investors
lose the opportunity of long run benefits of portfolio diversification.
Hence, it becomes mandatory for portfolio managers and investors at the

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global level to study the reliance of one market on the other at the
international level. Hence this paper investigates the market integration
of Asian Pacific countries, namely, Australia, India, Hong Kong, Japan
and China. The exchange of the capital across international borders
through the purchase and sale of equity securities, takes places across
nations. The global stock markets are not an exception to for reacting to
the market information. The volatility spills over from national to
international level. During 2008 – 2009, Asian Pacific Stock Markets
were affected by the global financial crisis and this was reflected in
world stock markets which experienced down turns. The effect of these
problems impacted the international portfolio diversification. Hence this
study investigates the integration between Asian Pacific Stock Markets
index (ALL ORDINARIES, BSE SENSEX, HANGSENG INDEX,
NIKKEI 225 and SSE COMPOSITE INDEX) to understand the
dynamics of market movements and its effects on other indices.
ASIA PACIFIC STOCK EXCHANGE:

The Asia Pacific Stock Exchange (APX) is a stock exchange with its
headquarters in Sydney, Australia. It is a wholly owned subsidiary of the
AIMS Financial Group, with a market license granted by the Australian
Securities & Investment Commission (ASIC) on 5 November 2013.
APX listed its first few companies on 6 March 2014. Asia Pacific
Exchange Pvt. Ltd. (APEX) (www.asiapacificex.com) is a derivatives
exchange incorporated in Singapore. APEX lists commodity and

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financial derivatives traded by global market participants. Recognizing
the demand that global market participants have for products closely
related to the Chinese economy, APEX aims to provide a robust
platform with such exposure for international market participants. The
platform also serves Chinese and international market participants
seeking to manage their price risk. APEX’s clearing house, APEX Clear,
offers innovative clearing and settlement services across asset classes for
all of its exchange traded derivatives.

HISTORY

The exchange began in 1997 as an exempt market operated by Austock.

(An exempt market is one the Australian government exempts from the
licensing otherwise required for a financial market.) The first listing was
pharmaceutical manufacturer Sigma Pharmaceuticals. At the time it was
a cooperative owned by pharmacists, and it wanted to raise capital, but
an Australian Stock Exchange listing would have required the owners to
give up control (under the ASX "one share, one vote" rule).

Austock instead created a structure of separate investor and voting

shares for them, and established an exempt market for those shares. The
Austock exempt market through its life listed 22 companies and turned
over about $500 million. It included initial listings for the SFE
Corporation (owner of the Sydney Futures Exchange) and SPC
Ardmona, before they moved to the Australian Stock Exchange.
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The exchange in its present form as a licensed stock exchange was
established in August 2004 and commenced trading in January 2005. It
retained the trading platform software used by the exempt market.

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REVIEW OF LITERATURE:

Reviews of different authors:`

 Guidi and Ugur (2014) found that the stock markets of South
Eastern Europe were cointegrated with the German and the UK
markets during 2000–2013. Andreou, Matsi and Savvides (2013)
examined the linkages of stock and foreign exchange market in
developing economies.
 The results evidenced bi-directional causality between the foreign
exchange market and stock markets of emerging economies except
Colombia. Using quintile regression approach, Tsai (2012) found
the relationship between stock indices and exchange rates in Asian
economies.
 Wang (2014) investigated the co movement of six major East
Asian Stock Exchanges before and during 2007–2009 global
financial crises found that the markets were less adaptive to the
shocks in the USA after the crisis.
 Tripathi and Sethi (2012) noticed linkages between Indian stock
market and emerging markets.
 Alkulaib, Najand and Mashayekh (2009) checked the dynamic
linkages among equity markets in Middle East and North African
countries and found that GCC influenced the other two regions. Do
(2011) analyzed the integration of six ASEAN stock markets

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 (Indonesia, Malaysia, Philippines, Singapore, Thailand and
Vietnam) with four international stock markets (US, ASEAN bloc,
Asia and world) and the interaction channels between domestic
and international stock markets.
 The researcher found integration/segmentation /interaction
channels between domestic and international markets. Using
Granger causality test, Do, Mcaleer and Sriboonchitta (2009)
studied the linkages between international gold prices and ASEAN
emerging stock markets and the results indicated the existence of
relationship in the long run for SET, VNI indices.
 Kapoor and Singh (2013) examined the co-integration of Asian
Capital Markets and found opportunities for diversification to the
potential investors of Pakistan, India, Bangladesh, and China.
Palamalai, Kalaivani and Devakumar (2013) examined the
integration of major stock markets of India, Malaysia, Hong Kong,
Singapore, South Korea, Taiwan, Japan, China and Indonesia
which represents the Asian-Pacific Markets and found limited long
run diversification benefits.
 Fan, Lu and Wang, (2009) investigated the relationship between
the Chinese stock found a major reversal of co-movement in the
long-run between the Chinese and the capital markets at global
level since 1999.

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  Pisedtasalasai and Gunasekarage (2007) examined the causation
effect of stock returns, volatility of return and the total volume of
trade with respect to the South- East Asian Markets and found
wide variations of stock returns and the volume of trade.
 Cha and Cheung, (1998) examined the causal relationship and
found that the impact of U.S. and Japan were larger in China,
Singapore than in Korea and Taiwan.
 Majority of the national and international researchers studied
either short run or long run relationship of Asian markets and other
stock markets at the global level, only a few researchers studied the
Asia Pacific Stock markets with other stock markets, the above
reviews exhibit that most of the international stock markets were
interlinked with other stock markets.
 Thus the present study investigated the inter linkages among
Asian pacific stock markets which has its implications for
investment diversification at short/long run.

