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Ten largest stock exchanges in the world by market capitalization in 2011

1. New York Stock Exchange (NYSE) - Headquartered in New York City. Market Capitalization (2011, USD Billions) – 14,242; Trade Value (2011, USD Billions) – 20,161.

The largest stock exchange in the world by both market capitalization and trade value. NYSE is the premier listing venue for the world’s leading large- and medium-sized companies. Operated by NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V., NYSE offers a broad and growin array of financial products and services in cash equities, futures, options, exchange-traded products (ETPs), bonds, market data, and commercial technology solutions. Featuring more than 8000 listed issues it includes 90% of the Dow Jones Industrial Average and 82% of the S&P 500 stock market indexes volume.

2. NASDAQ OMX - Headquartered in New York City. Market Capitalization (2011, USD Billions) - 4,687; Trade Value (2011, USD Billions) – 13,552.

Second largest stock exchange in the world by market capitalization and trade value. The exchange is owned by NASDAQ OMX Group which also owns and operates 24 markets, 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed invome, derivatives, commodities, futures and structured products. It is a home to approximately 3,400 listed companies and its main index is the NASDAQ Composite, which has been published since its inception. Stock market is also followed by S&P 500 index.

3. Tokyo Stock Exchange - Headquartered in Tokyo. Market Capitalization (2011, USD Billions) – 3,325; Trade Value (2011, USD Billions) – 3,972.

Third largest stock exchange market in the world by aggregate market capitalization of its listed companies. It had 2,292 companies which are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers section for high growth startup companies. The main indices tracking Tokyo Stock Exchange are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun, the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies. 94 domestic and 10 foreign securities companies participate in TSE trading. The London Stock Exchange and the Tokyo Stock Exchange are developing jointly traded products and share technology.

4. London Stock Exchange - Headquartered in London. Market Capitalization (2011, USD Billions) – 3,266; Trade Value (2011, USD Billions) – 2,871.

Located in London City, it is the oldest and fourth-largest stock exchange in the world. The Exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Paul’s Cathedral. It is the most international of all the world’s stock exchanges, with around 3,000 companies from over 70 countries admitted to trading on its markets. The London Stock Exchange runs several markets for listing, giving an opportunity for different sized companies to list. For the biggest companies exists the Premium Listed Main Market, while in terms of smaller SME’s the Stock Exchange operates the Alternative Investment Market and for international companies that fall outside the EU, it operates the Depository Receipt scheme as a way of listing and raising capital.

5. Shanghai Stock Exchange - Headquartered in Shanghai. Market Capitalization (2011, USD Billions) – 2,357; Trade Value (2011, USD Billions) – 3,658.

It is the world’s 5th largest stock market by market capitalization and one of the two stock exchanges operating independently in the People’s Republic of China. Unlike the Hong Kong Stock Exchange, the SSE is not entirely open to foreign investors. The main reason is tight capital account controls by Chinese authorities. The securities listed at the SSE include the three main categories of stocks, bonds, and funds. Bonds traded on SSE include treasury bonds, corporate bonds, and convertible corporate bonds. The largest company in SSE is PetroChina (market value – 3,656.20 billion).

6. Hong Kong Stock Exchange - Headquartered in Hong Kong. Market Capitalization (2011, USD Billions) – 2,258; Trade Value (2011, USD Billions) – 1,447.

It is the third largest stock exchange in Asia and the sixth largest in the world in terms of market capitalization. Hong Kong Stock Exchange (SEHK) has about 1,477 listed companies and it operates securities market and a derivatives market in Hong Kong and the clearing houses for those markets. The three largest stocks by market capitalisation in Hong Kong Stock Exchange are PetroChina, Industrial & Commercial Bank of China, and China Mobile.

7. Toronto Stock Exchange - Headquartered in Toronto. Market Capitalization (2011, USD Billions) – 1,912; Trade Value (2011, USD Billions) – 1,542.

It is the largest stock exchange in Canada and the third largest in North America. Toronto Stock Exchange is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities. A broad range of businesses from Canada, the United States, Europe, and other countries are represented on the exchange. The exchange lists conventional securities, exchange-traded funds, split share corporations, income trusts and investment funds. Toronto Stock Exchange is the leader in the mining and oil & gas sector, including such companies like Cameco Corporation, Canadian Natural Resources Ltd., EnCana Corporation, Husky Energy Inc., Imperial Oil Ltd., and others.

8. BM&F Bovespa - Headquartered in Sao Paulo. Market Capitalization (2011, USD Billions) – 1,229; Trade Value (2011, USD Billions) – 931.

