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Case Title:

Reforms at Bombay Stock Exchange, Asia's Oldest Stock Exchange: The Competitive Strategies

Publication Year : 2005

Authors: Krishna Chaitanya, Phani Madhav

Industry: Stock Markets

Region:India

Case Code: COS0064

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
The Bombay Stock Exchange (BSE), which is the largest stock exchange in Asia, witnessed a profound transformation in its business operations. From being a regional stock exchange, it has emerged as one of the important institutions for transferring savings into investments, in the country. Between 1990 and 2003, BSE witnessed a series of stock market scams, which involved more than 5,000 rupee crores of investors' money. BSE faced criticism from industry experts, analysts, policy makers and politicians for being non-transparent, unregulated and taking inadequate measures for investors' protection. To overcome these challenges, BSE launched a series of measures in the late 1990s and with the advent of reforms, BSE witnessed notable developments in many areas such as: (1) trading; (2) operations; (3) management; and (4) addressing investors' grievances. The Government of India also took steps to corporatise the stock exchange, thereby separating trading, ownership and management. Finally, on the August 9 th 2005, BSE created history by converting itself into a corporate entity, thereby forming BSE Limited.

Pedagogical Objectives:

  • To understand how BSE has emerged (from a regional stock exchange) to Asia's largest stock exchange
  • To understand the issue of failure of corporate governance at Asia's biggest stock exchange.
  • To discuss the competitive strategies adopted by BSE to overcome the challenges and competition faced by a National Stock Exchange and other global stock exchanges.

Keywords : Bombay Stock Exchange (BSE), National Stock Exchange, Over the counter exchange of India (OTCEI), Securities and Exchange Board of India (SEBI), Competitive Strategies Case Study, Government of India, Competition, Corporatisation, Financial markets, Stock broking, Stock market scams, Financial sector reforms, Controller of Capital Issues (CCI), Margin trading, On-line trading, Economics, politics and business environment, Strategy and general management

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