OBJECTIVE OF THE STUDY

The primary aim of the present study is to identify the inter linkages of
Asian Pacific Stock Markets during the study period from April 2009 to
March 2014. Further, attempts were made to know the normality,
stationary, long run relationship and causal relationships in selected

Asian Pacific Stock Markets indices.

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METHODOLOGY
The Stock Exchanges in Asian Pacific region, Australia, India, China,
Hong Kong and Japan countries were selected for the analysis of stock
market integration.
The leading stock markets of Asian-Pacific Region were selected on the
basis of market capitalization listed in World Federation of Exchanges.

S.No. COUNTRY STOCK EXCHANGE

1. Vietnam Vietnam Hanoi Stock Exchange
2. China(Hong Kong) Hong Kong Hang Seng
3. Philippines Philippines Stock Exchange
4. South Korea Korea Stock Exchange
5. India S&P BSE SENSEX
6. China (Shanghai) Shanghai Shenzhen CSI 300
7. China (Taiwan) Taiwan Stock Exchange Weighted
8. Singapore Straits Times
9. Thailand Stock Exchange of Thailand
10. Japan Tokyo Stock Exchange
11. Indonesia Jakarta Stock Exchange
12. Japan Japan Nikkei 225 - Nikkei Index
13. Malaysia FTSE Bursa Malaysia KLCI Index

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 CHAPTER – 3

STOCK EXCHANGES IN INDIA

The Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE) are the country’s two leading Exchanges. There are 20 other
regional Exchanges, connected via the Inter-Connected Stock Exchange
(ICSE). The BSE and NSE allow nationwide trading via their VSAT
systems.

 The Bombay Stock Exchange (BSE) and the National Stock

Exchange of India Ltd (NSE) are the two primary exchanges in
India. In addition, there are 22 Regional Stock Exchanges.
 However, the BSE and NSE have established themselves as the
two leading exchanges and account for about 80 per cent of the
equity volume traded in India.
 The NSE and BSE are equal in size in terms of daily traded
volume. The average daily turnover at the exchanges has increased
from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and
further to Rs 2,273 crore in 1999-2000 (April – August 1999).
NSE has around 1500 shares listed with a total market
capitalization of around Rs 9, 21,500 crore.
 The BSE has over 6000 stocks listed and has a market
capitalization of around Rs 9, 68,000 crore. Most key stocks are
traded on both the exchanges and hence the investor could buy
them on either exchange.
 Both exchanges have a different settlement cycle, which allows
investors to shift their positions on the bourses.
 The primary index of BSE is BSE Sensex comprising 30 stocks.
NSE has the S&P NSE 50 Index (Nifty) which consists of fifty
stocks. The BSE Sensex is the older and more widely followed
index.

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  Both these indices are calculated on the basis of market
capitalization and contain the heavily traded shares from key
sectors.
 The markets are closed on Saturdays and Sundays. Both the
exchanges have switched over from the open outcry trading system
to a fully automated computerized mode of trading known as
BOLT (BSE on Line Trading) and NEAT (National Exchange
Automated Trading) System.
 It facilitates more efficient processing, automatic order matching,
faster execution of trades and transparency; the scrip’s traded on
the BSE have been classified into ‘A’, ‘B1’, ‘B2’, ‘C’, ‘F’ and ‘Z’
groups. The ‘A’ group shares represent those, which are in the
carry forward system (Badla).
 The ‘F’ group represents the debt market (fixed income securities)
segment. The ‘Z’ group scrip’s are the blacklisted companies. The
‘C’ group covers the odd lot securities in ‘A’, ‘B1’ & ‘B2’ groups
and Rights renunciations.
 The key regulator governing Stock Exchanges, Brokers,
Depositories, Depository participants, Mutual Funds, FIIs and
other participants in Indian secondary and primary market is the
Securities and Exchange Board of India (SEBI) Ltd.

STOCK EXCHANGE INDICES:

1. NIFTY:
The NIFTY 50 index is National Stock Exchange of India's benchmark
stock market index for Indian equity market, launched on 21st April
1996. Nifty is owned and managed by India Index Services and Products
(IISL), which is a wholly owned subsidiary of the NSE Strategic
Investment Corporation Limited. IISL had marketing and licensing
agreement with Standard & Poor's for co-branding equity indices until
2013.

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NIFTY 50 Index has shaped up as a largest single financial product in
India, with an ecosystem comprising: exchange traded funds (onshore
and offshore), exchange-traded futures and options (at NSE in India and
at SGX and CME abroad), other index funds and OTC derivatives
(mostly offshore). NIFTY 50 is the world’s most actively traded
contract. WFE, IOMA and FIA surveys endorse NSE’s leadership
position.

The NIFTY 50 covers 13 sectors of the Indian economy and offers

investment managers exposure to the Indian market in one portfolio.