Founded in 1890, today BM&F Bovespa is the largest stock exchange in South America and 8th largest in the world by market capitalization. It is the most important Brazilian institution to intermediate equity market transactions and the only securities, commodities and futures exchange in Brazil. BM&F Bovespa acts as a driver for the Brazilian capital markets. There are about 381 listed companies at Bovespa and its benchmark indicator is the Indice Bovespa.

9. Australian Securities Exchange - Headquartered in Sydney. Market Capitalization (2011, USD Billions) – 1,198; Trade Value (2011, USD Billions) – 1,197.

The Australian Securities Exchange is Australia’s primary securities exchange and it was created back in 2006 when the merger of Australian Stock Exchange and the Sydney Futures Exchange took place. Today Australian Securities Exchange is 9th largest stock exchange in the world by market capitalization and has an average daily turnover of 4,685 billion dollar. Products and services available for trading on ASX include shares, futures, exchange traded options, warrants, contracts for difference, exchange-traded funds, real estate investment trusts, listed investment companies and interest rate securities. The major market index is the S&P/ASX 200.

10. Deutsche Börse - Headquartered in Frankfurt. Market Capitalization (2011, USD Billions) – 1,185; Trade Value (2011, USD Billions) – 1,758.

Deutsche Börse is one of the world’s leading exchange organisations providing investors, financial institutions and companies access to global capital markets. The exchange covers the entire process chain from securities and derivatives trading, clearing, settlement and custody, through to market data and the development and operation of electronic trading system. Deutsche Börse has an approximately 765 listed companies with a combined market capitalization of 1,185 trillion USD.

NSE top-ranked globally for equity trades for 2nd year in 2013

Courtesy : The Economic Times, 19/1/2014

NEW DELHI: The National Stock Exchange (NSE) retained its position as the world's largest bourse in terms of number of equity trades for the second consecutive year in 2013, while China's Shenzhen Exchange overtook the NYSE as the second largest.

NSE recorded almost 145 crore equity trades on its platform last year, a gain of 3 per cent from 2012, making it the biggest among 51 global peers, according to data with the World Federation of Exchanges (WFE).

Rival exchange BSE slipped one place to eighth position. Although it has more than 4,000 listed companies, the BSE recorded 34.46 crore trades last year, a drop of 3 per cent compared to 2012.

China's Shenzhen Stock Exchange recorded 129 crore trades, climbing three places to become the second-largest bourse in the world. Trades on the Shenzhen SE, which pushed NYSE Euronext to third place, rose 38 per cent from 2012.

Another Chinese bourse, the Shanghai Stock Exchange, moved up to fourth place from sixth in 2012, while the Nasdaq dropped two places to fifth.

Others in the top 10 include Korea Exchange (6th), Japan Exchange Group - Tokyo (7th), Canada's TMX Group (9th) and London SE Group (10th).

The combined equity trade volume of NSE and BSE rose by almost 2 per cent to 179.4 crore in 2013.

Globally, the number of equity trades rose 6.6 per cent to 1,045 crore. The Asia Pacific region witnessed a gain of 13.7 per cent to 660.6 crore.

According to experts, the positive trend in equity trades was bolstered by steps taken by the government and the Reserve Bank of India as well as sustained foreign institutional investment besides the global economic recovery.

"No doubt, the year 2013 will be remembered as the renaissance of equities as the financial crisis ended, while the year 2014 should see the end of the economic crisis bringing more opportunities for the market participants," SMC Global Securities Associate Analyst Kamla Devi said.

"Despite Fed's decision to taper its bond buying programme by USD 10 billion, the buying rally continued in the market," she added.

Echoing the view, CNI Research CMD Kishor Ostwal said: "The rise in equity...is for three reasons -- one, global rally; two, expectation of policy decisions post-general election of 2014, and three, the rate cycle is peaking and very soon can start reversing."

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Factors Affecting Dividend Policy

Factors Affecting Dividend Policy

A number of considerations affect the dividend policy of company. The major factors are

1. Stability of Earnings. The nature of business has an important bearing on the dividend policy. Industrial units having stability of earnings may formulate a more consistent dividend policy than those having an uneven flow of incomes because they can predict easily their savings and earnings. Usually, enterprises dealing in necessities suffer less from oscillating earnings than those dealing in luxuries or fancy goods.

2. Age of corporation. Age of the corporation counts much in deciding the dividend policy. A newly established company may require much of its earnings for expansion and plant improvement and may adopt a rigid dividend policy while, on the other hand, an older company can formulate a clear cut and more consistent policy regarding dividend.

