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Full Form Of BSE

Updated on April 17, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Full Form Of BSE?

The BSE is the oldest stock exchange in Asia; it was established in 1875 as Native Shares and Stock Broker’s Association. It was the first exchange in India recognized as the exchange in 1957 under the Securities Contract (Regulation) Act by the government.

Full Form of BSE

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The transactions that occur at the BSE are regulated and governed strictly within the legal framework as India’s securities exchange board governs its functions. Thus it opens the platform for speculation but within a legal framework. Since 1957, it has played a pivotal role in the development of the capital market of the country. The full form of BSE is the Bombay Stock Exchange.

Key Takeaways

  • The BSE, founded in 1875, is Asia’s oldest stock exchange. It was recognized as India’s first exchange in 1957 and has played a vital role in the country’s capital market growth. The BSE stands for the Bombay Stock Exchange. 
  • SENSEX is the BSE benchmark index of 30 stable and established companies used to evaluate overall performance. 
  • At the BSE, all transactions are strictly regulated and governed by India’s Securities Exchange Board to ensure they are within the legal framework. It allows for speculation to occur within the legal boundaries.

Full Form Of BSE Explained

The full form of BSE in share market is the abbreviation used for the Bombay Stock Exchange. As the name implies, It is the stock exchange established in 1875. The benchmark index of the BSE is SENSEX which consists of the 30 companies that are financially sound and well established, which helps in measuring the Bombay Stock Exchange’s overall performance.

It is the oldest Indian Stock exchange that is located in Mumbai, in the state of Maharashtra, India. It provides a suitable platform through which the companies can list their stocks, derivatives, bonds or any other type of financial instrument. This process allows the traders and investors to trade in the secondary market using these securities.

The exchange, along with the SEBI(Securities and Exchange Board of India) supervise and regulate the proper functioning of the Inddian securities market. It follows a list of rules and regulations which the listed companies, the traders, investors or any other market participant should strictly abide by, so that there is a transparent, smooth and fair trading practice.

Over the years, it has expanded itself globally to facilitate cross-border listing of stocks. It also ensures investor protection and education through various initiatives and also ensures that any investor grievance is addressed. We will learn about the full form of S&P BSE in details as given below.

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History

Now let us learn about the history of the full form of BSE in share market.

  • The Bombay Stock Exchange was established in 1875 and is called the Stock Exchange in Mumbai. Before establishing the BSE, a group of five stockbrokers was there who used to conduct the different meetings in front of the Mumbai town hall under a banyan tree.
  • But gradually, over time, the number of brokers in the meeting increased, and because of this, the meeting venue used to change frequently. After a few decades, in 1874, the brokers moved to Dalal Street for meetings and made it their permanent location.
  • It was then established in 1875 as Native Shares and Stock Broker’s Association the following year, providing it an official organization. After decades of working, it became the first exchange in India that was recognized as the exchange in 1957 under the Securities Contracts (Regulation) Act by the government.
  • After some years of its recognition, in 1986, a tool was developed to measure the Bombay stock exchange’s overall performance known as the SENSEX, which is the stock market index consisting of the 30 well-established as well as financially sound companies that are listed on the Bombay stock exchange.
  • In 1995, the Bombay stock exchange switched to the electronic trading system known as BOLT (BSE On-Line Trading). Also, it became the first stock exchange in the world, which introduced an internet trading system at a centralized level.

Features

The following are the features of the full form of S&P BSE, which is Bombay Stock Exchange:

  • It is the largest and the first securities market in India based in Mumbai, India. The securities that are listed at the BSE include stocks, stock options, stock futures, index options, index futures, and weekly options.
  • The SENSEX is the benchmark index of the BSE that consists of the 30 companies that are financially sound and well established from around 12 different sectors, which help measure the Bombay Stock Exchange’s overall performance.
  • It has helped in the development of India’s capital market and helped in the growth of India’s corporate sector.

Functions

The following are the main functions of the Bombay Stock Exchange:

Functions of BSE

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#1 – Price Determination

The price determination in the secondary market depends upon the demand and supply of the securities. Bombay Stock Exchange helps in the process of valuation by constantly valuing all the listed securities. Such share prices can be easily tracked through the index that is popularly known as SENSEX.

#2 – Economical Contribution

Since the Bombay Stock Exchange deals with the securities listed, which are sold and re-sold continuously, it allows the funds to keep moving instead of remaining idle, boosting the economy.

#3 – Marketability and Liquidity

They provide high liquidity as the listed securities can be sold anytime, converting them into cash. It works continually, and the investor can sell and purchase the security according to their wish.

Importance

The following are the main importance of the Bombay Stock Exchange:

  • It is easy to sell and buy securities in the financial market if the security is listed on the BSE, thereby meeting potential investor’s liquidity needs.
  • It is easy to raise funds by issuing equity and debt securities through BSE as it is a trusted source from where the securities are traded in the financial market.
  • They provide an open platform for speculation within a legal framework. Bombay Stock Exchange is the best platform for healthy speculative trading, which helps fulfill an investor’s liquidity requirement.

Benefits

The following are the benefits of the Bombay Stock Exchange:

  • The securities exchange board of India governs the functions of BSE. Therefore, the transactions at the Bombay Stock Exchanges are regulated and governed strictly within the legal framework. Therefore it assures the investor that they are dealing in a safe place and their money is not wasted.
  • They provide education about the benefits of investing in the stock market and ensure the smooth functioning of the transactions.
  • The securities listed on it can be kept as collateral by an investor while availing the loans from banks and other financial institutions.

Full Form Of BSE Vs Full Form Of NSE

The following are the main differences between full form of BSE and NSE along with other points of differences:

  • NSE stands for the National Stock Exchange, the country’s largest stock exchange, and was founded in 1992, whereas BSE stands for the Bombay Stock Exchange, the oldest stock exchange in the country and was founded in 1875.
  • The benchmark index of the NSE is Nifty, which consists of the 50 most actively traded companies. In contrast, the benchmark index of the BSE is SENSEX, which is the stock market index consisting of the 30 well-established as well as financially sound companies that are listed on the Bombay Stock Exchange.

Thus, the above are the basic points of differences between full form of BSE and NSE.

Frequently Asked Questions (FAQs)

1. Which is better, NSE or BSE?

Both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are prominent stock exchanges in India. The choice between them depends on factors like trading volume, listed companies, and services offered. NSE is known for its electronic trading platform and broader index, while BSE has a longer history. Investors should consider their preferences and requirements before deciding.

2. Can I buy in BSE and sell in NSE? 

Yes, you can buy stocks on the Bombay Stock Exchange (BSE) and sell them on the National Stock Exchange (NSE) or vice versa. However, the prices might slightly differ due to trading activity and demand variations on both exchanges. Keep in mind that transaction costs and timing may affect the effectiveness of such strategies.

3. Who is the owner of the BSE? 

The Bombay Stock Exchange (BSE) is a publicly traded company, so its shareholders own it. It is governed by a board of directors and managed by professionals in the financial industry. Ownership is distributed among institutional investors, retail investors, and other stakeholders.

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