The NIFTY 50 index is a free float market capitalization weighted

index. The index was initially calculated on full market capitalization
methodology. From June 26, 2009, the computation was changed to free
float methodology. The base period for the CNX Nifty index is
November 3, 1995, which marked the completion of one year of
operations of National Stock Exchange Equity Market Segment. The
base value of the index has been set at 1000, and a base capital of Rs
2.06 trillion.

2. SENSEX:
Sensex, otherwise known as the S&P BSE Sensex index, is the
benchmark index of the Bombay Stock Exchange (BSE). It is composed
of 30 of the largest and most actively-traded stocks on the BSE,
providing an accurate gauge of India's economy. Initially compiled in
1986, the Sensex is the oldest stock index in India.

Analysts and investors use the Sensex to observe the overall growth,
development of particular industries, and booms and busts of the Indian
economy. Some of the highest priced shares listed on the Sensex, as of
July 2016, include those of ACC (cement and cement products), HDFC
Bank (banking), Housing Development Finance Corporation (finance
and housing), Infosys Technologies (computer software), Larsen &
Toubro (engineering), Mahindra & Mahindra (automobiles), Maruti

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Suzuki India (automobiles) and Tata Consultancy Services (computer
software).

HISTORY
Do you know that the world’s foremost marketplace New York Stock
Exchange (NYSE), started its trading under a tree (now known as 68
Wall Street) over 200 years ago? Similarly, India’s premier stock
exchange Bombay Stock Exchange (BSE) can also trace back its origin
to as far as 125 years when it started as a voluntary non-profit making
association. News on the stock market appears in different media every
day. You hear about it any time it reaches a new high or a new low, and
you also hear about it daily in statements like ‘The BSE Sensitive Index
rose 5% today’. Obviously, stocks and stock markets are important.
Stocks of public limited companies are bought and sold at a stock
exchange.
But what really are stock exchanges? Known also as the stock market or
bourse, a stock exchange is an organized marketplace for securities (like
stocks, bonds, options) featured by the centralization of supply and
demand for the transaction of orders by member brokers, for institutional
and individual investors. The exchange makes buying and selling easy.
For example, you don’t have to actually go to a stock exchange, say,
BSE – you can contact a broker, who does business with the BSE, and
he or she will buy or sell your stock on your behalf.

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 CHAPTER – 3
ASIAN STOCK EXCHANGES

THE NEW YORK STOCK EXCHANGE:

The New York Stock Exchange (NYSE) is an American stock exchange

on Wall Street in New York City. With a market cap of more than
US$16 trillion, the NYSE is the world’s largest stock exchange,
averaging US$169 billion in daily trading value in 2013. As of 2014, the
NYSE (also known as “the Big Board”) has a listing of nearly 1,900
companies, 1,500 of which are U.S. companies. The NYSE is owned by
Intercontinental Exchange and is regulated by the Securities and
Exchange Commission.

 NYSE expanded beyond government bonds and bank stocks. New

York itself soon surpassed Philadelphia as the financial center or
the United States.
 Advances in telegraphic communication allowed buying and
selling through the telegraph, creating a new ease in trading.
Membership increased and became more exclusive. By the start of
the Civil War, securities, commodities and gold, discovered in
California, excited participation in the exchange.

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  The location changed several times before settling into its present
location at 11 Wall Street in 1865. The Neo-Classical building
was registered as a Historic Landmark in 1978.
 In 1878, telephones were installed, giving investors direct access
to brokers on the floor of the exchange. The increased activity
made the exchange cap the number of members to 1,060, seats for
which required purchase from retiring members.

Between the late 1800s and the end of World War I, the NYSE struggled
in the wake of international turmoil. Then the stock market crashed 23
October 1929, causing an 89% drop in share prices. The crash led to
heavy regulation by the U.S. government. The NYSE subsequently
registered with the United States Securities and Exchange Commission.
On 19 October 1987 the Dow Jones Industrial Average dropped 508
points, the biggest crash since 1929.

NYSE TRADING:

When a company registers with the NYSE (fundamentally to raise

capital), shares of the company’s stocks become available for public
trading. Traders wanting to invest in the stock market can buy and sell
stocks online through exchange companies. Trading takes place on the
trading floor through floor brokers and Designated Market Makers. The
NYSE assigns Designated Market Makers to each stock to provide
liquidity—the only exchange that requires this assignment.
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Opening and closing bells are rung at the start and end of each trading
day; the NYSE’s hours of operation are Monday through Friday, 9:30
am to 4:00 pm ET. Since the 1870s, market participants have been
invited to ring the bell, included CEOs, celebrities and more.

Trading is automated, with the exception of occasional high-priced

stocks, making the NYSE the premier hybrid market. Trades execute in
less than a second when electronic, while manual trades typically take
nine seconds.7) Likewise, trades run in a continuous auction format.
Currently, investors need only find a brokerage who is a member of the
NYSE. Through the brokerage, investors buy and sell stocks and other
products from quotes provided to the brokerage from the NYSE.

NYSE Products:

The NYSE holds five regulated markets, including the New York Stock
Exchange, Arca, MKT and Amex Options. The NYSE lists medium and
large companies, with smaller companies listing on NYSE MKT. On the
NYSE, investors can trade several major asset classes: equities, options,
exchange-traded funds (NYSE Arca) and bonds (NYSE Bonds).

