Advantages of Listing in Stock Market

Ashish M. Shaji

18 Nov, 2020

Stock exchange is a highly technology-driven organized market. The SME and large business can apply for listing with BSE (Bombay Stock Exchange) or NSE (National Stock Exchange) in India.

The principal objective of the stock market is maintaining transparency where securities are bought and sold in a regulated environment. The stock market mobilizes small saving for productive purposes.

What does Company Listing Mean?

Listing means getting securities of a Company Listed in the stock market to raise investment and for further trading. It can be also said as the process of making the securities officially quoted on the notified stock exchange for the trade.

What is the main Objective of Listing in the stock market?

The main objectives of listing are to provide ready marketability and Liquidity to shares and stocks. To keep proper control and supervision in dealing therein. It also protects the interest of shareholders and also the general public.

Advantages of Listing in Stock Market (Bombay Stock Exchange)

Listing is beneficial to the company, to the investor, and to the public at large. The most important advantages are listed below:

1. Easy Fund Raising
2. Exit route to investors available easily
3. Ready Marketability of Security
4. Ability to raise further capital
5. Supervision and Control of Trading in Securities
6. Better Corporate Practice
7. Benefits to the Public
8. Fair and transparent etc.

Advantages of Listing in Stock Market (National Stock Exchange)

Some of the advantages of listing on National Stock Exchange are mentioned below:

1. Comprehensive marketplace
2. Largest exchange
3. Scale of operations
4. Settlement Guarantee
5. Trade statistics for listed companies
6. Investor service centres: 24 service centres opened by NSE across a country to fulfil the needs of investors etc.

BSE Listing for SME

1. BSE SME will assist these SMEs^[1] to raise equity capital for their expansion and growth and will help them become full-fledged Companies
2. BSE SME will provide more and more opportunities to the existing as well as new market participants.
3. It also helps to raise equity capital for growth and expansion of SMEs in a very cost-effective manner.
4. Opportunities to identify and invest in good companies at an early stage.
5. It helps to make long-term Capital Gain tax benefits and Exit Route.
6. Easy access to Capital becomes possible on this platform.
7. Encourages Growth of SMEs.
8. Also, helps in Equity financing through Venture Capital.
9. Efficient Risk Distribution among the market.

Stock Exchange Services/Functions to the Investors

Investor Education- Stock exchange is responsible for creating awareness among the investor by publishing periodically the quotations of listed securities. Disclosing financials of the listed company. An investor can make the right decision and can get the maximum benefit from their investments.

Liquidity of investment- The stock market provides a high level of liquidity on investment. Investment in the stock market is easily convertible to cash as the need of the investor.

Investment is safe- The Company listed on the stock exchange is strictly regulated in terms of the end-use of fundraised from an investor. The amount invested in stock is safe and the only investor has to assume the market risk in lieu of return on investment.

Efficient use of Capital – The stock exchange helps the investor in taking the right decision by providing them a market trend, financials of the company listed on a stock exchange. The share price of a listed company fairly calculated based on the profitability and operational efficiency of the company.

Protection from bad deliveries- The Company listing process with the stock market is regulated and hence trading of their securities is too regulated. It prevents the trading of false and duplicate securities. So there are almost no possibilities of bad deliveries.

High collateral value – The listed securities on a stock exchange is backed by high collateral value. The securities of such a level of the company can be sold easily.

Conclusion

Stock market plays a vital role in regulating the financial markets in India. You are advised to go through our blogs for more information on BSE, NSE, listing requirements etc.

Read our article: The Significance of Financial Analytics and Reporting for Businesses