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Listing, Trading and Settlement

Only such securities are traded on SEs as are "listed" or quoted on them. SEs have their own listing requirements/rules which tend to undergo changes from time to time. With effect from 27 May 1996, the listing requirement on many SEs in India been made more stringent in order to broaden the shareholder base of the companies and to avoid large chunk of shares being held by a few individuals close to company management. It is now stipulated that in case of offer for sale, there will have to be at least 10 public shareholders for every Rs 1 lakh of equity offered to the public. Further, it is stipulated that the minimum equity capital of a company seeking a listing on the BSE should be Rs 10 crore. The non-manufacturing companies cannot make a public issue unless they have a track record of dividend payments for a least three years out of five preceding years.

Security groupings

Recently, the BSE has changed classification and adopted the following one: "A group" or "specified" securities have weekly settlement and "carry forward" is allowed in their case. The non-specified group has been split into B1 group and B2 group securities. B1 group has weekly settlement; it is on par with A group in every respect except the fact that the carry-forward is not allowed in its case; it includes actively traded securities. B2 group is subject to settlement procedure, which earlier existed in the case of Group B securities. From September 1996, the BSE has started in all debentures listed on it, and they are included in the new group called "F Group" for this purpose.

Trading Systems

Transactions on stock exchange are carried out either on cash basis or carry-over basis, i.e., through "clearing". Exchanges at Mumbai, Calcutta, Chennai and Ahmedabad have their own clearing houses. The stock exchange year is divided into period called "accounts". All transaction made during one account are to be settled by payment for for purchases and by delivery of share certificates in the case of sales on notified days of the clearing programme of a given stock exchange. Transactions in non-specified securities have to be settled compulsorily by delivery; carry-over is permitted only in respect of Group A securities.
The types of transactions on cash basis according to arrangement for delivery (delivery-wise) are:
(a) spot Delivery, where the delivery and payment are made on the same day as the day of contract or on the next day
(b) hand delivery, where the delivery and payment are made when stipulated; (c) special delivery, where the delivery and payment are made beyond 14 days if permitted by the stock exchange authority.

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