NYSE Listing Companies:

The NYSE is currently the world’s largest IPO provider, raising US$55

billion in 2013.8) Companies listing on the NYSE use a ticker symbol

23
(Apple Inc.: AAPL). Some 20% of the industries represented are from

financials—trusts, insurance, and others.9) Oil and gas, consumer goods

and services, healthcare, technology and telecommunications are among

other major industries covered by the NYSE.

Major corporations listing on the NYSE include:

 Bank of America
 Ford Motor Co
 Sprint Corp
 General Electric Co
 Twitter Inc.
 Pfizer Inc.

Since the establishment of the circuit breaker market protection

system, the NYSE has been subject to periods of stress on several
occasions.

 October 1989: The prices on the NYSE exchange saw a 6.9% one-
day decline following a collapse of the junk bond market.
 October 1997: The Dow Jones fell 7.2%, in response the outbreak
of the Asian Financial Crisis.
 September 2001: In the wake of terror attacks in New York on
September 11, the NYSE was closed for four trading sessions. It
was only the third time since, March 1933 that the exchange was
closed for more than one session.

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  May 2010: The Dow Jones Industrial Average fell about 10%, its
largest intraday percentage drop since the October 19, 1987
decrease, in what was called the “Flash Crash.”
 October 2012: The exchange was closed for two days due to
Hurricane Sandy. It was the first weather-related multi-day
shutdown since 1888.
 July 8, 2015: The exchange halted trading for nearly four hours
due to technical issues that were initially suspected to be the result
of a cyber-attack. No evidence of a security breach was found.13)

INFLUENCE OF NYSE ON THE ECONOMY

The NYSE is one of the earliest major world stock exchanges, and it has
grown to have significant influence on the U.S. and global economies.
As the largest exchange in the U.S. and in the world, the NYSE and its
trading are understood to be responsible for the creation, and
destruction, of large amounts of financial wealth every hour of every
trading day. The rise and fall of share prices on the NYSE affects
investor sentiment, encouraging or discouraging investors to spend more
or less money in the economy according to gains or losses in their
investment portfolios.

The exchange offers companies a significant mechanism to raise capital

for their investments, which also injects money directly into the
economy and into the creation of jobs. Trading volume on the NYSE in

25
2015 totaled US$18 trillion, nearly equal to the U.S. gross domestic
product and approximately 20% of the gross world product, according to
an estimate calculated by the World Bank.

Any opinions, news, research, analyses, prices, other information, or

links to third-party sites are provided as general market commentary and
do not constitute investment advice. FXCM will not accept liability for
any loss or damage including, without limitation, to any loss of profit
which may arise directly or indirectly from use of or reliance on such
information.
THE NEW YORK STOCK EXCHANGE:

The New York Stock Exchange (NYSE) is an American stock exchange

on Wall Street in New York City. With a market cap of more than
US$16 trillion, the NYSE is the world’s largest stock exchange,
averaging US$169 billion in daily trading value in 2013. As of 2014, the
NYSE (also known as “the Big Board”) has a listing of nearly 1,900
companies, 1,500 of which are U.S. companies. The NYSE is owned by
Intercontinental Exchange and is regulated by the Securities and
Exchange Commission.

HISTORY OF THE NEW YORK STOCK EXCHANGE:

The NYSE was founded 17 May 1792 when 24 stockbrokers signed the
Buttonwood Agreement on Wall Street in New York City. Famously,

26
they met beneath a Buttonwood tree and formed a centralized exchanged
for the burgeoning securities market in the United States. The agreement
eliminated the need for auctioneers—used frequently for wheat, tobacco
and other commodities—and set a commission rate. The organization
made the Tontine Coffee House its headquarters and focused on
government bonds.

 Twenty-five years later, 8 March 1817, the organisation officially

became the New York Stock & Exchange Board, later simplified
to the New York Stock Exchange. Throughout the early 1800s, the
NYSE expanded beyond government bonds and bank stocks. New
York itself soon surpassed Philadelphia as the financial center or
the United States.
 Advances in telegraphic communication allowed buying and
selling through the telegraph, creating a new ease in trading.
Membership increased and became more exclusive. By the start of
the Civil War, securities, commodities and gold, discovered in
California, excited participation in the exchange.
 The location changed several times before settling into its present
location at 11 Wall Street in 1865. The Neo-Classical building
was registered as a Historic Landmark in 1978.
 In 1878, telephones were installed, giving investors direct access
to brokers on the floor of the exchange. The increased activity

27
 made the exchange cap the number of members to 1,060, seats for
which required purchase from retiring members.

Between the late 1800s and the end of World War I, the NYSE struggled
in the wake of international turmoil. Then the stock market crashed 23
October 1929, causing an 89% drop in share prices. The crash led to
heavy regulation by the U.S. government. The NYSE subsequently
registered with the United States Securities and Exchange Commission.
On 19 October 1987 the Dow Jones Industrial Average dropped 508
points, the biggest crash since 1929.

28
LONDON STOCK EXCHANGE

London Stock Exchange (LSE), a London marketplace for securities.

After having long been situated closer to the Bank of England and the

Royal Exchange, in 2004 the London Stock Exchange relocated

elsewhere in the City of London to Paternoster Square. The market was

formed in 1773 by several stockbrokers who had been doing business

informally in neighborhood coffeehouses.

