The
Bombay Stock Exchange is the oldest Stock Exchange in Asia located in Dalal Street , Mumbai in India.
Evolution of the Bombay Stock Exchange and its Size
The Bombay Stock Exchange was established in 1875 as the “ Native Share and Stock Brokers Association ” in 1875. It earned a formal status under the Securities and Exchange Board of India ( SEBI) in 1956. Market Capitalization of the BSE was about Rs 33.4 trillion as on 2006 , October. The Bombay Stock Exchange uses the Bombay Stock Exchange Sensex as the market index in Asia and India.
The Bombay Stock Exchange deals with trading in derivatives, equity and other debt instruments .
Derivative Market
the Bombay Stock Exchange introduces the first Exchange Traded Index Derivative Contract in 2000. the Index Options started to be traded from 2001 whereas the single stock futures were traded from 2002. The weekly options were introduced in 2004.
Index Futures: I ndex futures are basically futures whose underlying asset is the BSE index itself. No commodity or stock constitute the underlying asset.
Index options
The index options like any option gives the holder the right but not the obligation to buy or sell the underlying asset at the specified date and price. Then underlying asset in the case of the index option is again the BSE index itself.
Stock Futures and Options
Stock futures and the stock options have the normal characteristics as any other stock future or option traded by any index where the underlying asset is some stock.
Equity futures and options
The equity futures and options that were introduces by the Bombay Stock Exchange have a maximum expiry period of 3 months.
Weekly options
The weekly options are similar to the monthly options except for the fact that these options are introduced on every Monday of each week and the option matures in a two weeks time.
Leaving aside the BSE Sensex there are many other indices that are used by the Bombay Stock Exchange and they are listed as follows:
- BSE 500
- BSE 100
- BSE 200
- BSE PSU
- BSE MIDCAP
- BSE SMLCAP
- BSE BANKEX
- BSE Teck
- BSE Auto
- BSE Pharma
- BSE Fast Moving Consumer Goods
- BSE Consumer Durables
- BSE Metal