SOCIAL STOCK EXCHANGE
SOCIAL STOCK EXCHANGE I RACE IAS : Best IAS Coaching in Lucknow I Current Affairs
Main Examination: General Studies Paper-3
Indian Economy
Why in news:
- Recently, the National Stock Exchange in India was granted final approval by the Securities and Exchange Board of India (SEBI) to set up a Social Stock Exchange (SSE).
- The setting up of the Social Stock Exchange was announced by Finance Minister Nirmala Sitharaman during the Union Budget 2019-20.
About Social Stock Exchange (SSE):
- A social stock exchange allows a non-profit organization's stock to be listed on exchanges that provide an alternative fund-raising structure.
- Social Stock Exchange is a new idea in India, through this one can invest in social enterprises.
- The social stock exchange will be operated within the already established stock exchange, so that it can take advantage of the existing stock exchange's infrastructure as well as its customer relationships, investors, philanthropic donors and for-profit and non-profit organizations.
- The Social Stock Exchange will function as a separate segment within the existing stock exchange and will help social enterprises to raise money from the public through its mechanism.
- Social Stock Exchanges are already functioning in countries like UK, Canada, Singapore, South Africa, Jamaica and Kenya etc.
- According to a draft SEBI report, a social stock exchange can be helpful in rebuilding the livelihood of those affected during the COVID-19 pandemic.
Features of Social Stock Exchange:
- Retail investors can invest only in securities offered by for profit Social Enterprises (SEs) under the Main Board.
- In all other cases, only institutional investors and non-institutional investors can invest in securities issued by SEs.
- Eligibility: Any non-profit organization or for-profit social enterprise that establishes primacy of social intent will be recognized as a social enterprise, which will make it eligible to be registered or listed on a social stock exchange. ,
- NPOs can raise money through private placement or public issue by issuing zero-coupon zero-principal instruments or by subscribing to mutual funds.
Significance of the Social Stock Exchange:
- The Social Stock Exchange will function as a separate segment within the existing stock exchange and will help social enterprises to raise funds from the public through its mechanism.
- It will serve as a medium for enterprises to seek finance for their social initiatives, gain visibility and provide enhanced transparency about fund raising and utilization.
- With this, non-profit organizations and social welfare organizations will be able to get the benefit of social capital on a transparent electronic platform.
- With the functioning of the Social Stock Exchange, the non-profit sector will get a favorable environment as well as an opportunity to fully utilize its potential.
- This will help in strengthening the social structure weakened during the corona virus pandemic.
- Due to the creation of social capital in India, people will be self-reliant, which will reduce the pressure on the government for the availability of employment and other facilities.
Working Group on Social Stock Exchange:
- A working group was constituted by SEBI in September 2019 under the chairmanship of Ishaat Hussain (Director of SBI Foundation and former Finance Director of Tata Sons) to start Social Stock Exchange.
Main recommendations of the working group-
- Social organizations and non-profit organizations (NPOs) should be given the facility to be directly listed on the social stock exchange to raise funds by issuing bonds.
- Social Venture Fund (Social Venture Fund / SVF) should also be included under Alternative Investment Fund (Alternative Investment Fund) in the financing system.
- Minimum reporting standards should be ensured for the institutions under the Social Stock Exchange.
- For-profit social organizations should also be listed on the social stock exchange with certain reporting provisions to incentivize them for tax exemption.
Securities and Exchange Board of India (SEBI):
- The Securities and Exchange Board of India is the regulatory board for securities and finance in India.
- SEBI was established on April 12, 1992 under the provisions of the Securities and Exchange Board of India Act, 1992.
- It is headquartered in Mumbai and has regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.
Main functions of SEBI-
- The main objectives of SEBI are to provide the best protection of the interests of the Indian stock investors and to promote the development and regulation of the securities market.
- Regulating and registering the work of stock brokers, share transfer agents, trustees, merchant bankers, gold exchanges, portfolio managers etc.
- To register and regulate collective investment schemes of mutual funds.
- To eliminate unfair trade practices relating to the securities market.
About Stock Exchange
- A stock exchange is an institution where a stock market is run. Here stock traders buy and sell shares, debentures (bonds) and other securities of companies and other organizations.
- There are 23 stock exchanges recognized by SEBI in India. There are two national level stock exchanges of these, BSE and NSE. Apart from this, there are 21 regional stock exchanges.
- The stock market is regulated by the Securities Exchange and Board of India ie SEBI.
Bombay Stock Exchange (BSE)
- The Bombay Stock Exchange (BSE) is the first stock exchange in Asia.
- The Mumbai Stock Exchange was established on 9 July 1875 by Shri Prem Chandra Roy. He was also known as Bullion King Big Bull and Cotton King.
- India's first exchange to launch equity derivatives
- First Exchange in India to launch Free Plot Index
- India's first exchange to introduce US dollar based SENSEX
- Sensex (BSE 30) is BSE market index consisting of 30 well established and financially sound companies listed on Bombay Stock Exchange (BSE).
- First exchange in India to set up exchange based internet trading platform
- First exchange in the country to get ISO certification for surveillance, clearing and settlement
- BSE Online Trading System (Bolt) Receives Globally Recognized Information Security Management System Standard BSE BS 7799-2-2002
- First exchange to have a separate dedicated facility for financial training
National Stock Exchange (NSE)
- National Stock Exchange is the largest and technologically leading stock exchange in India. It is located in Mumbai. It was established in 1992. In terms of business, it is the third largest stock exchange in the world.
- Its VSAT terminals are spread across 320 cities in India. NSE was the first exchange in the country to provide a modern and fully automated screen based electronic trading system.
- NSE's index Nifty-50 is used by investors in the Indian markets and across the world.
23 stock exchanges recognized by SEBI in India
- Mumbai Stock Exchange, Mumbai
- Over the Counter Exchange, Mumbai
- National Stock Exchange, Mumbai
- Uttar Pradesh Stock Exchange, Kanpur
- Meerut Stock Exchange, Meerut
- Vadodara Stock Exchange, Vadodara
- Ahmedabad Stock Exchange, Ahmedabad
- Bangalore Stock Exchange, Bangalore
- Bhubaneswar Stock Exchange, Bhubaneswar
- Cochin Stock Exchange, Cochin
- Kolkata Stock Exchange, Kolkata
- Guwahati Stock Exchange, Guwahati
- Delhi Stock Exchange, Delhi
- Coimbatore Stock Exchange, Coimbatore
- Hyderabad Stock Exchange, Hyderabad
- Jaipur Stock Exchange, Jaipur
- Ludhiana Stock Exchange, Ludhiana
- Camera Stock Exchange, Bangalore
- Chennai Stock Exchange, Chennai
- Pune Stock Exchange, Pune
- Magadh Stock Exchange, Patna
- Madhya Pradesh Stock Exchange, Indore
- Capital Stock Exchange Kerala Limited Thiruvananthapuram, Kerala
Conclusion:
- There is a lot of potential for Social Stock Exchanges (SSEs) in India as there are 31 lakh NPOs more than the number of schools and 250 times the number of government hospitals. This means there is one NPO for 400 Indians. In this way the foundation of a strong welfare state can be helpful
- In order to meet the serious challenges related to COVID-19 and socio-economic activities, social stock exchanges will have to tap into the larger pool of social capital and at the same time encourage a mixed financial structure.
---------------------------------------------------------------------
Mains Exam Question:
Write the importance of Social Stock Exchange (SSE) in India.