In 1801 a group of members raised money for the construction of a

building in Capel Court, Bartholomew Lane, and rules for the exchange

were established soon afterward; the rules subsequently have been

amended several times. In 1973 the exchange merged with several

regional stock exchanges in Great Britain, and in 1986 its operations

were reorganized and an automated price-quotation system introduced.

 London Stock Exchange Group (LSE.L) is a diversified

international market infrastructure and capital markets business
sitting at the heart of the world's financial community. The Group
can trace its history back to 1698.

29
 The Group operates a broad range of international equity, bond and
derivatives markets, including London Stock Exchange; Borsa
Italiana; MTS, Europe's leading fixed income market; and
Turquoise, pan-European equities MTF. It is also home to one of
the world’s leading growth markets for SMEs, AIM. Through its
platforms, the Group offers international business and investors
unrivalled access to Europe's capital markets.
 Post trade and risk management services are a significant part of
the Group’s business operations. In addition to majority ownership
of multi-asset global CCP operator, LCH Group, LSEG operates
CC&G, the Italian clearing house; Monte Titoli, the T2S-ready
European settlement business; and globe Settle, the Group’s newly
established CSD based in Luxembourg.
 The Group is a global leader in indexing and analytic solutions.
FTSE Russell offers thousands of indexes that measure and
benchmark markets around the world. The Group also provides
customers with an extensive range of real time and reference data
products, including SEDOL, UnaVista, and RNS.
 London Stock Exchange Group is a leading developer of high
performance trading platforms and capital markets software for
customers around the world. In addition to the Group’s own
markets, over 35 other organizations and exchanges use the

30
 Group’s Millennium IT trading, surveillance and post trade
technology.
 Headquartered in London, with significant operations in North
America, Italy, France and Sri Lanka, the Group employs
approximately 4,700 people.

HISTORY:

For over 300 years, the London Stock Exchange has produced detailed
market information for companies and investors. Technological
innovations have transformed this service from a twice-weekly paper
publication for the London business community to a continuous flow of
electronic information to all the financial markets across the globe.

Jan 1698
The tradition of comprehensive market communications began when
John Castaing started to issue a detailed list of market prices called The
Course of The Exchange and Other Things from his base at Jonathan’s
Coffee House every Tuesday & Friday.

1830
The electric telegraph transmitted price information via tickertape so
producing a massive increase in the flow of financial information.
Company announcements were also pinned up on notice boards in the
Exchange for the first time.

31
1960
The “Enunciator” screen, displayed headlines electronically replaced the
notice boards on the Exchange floor. Key announcements from
Bellwether and SE30 (now FTSE100) companies began to be projected
onto a screen on the Exchange floor.

1972
The London Stock Exchange and Extel introduced the Market Price
Display Service (“MPDS”) with 16 pages of market prices and 4 pages
of company news summaries. The service's mainframe computer took up
an entire floor of a City office building.

1986
“Big Bang”, the de-regulation of the securities industry. As trading
moved from face-to-face dealings on the market floor to computer and
telephone dealings, a new method of distributing information fairly and
widely was required. The Exchange enabled market users to view full
text announcements on the Company News Service (CNS) and
summaries on the Edited Text News Service (ETNS).

1988
The Exchange split its news services into two distinct services. The
edited service, Commercial Company News Service (CCNS) was
ultimately sold. The full text service was re-named Regulatory News
Service (RNS) and remains the London market’s official news outlet.
32
The new computer-to-computer submission method, Direct Input
Provider (DIP) was introduced, enabling companies to deliver
announcements to RNS electronically and, via RNS, to key vendor and
market audiences.

2000
RNS Internet Services was launched putting RNS at the forefront of
secure corporate communications over the web.

2008
RNS redeveloped its technology platform to deliver improvements to the
submission, receipt and display of announcement content to the market
including XHTML formatted data output.

2010
In January 2010, RNS introduced a superior conversion tool to make it
even easier for companies to submit their announcements to the market
in the format and style they require.

The Present

Today, RNS is the leading specialist provider of regulatory disclosure

distribution services to UK listed and Aim companies, giving them the
power to communicate with the international investor audience and
fulfill their regulatory obligations – wherever they are – through just one
partner.
33
CAPITAL MARKETS

Our central economic function is to bring together companies and other

issuers seeking capital with investors from around the world.

Primary market

Our primary markets in London and Italy provide companies and other
issuers of equity and debt from around the globe with cost efficient
access to some of the world’s deepest and most liquid pools of capital.

Secondary market

Our systems provide fast and efficient trading, providing investors and
institutions access to UK and Italian equities, pan-European equities
(through Turquoise), international depositary receipts (on our
International Order Book), European corporate and government bonds
(fixed income) and equity and index derivatives (Italian, Norwegian,
Russian and UK).

Equities

Our primary markets are home to a wide range of companies, from

global and well known, to small and medium size enterprises. Our
systems allow our members to electronically trade equities listed on our
markets. The majority of trading takes place on our Main and AIM

34
markets, both in London and Italy. Through Turquoise, traders can also
access pan-European equities.

Fixed Income

The Group’s MTS, MOT, ORB and Euro TLX markets provide
platforms for the trading of European and US Government and corporate
bonds.

Derivatives

Our success in running primary markets has enabled us to develop

derivative markets for the trading of emerging market equity derivatives,
particularly Russian derivatives. IDEM is our derivatives market for
Italian equities; Turquoise trades International Order Book derivatives
and has also launched FTSE 100 Index Futures and Options.

