After a long and wobbly road so far, Asia’s oldest stock exchange BSE is finally set to list on rival National Stock Exchange on Friday. As it adds another chapter in its 142-year-long history, Business Standard lists six little-known facts about BSE that will surprise you:
1) The origin: Under a banyan tree
The stock exchange’s origin can be traced back to 1855, when five brokers sat under a banyan tree to ‘play’ stocks in front of Bombay’s Town Hall. As more people got hooked to their game and joined in, the traffic movement on the road became difficult to manage and the brokers were forced to rent a floor at the Advocate of India building on Dalal Street. Thus, in 1875, was born the Native Share & Stock Brokers Association, which would later be known as the Bombay Stock Exchange, or BSE. The stock exchange in 1980 moved to its famed address of BSE Towers, later renamed Phiroze Jeejeebhoy Towers after one of its chairmen, on South Mumbai’s Dalal Street.
2) Admission fee: An exorbitant Rs 51
Originally, the fee for membership of the Association – the right of admission to the Broker’s Hall – was fixed at Rs 51. By 1920, this was revised to Rs 40,000. With increasing popularity, the membership cards became limited and could only be bought from the existing members. In 1996, amid huge membership demand, ING Baring paid as much as Rs 4 crore for a seat. However, the BSE in 2010 slashed its membership deposit to Rs 10 lakh.
3) BSE: Brokers’ Stock Exchange?
Amid little transparency in the system, the influential BSE brokers and their cartel would define the tricks of the trade, breaching the rules specified by the stock exchange. As the final stock prices would become public only at the end of the day, these brokers quoted buying cost closer to intraday highs and selling cost near intraday lows to spread their own margins. There was nothing in law that could prevent it. Many people even wondered whether BSE stood for Bombay Stock Exchange or Brokers’ Stock Exchange.
4) When BSE underestimated NSE
BSE remained the undisputed leader among stock exchanges until the National Stock Exchange emerged on the scene in 1994. Its electronic trading system and easy membership procedure changed overnight the rules of the game, and NSE soon wrested a substantial share of the market from BSE. Soon after, BSE, which had for long resisted the government’s efforts to introduce computerised trading, was forced to follow suit.
5) The term Sensex
Deepak Mohoni, a well-known technical analyst, is believed to have coined the word Sensex in 1989 to name BSE’s benchmark index. The name stands for sensitive index, which comprises 30 largest and most actively traded stocks on BSE.
6) One-week holiday
Initially, BSE used to keep operations shut from Christmas to the New Year’s Day. However, after NSE’s entry, it scrapped its one-week holiday system so as not to lose business to its younger rival.