Table of Contents
Introduction
The Bombay Stock Exchange (BSE) is situated in Mumbai, India. It is one of the largest stock exchanges in terms of trading volumes and market capitalization. It was founded on July 9th, 1875, as “The Native Share & Stock Brokers Association.”
In 1940, it moved to its current location at Dalal Street. Today, it covers an area of 1.88 acres.
BSE has faced many obstacles yet has become the central hub for all financial activities. It also acts as a monitoring agency, ensuring that all listed companies abide by the rules and regulations of the Securities and Exchange Board of India (SEBI).
Early History
The Bombay Stock Exchange has a long history. It was once known as the Native Share & Stock Brokers’ Association. Established in 1875, it began trading on July 9th. Initially, it was located at the Town Hall building in Mumbai. Seven brokers ran it. Today, it is one of the world’s biggest stock exchanges. It has been a major factor in India’s economic growth.
Formation of the Bombay Stock Exchange
The roots of the Bombay Stock Exchange (BSE) go back to 1875. Then, on the steps of the town hall in Mumbai, a group of people traded shares with each other.
This activity became more structured, and in 1887 the Native Share and Stock Brokers Association was formed. It was this body that gave rise to the modern BSE.
In 1895, the trading moved to an open field near the Town Hall. It was recognized as a corporate entity in 1901. At that time, 43 stockbrokers created a governing body for the exchange.
From then, the focus shifted to derivatives such as futures, options, and interest-rate swaps. Finally, in 1913, many actively-traded British companies were listed on BSE.
In 1998, online trading platforms and accounts were introduced. It allowed people to trade domestic stocks over international exchanges like NYSE Euronext and NASDAQ.
In 2007, BSE made its multi-million dollar IPO listing. It allowed investors to directly invest in Indian equities and markets from their digital accounts.
Expansion of the BSE
The Bombay Stock Exchange (BSE) was set up in 1875, making it one of the oldest in Asia. Members initially traded from their homes or offices, but it was reorganized and modernized in 1957. BSE adopted electronic trading for the first time in 1995. It was one of the first Indian exchanges to do so.
Over time, more services were added. For example, it included BOd, a market watch feature, and derivative products such as index futures and options based on the S&P BSE SENSEX index.
BSE has seen many milestones since it started. It became an international hub in 2013, introduced portfolio management services in 2014, and established a clearing corporation licensed by SEBI (Securities and Exchange Board of India) in 2017. In 2019, BSE had more than 5,400 listed companies with over six crore investors. Its total market capitalization was 1.68 trillion Indian rupees (around 23 billion US dollars).
Modern History
The Bombay Stock Exchange (BSE) is ancient! It is one of India’s top stock exchanges. Established in 1875 as “The Native Share & Stock Brokers’ Association.” Since then, its progress has been remarkable. It is now a significant part of the financial sector.
In this section, we’ll study more about BSE’s modern history.
Introduction of SENSEX
In 1986, the Bombay Stock Exchange (BSE) created India’s first stock market index for investors to use as a benchmark. Named the “Sensitive Index,” SENSEX is a basket of 30 top Indian companies weighted by their market capitalization. It shows the performance of the Indian stock market.
International investors and journalists recognize SENSEX. It has been a gauge of India’s wealth growth since its 100 points on January 1st, 1986. In October 2007, it reached historic highs at over 15000 points. It gives an average annual gain of 30%.
SENSEX still provides returns even when global markets fluctuate due to local or regional uncertainty. As a result, BSE stands tall today at Dalal Street Mumbai, one of Asia’s oldest stock exchanges and a significant part of India’s economic development.
Introduction of the Online Trading System
In 1994, the Online Trading System (OTS) emerged and changed the face of financial trading. It made the process automated and digital, allowing investors to join the stock markets with low transaction fees and no need for brokers. Investors had access to the same data as professionals, such as price data, news announcements, and technical analysis. In addition, they could now speculate on stocks and securities.