THE ROLE OF THE EXCHANGE

The London Stock Exchange enables companies from around the world
to raise money from outside investors. Its main aim is to provide
attractive, efficient and well-regulated markets for companies, investors
and intermediaries, such as stockbrokers.

The Exchange is one of the world’s oldest stock exchanges and can trace
its history back to the coffee houses of 17th century London. For many
decades, the Exchange provided a trading floor where members of the
35
Exchange could buy and sell shares. Today, share trading is almost
entirely done through computers and the Exchange offers this service
with state-of-the-art systems that can process over a million trades every
single day.

The Exchange is not only one of the oldest exchanges in the world, it is
also one of the most prestigious, supplying high-quality prices, news and
other information to the financial community, not just in the UK but
across the world.

The Exchange sends data to over 100,000 terminals in more than 100
countries. This data varies from live share prices to financial
announcements, made via the Regulatory Information Services.

For investors, the London Stock Exchange provides access to the shares
of thousands of UK and overseas companies, as well as other financial
securities, such as bonds.

For companies, the Exchange provides access to thousands of investors

from around the world, ranging from large financial institutions to
private individuals.

36
THE HONG KONG STOCK EXCHANGE

One of the world's largest securities markets by market capitalization,

the Hong Kong Stock Exchange traces its origins to the founding of
China's first formal securities market, the Association of Stock brokers
in Hong Kong, in 1891. A second market opened in 1921, and in 1947
the two merged to form the Hong Kong Stock Exchange. It is one of the
larger markets in Asia with around 1,200 listed companies as of 2008.
The Exchange introduced automated ordering in 1993 and stock option
trading in 1995. The Hong Kong Stock Exchange merged with the Hong
Kong Futures Exchange and the Hong Kong Securities Clearing
Company in 2000 to form Hong Kong Exchanges and Clearing Ltd., a
publicly traded company.

Companies offering H-shares must follow the regulations described in

the Stock Exchange of Hong Kong’s (SEHK’s) Listing Rules for the
Main Board and for the Growth Enterprise Market (GEM). The rules
state that annual accounts must follow Hong Kong or international
accounting standards. Also, a company’s articles of incorporation must
include sections clarifying the varying nature of domestic shares and
foreign shares, including H-shares, as well as the rights given to each
purchaser. In addition, sections protecting investors must follow the laws
of Hong Kong and be included in the company’s constitutional

37
documents. Otherwise, the processes of listing and trading H-shares are
similar to those of other stocks in Hong Kong.

HISTORY OF HONG KONG STOCK EXCHANGE

The Stock Exchange of Hong Kong Limited (SEHK) is a stock

exchange located in Hong Kong. It is East Asia's and Asia's third largest
stock exchange in terms of market capitalization behind the Tokyo Stock
Exchange and Shanghai Stock Exchange, and the sixth largest in the
world before Euronext. As of 31 October 2016, SEHK had 1,955 listed
companies, 989 of which are from mainland China (Red chip, H share
and P chip), 856 from Hong Kong and 110 from other countries and
region (e.g. Macau, Taiwan, Malaysia, United States, Singapore, etc.)
Hong Kong Exchanges and Clearing owns SEHK and is itself listed on
SEHK. The physical trading floor at Exchange Square (Hong Kong)
closed in 2017, due to the shift towards electronic trading. By 2014, it
accounted for less than 1% of trade volume.

The Hong Kong securities market can be traced back to 1866, but the
stock market was formally set up in 1891, when the Association of
Stockbrokers in Hong Kong was established. It was renamed The Hong
Kong Stock Exchange in 1914.

By 1972, Hong Kong had four stock exchanges in operation. There were
subsequently calls for the formation of a unified stock exchange. The

38
Stock Exchange of Hong Kong Limited (the Exchange) was
incorporated in 1980 and trading on the Exchange finally commenced on
2 April 1986. Since 1986, a number of major developments have taken
place. The 1987 market crash revealed flaws in the market and led to
calls for a complete reform of the Hong Kong securities industry. This
led to significant regulatory changes and infrastructural developments.
As a result, the Securities and Futures Commission (SFC) was set up in
1989 as the single statutory securities market regulator.

The market infrastructure was much improves with the introduction by

the Exchange of the Central Clearing and Settlement System (CCASS)
in June 1992 and the Automatic Order Matching and Execution System
(AMS) in November 1993. Since then, the framework of market rules
and regulations, both Exchange-administered or otherwise, have been
undergoing continuing review and revision to meet changing market
needs while ensuring effective market regulation.

The Exchange Listing Rules have been made more comprehensive, and
other existing regulations have been improved or new regulations
introduced to enhance market development and investor protection.
Enhancements were also made to the system infrastructure, including the
launch of off-floor trading terminals in brokers’ offices in January 1996.
The third generation of the trading system, AMS/3, will be launched in

39
2000. It will provide enhanced functionality and a platform for a
straight-through transaction process.

In respect of market and product development, there are the listing of the
first derivative warrant in February 1988, the listing of the first China-
incorporated enterprise (H share) in July 1993; and the introduction of
regulated short selling in January 1994 and stock options in September
1995. Furthermore, the Exchange introduced the Growth Enterprise
Market (GEM) in November 1999 to provide fund raising opportunities
for growth companies of all sizes from all industries, and to promote the
development of technology industries in the region.

