What is the role of stock exchanges like NSE and BSE?

What is the role of stock exchanges like NSE and BSE?

Stock exchanges such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) play a critical role in the functioning of India’s financial markets.
They serve as regulated marketplaces where investors can buy and sell securities such as stocks, bonds, ETFs, and derivatives in a transparent and orderly manner.

Key roles of stock exchanges:

1. Provide a Regulated Trading Platform: They offer a secure and standardized environment for trading, ensuring fair price discovery, liquidity, and real-time execution of trades.

2. Facilitate Capital Raising: Stock exchanges enable companies to raise funds from the public through Initial Public Offerings (IPOs) and follow-on offerings, thereby supporting business growth and economic development.

3. Enforce Listing and Compliance Norms: They ensure that listed companies adhere to regulatory requirements, such as timely disclosure of financial results, corporate actions, and governance practices. This helps protect investor interests and maintain transparency.

4. Maintain Market Integrity: Exchanges monitor trading activity to detect and prevent manipulation, insider trading, and other unfair practices. They work closely with regulators like SEBI to uphold ethical conduct and market stability.

5. Provide Market Data and Indices: They offer real-time market data, stock quotes, and benchmark indices (like Nifty and Sensex) that help investors make informed decisions.

6. Support Investor Education and Protection: Many exchanges run investor awareness programs and grievance redressal mechanisms to improve financial literacy and protect retail investors.

In essence, stock exchanges are the backbone of the capital market ecosystem.
By offering a secure, transparent, and efficient trading environment, NSE and BSE play a vital role in promoting investor confidence and driving India’s economic progress.

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