Business

What are the Different Types of Exchanges in the Share Market?

4 Mins read

A market, as we all know, is a place where we buy and sell – or in a more simple way – where buyers and sellers meet. This has been quite the most crucial midpoint for ages, just in different forms. The stock exchange or share market also stands in the same position today. This is a place where the shares of publicly listed companies are traded. In India – we can say share markets originated in the 18th century, and it helps in facilitate the trades that allow smooth functioning of transactions. 

Well, the one thing you need to be aware of is that – there are numerous stock exchanges in the country, and in this article, we will speak of some of the most important ones. 

Types of Stock Exchanges in India

The share market is vast – so vast that you would need an intense and deep knowledge about the type of stock exchanges that operate in India. Here are some of the most important stock exchanges in the Indian share market:

1) The Bombay Stock Exchange

The Bombay Stock Exchange, or BSE, was established in 1875 and is India’s oldest stock exchange. But, it is not just India’s oldest stock exchange – it is also Asia’s oldest stock exchange (yes! That’s huge). The stock exchange operates out of Mumbai, Maharashtra.

2) National Stock Exchange

NSE, or The National Stock Exchange, was established in the year 1992 and it is also the first stock exchange in India to give a decentralized electronic trading platform for you. Just like BSE, NSE is based out of Mumbai. 

3) Calcutta Stock Exchange 

The Calcutta Stock Exchange was established in the year 1908, and it operates out of Kolkata, West Bengal. 

4) Metropolitan Stock Exchange

MSE (Metropolitan Stock Exchange) was established in the year 2008. The MSE is a modern clearinghouse that was established to handle the clearing and settlement of contracts involving a variety of asset classes. Its headquarters are in Mumbai, Maharashtra.

5) India International Exchange

India INX, or India International Exchange, was established in 2017. The first international stock exchange in the country. It is a subsidiary of BSE and is based in Gujarat International Finance Tec-City.

6) NSE International Exchange

In 2016, the NSE IFSC Limited (NSE International Exchange) rose to prominence. It is a subsidiary of the New York Stock Exchange. Gujarat International Finance Tec-City is where it is based.

Apart from India, you need to know that internationally – there are quite a lot of important exchanges that could blow your mind.

Significant International Exchanges you Need to Know

There is a global network of stock exchanges in addition to the NYSE and Nasdaq in the United States that you could not miss out on. The Tokyo Stock Exchange in Japan, the London Stock Exchange in the United Kingdom, the Shanghai Stock Exchange in China, and the Euronext exchange that services the European Union are among them.

Enterprises frequently opt to list primarily in their home country, but international stock exchanges can provide investors with access to companies all around the world. However, some businesses prefer to list their stock on multiple exchanges. This method, known as dual listing, gives investors all around the world instant access to those companies’ stock. It also lets the investor buy and sell shares around the clock in some situations.

Closed Exchanges of India

India today has a lot more exchanges that were closed down, and some of them are:

  • Madhya Pradesh Stock Exchange
  • Ahmedabad Stock Exchange
  • Delhi Stock Exchange
  • Guwahati Stock Exchange
  • Madras Stock Exchange
  • Jaipur Stock Exchange
  • UP Stock Exchange
  • OTC Exchange of India
  • Pune Stock Exchange
  • Inter-connected Stock Exchange of India
  • Vadodara Stock Exchange
  • Bangalore Stock Exchange
  • Cochin Stock Exchange
  • Trivandrum Stock Exchange
  • Hyderabad Stock Exchange
  • Magadh Stock Exchange
  • Mangalore Stock Exchange
  • Bhubaneswar Stock Exchange
  • Coimbatore Stock Exchange

Why were these stock exchanges closed, you may wonder – each one had its reasons. For instance, the Calcutta stock exchange has been asked to exit by SEBI, but still, the matter is still being heard in the Calcutta High Court.

Why are Stock Exchanges Important?

They are important for a lot of reasons – they are mentioned below; just read on:

To protect the interest of the share market investors: The stock markets set rules for how listed companies should operate. Companies must adhere to these guidelines to preserve investors’ interests, as they are the ones who funded the activities. Any key decision that the company makes must be brought to the stock exchange’s attention.

It reduces the dependency on loans for corporate companies: The existence of stock exchanges has aided listed companies in avoiding the need for a loan by allowing them to raise cash through the issuance of securities. This has allowed them to save a large amount of money in interest payments.

It will also act as a secondary market: Investors in some bonds, such as sovereign gold bonds (SGBs), will be able to sell their holdings before the lock-in period or maturity date.

To determine fair prices of publicly listed securities: The stock exchange discovers the fair prices of public companies, and relentless trading of the securities helps to determine the price of a listed security.

To facilitate industrial advancement: The industrialization of the country is reliant on capital availability. This is made sure through the stock exchanges as the public could invest directly in the businesses through the stock exchange. 

Before you start investing in stocks, the very first thing you would have to do is look into the different kinds of exchanges in your country. As of India, we have covered it all for you right in this article. Make sure you know the different aspects these stock exchanges serve and how they are different from the other.

Conclusion

Though a lot of stocks are traded through brokers, you need to understand the relationship between an exchange and a company that trades. Also, there are various needs between varied exchanges 0 which are designed to protect the investors.

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