40
SHANGHAI STOCK EXCHANGE

The Shanghai Stock Exchange (SSE) is a stock exchange that is based

in the city of Shanghai, China. It is one of the two stock exchanges
operating independently in the People's Republic of China, the other
being the Shenzhen Stock Exchange. Shanghai Stock Exchange is the
world's 5th largest stock market by market capitalization at US$3.5
trillion as of February 2016, and 2nd largest in East Asia and Asia.
Unlike the Hong Kong Stock Exchange, the Shanghai Stock Exchange is
still not entirely open to foreign investors due to tight capital account
controls exercised by the Chinese mainland authorities and often
manipulated by the decisions of the Central Government.

The current exchange was re-established on November 26, 1990 after a

41-year hiatus and was in operation on December 19 of the same year. It
is a non-profit organization directly administered by the China Securities
Regulatory Commission (CSRC).

The Shanghai Clearing House provides security for financial market

participants, and efficient clearing services development purposes, but
also conductive to international peers inter-agency communication and
cooperation. It provides central counterparty clearing of foreign currency
in the interbank market, including clearing, settlement, margin
management, collateral management, information services, consulting
services, and related management department under other business.
41
HISTORY OF SHANGHAI STOCK EXCHANGE

The formation of the International Settlement (foreign concession areas)

in Shanghai was the result of the Treaty of Nanking of 1842 (which
ended the First Opium War) and subsequent agreements between the
Chinese and foreign governments. The Shanghai International
Settlement was crucial to the development of foreign trade in China and
to the development of the foreign community in Shanghai. The market
for securities trading in Shanghai began in the late 1860s. The first
shares registrar appeared in June 1866. By then, Shanghai's International
Settlement had developed the conditions conducive to the emergence of
a share market: several banks, a legal framework for joint-stock
companies, and an interest in diversification among the established
trading houses (although the trading houses themselves remained
partnerships).

In 1891 during the boom in mining shares, foreign businessmen founded

the "Shanghai Share brokers' Association" headquartered in Shanghai as
China's first stock exchange. In 1904 the Association applied for
registration in Hong Kong under the provision of the Companies
ordinance and was renamed as the "Shanghai Stock Exchange". The
supply of securities came primarily from local companies. In the early
days, banks dominated private shares but, by 1880, only the Hong Kong
and Shanghai local banks remained. Merchant Exchange" started

42
operation respectively. An amalgamation eventually took place in 1929,
and the combined markets operated thereafter as the "Shanghai Stock
Exchange". Shipping, insurance, and docks persisted to 1940 but were
overshadowed by industrial shares after the Treaty of Shimonoseki of
1895, which permitted Japan, and by extension other nations which had
treaties with China, to establish factories in Shanghai and other treaty
ports. Rubber plantations became the staple of stock trading beginning in
the second decade of the 20th century.

By the 1930s, Shanghai had emerged as the financial center of the Far
East, where both Chinese and foreign investors could trade stocks,
debentures, government bonds, and futures. The operation of Shanghai
Stock Exchange came to an abrupt halt after Japanese troops occupied
the Shanghai International Settlement on December 8, 1941. In 1946,
Shanghai Stock Exchange resumed its operations before closing again 3
years later in 1949, after the Communist revolution took place.

After the Cultural Revolution ended and Deng Xiaoping rose to power,
China was re-opened to the outside world in 1978. During the 1980s,
China's securities market evolved in tandem with the country's economic
reform and opening up and the development of socialist market
economy. On 26 November 1990, Shanghai Stock Exchange was re-
established and operations began a few weeks later on 19 December.

43
LISTING REQUIREMENTS
According to the regulations of Securities Law of the People’s Republic
of China and Company Law of the People’s Republic of China, limited
companies applying for the listing of shares must meet the following
criteria:

 The shares must have been publicly issued following approval of

the State Council Securities Management Department.
 The company’s total share capital must not be less than RMB 30
million.
 The company must have been in business for more than 3 years
and have made profits over the last three consecutive years. This
requirement also applies to former state-owned enterprises
reincorporating as private or public enterprises. In the case of
former state-owned enterprises re-established according to the law
or founded after implementation of the law and if their issuers are
large and medium state owned enterprises, it can be calculated
consecutively. The number of shareholders with holdings of values
reaching in excess of RMB 1,000 must not be less than 1,000
persons. Publicly offered shares must be more than 25% of the
company’s total share capital. For company whose total share
capital exceeds RMB 400 million, the ratio of publicly offered
shares must be more than 15%.

44
 The company must not have committed any major illegal activities
or false accounting records in the last three years.
 China currently has a preference for domestic firms only to list
onto their stock exchanges; India has similar rules. However,
China is considering opening up their capital markets to foreign
firms in 2010.
 The conditions for applications for the listing of shares by limited
companies involved in high and new technology are set out
separately by the State Council.