This system gave users almost real-time market access. It increased – by 1997, there were 6 million active accounts. By 2000, it was 18 million accounts with a total value of USD 750 billion.
Today, OTS is even better. Sophisticated features help amateur investors make decisions without investing huge amounts. Instead, they can easily buy or sell stocks with just a few clicks. Something unimaginable 20 years ago!
Expansion of the BSE
From the mid-1980s to the start of the 21st century, the BSE (or “bubble“) brought extraordinary growth in some countries, such as Australia, New Zealand, the UK, and the US. This bubble was marked by considerable boosts in house prices and investments, despite warnings from financial specialists who saw the collapse coming.
The policies of the period opened up markets that were closed before. Low rates, rising incomes worldwide, and limited stock added to the demand and sent prices through the roof.
By 2006-2007, house prices had risen enormously, creating investment opportunities far beyond their real value. As a result, leveraged investments, such as mortgages, soared too. But this caused problems like stagnant wages, unemployment, and too much debt for many households.
In 2008, the bubble burst, coinciding with Lehman Brothers’ insolvency. The economic downturn that followed lasted for years and was felt globally.
Recent Developments
Recent decades have seen significant changes at the Bombay Stock Exchange (BSE). These modifications have enabled the BSE to become a global leader. It’s now counted among the world’s top stock exchanges.
We’ll now peek at the recent advancements in the BSE and see why they’ve had such a positive outcome.
Launch of BSE StAR MF
In 2019, BSE StAR MF was launched by the Bombay Stock Exchange and nine mutual fund houses. Asia’s oldest stock exchange backed it.
BSE StAR MF allows investors to invest in debt, equity, and hybrid mutual funds, along with closed-end schemes. It can be done online or offline from any part of India.
The platform offers value-added services, like market rates of various instruments and real-time portfolio valuations. In addition, account statements with net asset values (NAV) of investments are available daily.
SIPs and SWPs help diversify portfolios according to specific objectives. Mobile alerts track investments. Financial advisors get free tools for transparency and efficiency.
Introduction of BSE SME Platform
The BSE has recently launched the SME Platform. It helps SMEs access capital markets for growth and expansion. The platform supplies SMEs with tools and resources to understand the complexities of listing and financing. It also gives entrepreneurs a better view of the BSE’s network of investors.
This SME Platform is a regulated equity market only for SMEs. Therefore, good corporate governance must be followed for companies to list. BSE has made it easier for SMEs to list online via banking networks, NBFCs, and other financial platforms.
The introduction of this platform is excellent news. It boosts visibility for entrepreneurs in India while giving them an affordable route to grow their businesses. It also offers SMEs long-term finance from investors both in India and abroad, creating exciting opportunities for quality companies in India.
Launch of BSE International Exchange
BSE Intl is a new wing of BSE Ltd., India’s top stock exchange. Launched in June 2017, it is located in the International Financial Services Centre at The Gujarat International Finance Tec-City (GIFT City). This venture aims to provide global market access to Indian investors.
BSE Intl has advanced trading systems, multilingual capability, and risk management tools that meet the ISSA’s demanding international standards. In addition, customers can access markets 24 hours daily across different time zones. As a result, it offers better liquidity and risk diversification.
Investing overseas through BSE Intl has advantages like:
- Better liquidity
- Global diversification
- Improved risk management analytics
- Lower transaction costs due to automation
It is a massive milestone for India’s financial infrastructure, as it boosts foreign investment, capital flows, and economic growth.
Conclusion
To sum up, the Bombay Stock Exchange has had a long journey since its start in 1875. It began as an informal meeting of brokers and agents in churches but now is one of the world’s top financial centers. It is a significant source of capital for many businesses and is vital to India’s financial markets. It is one of Asia’s oldest exchanges, trading on par with other major exchanges worldwide. The BSE will no doubt keep playing a significant role in India’s economic growth in the future.
