The Stock Exchange, Mumbai, which was established in 1875 as The Native Share and Stockbrokers' Association, is the oldest Stock Exchange in Asia, even older than the Tokyo Stock Exchange, which was founded in 1878. The Stock Exchange, Mumbai, is the most active stock market in India counting for over 70 percent of the listed capital and 90 percent of market capitalisation - as such, it is the premier Stock Exchange in India. The number of investors in India, currently 25 million, is growing at the rate of 20 percent per annum.

Till Now, buyers and sellers used to negotiate face-to-face on the trading floor over a security until agreement was reached and a deal was struck in the open outcry system of trading, that used to take place in the trading ring. The transaction details of the account period (called settlement period) were submitted for settlement by members after each trading session.

The computerised settlement system initiated the netting and clearing process by providing on a daily basis statements for each member, showing matched and unmatched transactions. Settlement processing involves computation of each member's net position in each security, after taking into account all transactions for the member during the settlement period, which is 10 working days for group 'A' securities and 5 working days for group 'B' securities.

Trading is done by members and their authorised assistants from their Trader Work Stations (TWS) in their offices, through the BSE On-Line Trading (BOLT) system. BOLT system has replaced the open outcry system of trading. BOLT system accepts two-way quotations from jobbers, market and limit orders from client-brokers and matches them according to the matching logic specified in the Business Requirement Specifications (BRS) document for this system.

The matching logic for the Carry-Forward System as in the case of the regular trading system is quote-driven with the order book functioning as an "auxiliary jobber". 

SEBI as the watchdog of the industry has an important and crucial role in the market in ensuring that the market participants perform their duties in accordance with the regulatory norms. The Stock Exchange as a responsible Self Regulatory Organization (SRO) function to regulate the market and its prices as per the prevalent regulations. SEBI and the Exchange play complimentary roles to enhance the investor protection and the overall quality of the market.

BSE computerized its trading and settlement activities by following a three phased approach.
Phase I: The primary objective of this phase was the real time dissemination of price data through the Display Information Driver System (DIDS). DIDS was commissioned in November, 1992 to disseminate bids, offers, actual rates of transactions and indices on a real time basis.
Phase II: In 1994, settlement related daily transactions inputs and outputs were uploaded and downloaded from the TWS in the brokers offices.
Phase III: Commissioned on March 14, 1995. Although, screenbased trading started with 818 scrips, by the 70th day of its commissioning, all scrips-exceeding 5000 had been put on the BOLT system. The BOLT system was commissioned with the Himalya K 10,000 central trading computer hardware. Since then the hardware has been upgraded to the Himalya K 20,000 system. The system provides for a response time of two seconds and can handle more than two hundred thousand trades in a day.

The Stock Exchange, Bombay (BSE) is the premier Stock Exchange in India. This is evident from the figures given in the Annexures. The BSE accounted for 46 per cent of listed companies on an all India basis as on 31st March, 1994. It ranked first in terms of the number of listed companies and stock issues listed. The capital listed in the BSE as on 31st March 1994 accounted for 50% of the overall capital listed on all the stock exchanges. Its share of the market capitalisation was around 74% as on the same date. The paid-up capital of equity, debentures/bonds and preference were 73%, 31%, 44% respectively of the overall capital listed on all the Stock Exchanges as on the same date.

On the BSE, the Steel Authority of India had the largest market capitalisation of Rs.19,908 crores as on the 31st March, 1994 followed by the State Bank of India with the market capitalisation of Rs.16,702 crores and Mahanagar Telephone Nigam Limited with the market capitalisation of Rs.11,700 crores. The 50 leaders in the terms of market capitalisation are given in Annexure VII.