3. Liquidity of Funds. Availability of cash and sound financial position is also an important factor in dividend decisions. A dividend represents a cash outflow, the greater the funds and the liquidity of the firm the better the ability to pay dividend. The liquidity of a firm depends very much on the investment and financial decisions of the firm which in turn determines the rate of expansion and the manner of financing. If cash position is weak, stock dividend will be distributed and if cash position is good, company can distribute the cash dividend.

4. Extent of share Distribution. Nature of ownership also affects the dividend decisions. A closely held company is likely to get the assent of the shareholders for the suspension of dividend or for following a conservative dividend policy. On the other hand, a company having a good number of shareholders widely distributed and forming low or medium income group, would face a great difficulty in securing such assent because they will emphasise to distribute higher dividend.

5. Needs for Additional Capital. Companies retain a part of their profits for strengthening their financial position. The income may be conserved for meeting the increased requirements of working capital or of future expansion. Small companies usually find difficulties in raising finance for their needs of increased working capital for expansion programmes. They having no other alternative, use their ploughed back profits. Thus, such Companies distribute dividend at low rates and retain a big part of profits.

6. Trade Cycles. Business cycles also exercise influence upon dividend Policy. Dividend policy is adjusted according to the business oscillations. During the boom, prudent management creates food reserves for contingencies which follow the inflationary period. Higher rates of dividend can be used as a tool for marketing the securities in an otherwise depressed market. The financial solvency can be proved and maintained by the companies in dull years if the adequate reserves have been built up.

7. Government Policies. The earnings capacity of the enterprise is widely affected by the change in fiscal, industrial, labour, control and other government policies. Sometimes government restricts the distribution of dividend beyond a certain percentage in a particular industry or in all spheres of business activity as was done in emergency. The dividend policy has to be modified or formulated accordingly in those enterprises.

8. Taxation Policy. High taxation reduces the earnings of he companies and consequently the rate of dividend is lowered down. Sometimes government levies dividend-tax of distribution of dividend beyond a certain limit. It also affects the capital formation. N India, dividends beyond 10 % of paid-up capital are subject to dividend tax at 7.5 %.

9. Legal Requirements. In deciding on the dividend, the directors take the legal requirements too into consideration. In order to protect the interests of creditors an outsiders, the companies Act 1956 prescribes certain guidelines in respect of the distribution and payment of dividend. Moreover, a company is required to provide for depreciation on its fixed and tangible assets before declaring dividend on shares. It proposes that Dividend should not be distributed out of capita, in any case. Likewise, contractual obligation should also be fulfilled, for example, payment of dividend on preference shares in priority over ordinary dividend.

10. Past dividend Rates. While formulating the Dividend Policy, the directors must keep in mind the dividend paid in past years. The current rate should be around the average past rat. If it has been abnormally increased the shares will be subjected to speculation. In a new concern, the company should consider the dividend policy of the rival organisation.

11. Ability to Borrow. Well established and large firms have better access to the capital market than the new Companies and may borrow funds from the external sources if there arises any need. Such Companies may have a better dividend pay-out ratio. Whereas smaller firms have to depend on their internal sources and therefore they will have to built up good reserves by reducing the dividend pay out ratio for meeting any obligation requiring heavy funds.

12. Policy of Control. Policy of control is another determining factor is so far as dividends are concerned. If the directors want to have control on company, they would not like to add new shareholders and therefore, declare a dividend at low rate. Because by adding new shareholders they fear dilution of control and diversion of policies and

programmes of the existing management. So they prefer to meet the needs through retained earing. If the directors do not bother about the control of affairs they will follow a liberal dividend policy. Thus control is an influencing factor in framing the dividend policy.

13. Repayments of Loan. A company having loan indebtedness are vowed to a high rate of retention earnings, unless one other arrangements are made for the redemption of debt on maturity. It will naturally lower down the rate of dividend. Sometimes, the lenders (mostly institutional lenders) put restrictions on the dividend distribution still such time their loan is outstanding. Formal loan contracts generally provide a certain standard of liquidity and solvency to be maintained. Management is bound to hour such restrictions and to limit the rate of dividend payout.

14. Time for Payment of Dividend. When should the dividend be paid is another consideration. Payment of dividend means outflow of cash. It is, therefore, desirable to distribute dividend at a time when is least needed by the company because there are peak times as well as lean periods of expenditure. Wise management should plan the payment of dividend in such a manner that there is no cash outflow at a time when the undertaking is already in need of urgent finances.

15. Regularity and stability in Dividend Payment. Dividends should be paid regularly because each investor is interested in the regular payment of dividend. The management should, inspite of regular payment of dividend, consider that the rate of dividend should be all the most constant. For this purpose sometimes companies maintain dividend equalization Fund.

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