April 13, 2017

How failure of stock brokers/banks in 1860s led to formation of Bombay Stock Exchange..(and history repeated with NSE 120 years later)

Image result for bombay stock exchange old pictures... By the decade of 1840-50, six such brokers were recognised by banks and merchants. These brokers also dealt in bullion along with stocks. The number was small but still good enough to serve limited needs at that time.

Chief amidst these brokers was Seth Premchand Roychand. He entered the list of brokers in 1849 but soom rose to become the most prominent name. He was known by various names such as Cotton king, Napoleon of Finance and so on, They conducted business under a banyan tree in Horniman Circle which still stands today ( I think have gone by that tree a couple of times without being aware of its history).

By 1855, brokers increased to 40. Now, there were multiple such trading posts under banyan trees located around Fort area.

The number of brokers jumped to more than 200 following American Civil War (1861-65). The civil war led to rise in demand for Indian cotton which made Bombay such a frenzied place. Along with rising demand for cotton, demand for raising money via equities also rose leading to rise in share trading. These brokers became a widely respected community well known to bankers and police alike.

Read more at https://mostlyeconomics.wordpress.com/2017/04/12/how-failure-of-stock-brokersbanks-in-1860s-led-to-formation-of-bombay-stock-exchange-and-history-repeated-with-nse-120-years-later

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