STRUCTURE
 The securities listed at the SSE include the three main categories of
stocks, bonds, and funds. Bonds traded on SSE include treasury
bonds (T-bond), corporate bonds, and convertible corporate bonds.
SSE T-bond market is the most active of its kind in China. There
are two types of stocks being issued in the Shanghai Stock
Exchange: "A" shares and "B" shares.
 “A” shares are priced in the local renminbi yuan currency, while B
shares are quoted in U.S. dollars. Initially, trading in A shares are
restricted to domestic investors only while B shares are available to
both domestic (since 2001) and foreign investors. However, after
reforms were implemented in December 2002, foreign investors
are now allowed (with limitations) to trade in A shares under the
Qualified Foreign Institutional Investor (QFII) program which was
officially launched in 2003. Currently, a total of 98 foreign

45
 institutional investors have been approved to buy and sell A shares
under the QFII program. Quotas under the QFII program are
currently US$30 billion. There has been a plan to eventually merge
the two types of shares in the future.
 The SSE is open for trading every Monday to Friday. The morning
session begins with centralized competitive pricing from 09:15 to
09:25, and continues with consecutive bidding from 09:30 to
11:30. This is followed by the afternoon consecutive bidding
session, which starts from 13:00 to 15:00. The market is closed on
Saturday and Sunday and other holidays announced by the SSE
 The SSE Composite (also known as Shanghai Composite) Index is
the most commonly used indicator to reflect SSE's market
performance. Constituents for the SSE Composite Index are all
listed stocks (A shares and B shares) at the Shanghai Stock
Exchange.
 The Base Day for the SSE Composite Index is December 19, 1990.
The Base Period is the total market capitalization of all stocks of
that day. The Base Value is 100. The index was launched on July
15, 1991. At the end of 2006, the index reaches 2,675.47. Other
important indexes used in the Shanghai Stock Exchanges include
the SSE 50 Index and SSE 180 Index.

46
KOREA STOCK EXCHANGE

The Stock Market Division of Korea Exchange, formerly an independent

South Korean exchange, was established in 1956. Some of its milestones
include the launching of the Stock Index Futures Market in 1996 and the
Stock Index Options Market in 1997, as well as the adoption of
electronic trading in 1988, warrants trading in 2000, and equity options
and ETFs in 2002. Its traded instruments include stocks, bonds, ETFs
and REITs. The Korea Exchange was established in 2005 as a merger of
the Korea Stock Exchange, the KOSDAQ and the Korea Futures
Exchange. The Korea Exchange is one of Asia's largest exchanges with
around 1,800 listed companies.

Korea Exchange (KRX) is the sole securities exchange operator in

South Korea. It is headquartered in Busan, and has an office for cash
markets and market oversight in Seoul

HISTORY OF KOREA STOCK EXCHANGE

The Korea Exchange was created through the integration of Korea Stock
Exchange, Korea Futures Exchange and KOSDAQ Stock Market under
the Korea Stock & Futures Exchange Act. The securities and derivatives
markets of former exchanges are now business divisions of Korea
Exchange: the Stock Market Division, KOSDAQ Market Division and
Derivatives Market Division. As of January 2015, Korea Exchange had

47
2,030 listed companies with a combined market capitalization of $1.2
trillion. Sustainable Stock Exchanges .The exchange has normal trading
sessions from 09:00 am to 03:30 pm on all days of the week except
Saturdays, Sundays and holidays declared by the Exchange in advance.

On 22 May 2015, The Korea Exchange joined the United Nations

Sustainable Stock Exchanges initiative in an event with the UN-SG Ban
Ki-moon in attendance, as well as senior officials from UN Global
Compact and UNCTAD.

TRADED INSTRUMENTS

KOSPI Market Division:

 Stocks
 Bonds
 Exchange Traded Funds (ETFs)
 Exchange-Linked Warrants (ELWs)
 Real Estate Investment Trusts (REITs)

KOSDAQ Market Division:

 Stocks

Derivatives Market Division:

 Index Instruments: KOSPI 200 Index Futures, KOSTAR Futures,

KOSPI 200 Index Options
 Single Stock Futures
 Equity Options

48
  Interest Rate Instruments: 3-Year KTB (Korea Treasury Bond)
Futures, 5-Year KTB Futures, 10-Year KTB Futures
 Foreign Exchange Instruments: USD Futures, JPY Futures, EUR
Futures, USD Options
 Commodity Instruments: Gold Futures, Mini-gold Futures, Lean
Hog Futures.

RX, Korea Exchange Inc., established in January 2005 through the

merger of the Korea Stock Exchange (KSE), the Korea Futures
Exchange (KOFEX), the KOSDAQ Market, and the KOSDAQ
Committee, is the sole exchange in the Republic of Korea. KRX
operates the centralized securities and derivatives markets where stocks,
bonds and derivatives are traded on a common platform called
EXTURE. KRX offers:

 Full access to both derivatives and cash markets

 Clearing and settlement of all transactions on its markets as a one-
stop service

Its flagship KOSPI 200 futures and options are two of the world’s most
liquid index contracts. Few products combine widespread retail liquidity
with institutional interest so successfully. The futures contract is a world
leader among stock index futures contracts, with a total 2009 volume of
over 83 million contracts traded.

49
 BIBLIOGRAPHY

http://markets.wsj.com/asia

https://www.acgcsd.org/acg_01-07-02.aspx

https://in.reuters.com/finance/markets/asia

https://in.investing.com/equities/asia-pacific

https://www.acgcsd.org/showfile.ashx?id=61

http://money.cnn.com/data/world_markets/asia/

https://link.springer.com/article/10.1057/

http://www.wikinvest.com/wiki/List_of_Stock_Exchanges

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