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Advantages of Listing in Stock Market

Narendra Kumar

| Updated: Jul 24, 2017 | Category: CFO Service

Stock Market

A stock exchange is a highly technology-driven organized market. The SME and large business can apply for listing with BSE or NSE 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.

Company Listing Means?

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.

Objectives/Listing Requirement

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 on Bombay Stock Exchange

Listing is beneficial to the company, to the investor, and to the public at large. The 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 on National Stock Exchange

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

BSE Listing for SME

  1. BSE SME will assist these SMEs 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.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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