Systems audit: Bombay Stock Exchange

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Systems audit: Bombay Stock Exchange

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Abstract

Indian capital markets have witnessed radical transformation during the short period of a decade. There is hardly any country in the world which has witnessed such massive changes in its capital market during such a short period. During the early part of the 1990s, ranking of the Indian capital market with reference to the standard global indices relating to efficiency, safety, market integrity, etc was not at all flattering. With reference to the risk indices in particular, the Indian capital market was regarded as one of the worst as it figured almost at the bottom of the league. The same was the case in regard to its efficiency levels in trading and settlement systems. Strangely, not many people appeared to be bothered about the dismal state of our capital markets. As we are all accustomed to find India figuring in the bottom league in regard to so many other indicators of development such as per capita income, nutritional standards, and health amenities to citizens, literacy levels, etc we did not feel sorry to note that Indian capital market was also ranked at the bottom of the global ranking sheet. Interestingly, however, the same cannot be said about the current state of the Indian capital markets. From the viewpoint of both adoption of sophisticated information technology tools in trading and settlement mechanisms as also efficiency of capital markets, not only is India ranked in the top league but that it is also considered to be way ahead of many developed country capital markets.

Introduction
Background study of the stock exchange
Importance of stock exchanges
Background study of the Bombay Stock Exchange (BSE)
1. Vision of BSE
2. Product and services offerered by BSE
Definitions and types of derivatives products
An overview of BSE's On-line Trading System (BOLT)
Market information
Backdated trades/broker query files
Overview of Intermediate Message Layer (IML) by BSE
A study of client-broker relationship
Suggestions
Bibliography and websites
Conclusion

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[...] The following indices maintained by BSE along with the Dollex 30, Dollex 100, Dollex 200 which are based on the current Re/Dollar exchange rate and corresponding values of Sensex, BSE 100, BSE 200 respectively are displayed: BSE SENSEX BSE 100 BSE 200 BSE 500 BSE IT BSE FMCG BSE Healthcare BSE Consumer Durable BSE Capital Goods BSE PSU BSE TECK BSE Bankex Auto Metal Oil Gas Mid Cap Dollex 30 Dollex 100 Dollex 200 There is a facility to show the trend only for Sensex. [...]

[...] The Exchange decides the Circuit filter percentage from time to time. The present circuit filter percentage is given below to indicate that the price for particular scrip in a particular group should not vary beyond the specified percentage of the previous day's closing price (plus or minus) in a day. If scrip touches the upper circuit, & there are no sellers for that scrip at lower than the circuit price, then the scrip would be frozen at the upper circuit for the rest of the day. [...]

[...] Introduction to BSE Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as 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. [...]

[...] Member ID The Exchange assigns a trading member id to each trading member. The trading member id is unique and functions as a reference for all orders/ trades of different users. This id is common for all the traders of a particular trading member. The Trading member id and Trader id forms a unique and valid combination. Trader ID Each trading member can have more than one user. The number of users allowed for each main member is notified by the exchange from time to time. [...]

[...] Trading Trades are carried out between brokers who earn their commission from this business. Further, there is another class of brokers who work towards profit from the difference in prices between the two exchanges. These categories of brokers are called “Arbitrageurs”. Members trade with each other for B1, B2, S and TS group scrips in rolling settlement, which could be in demat or physical. Members trade in the scrips by submitting orders. Auction of the scrips, in case of default, is done concurrently with the trading sessions. [...]

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